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IvIBRARY 

OF  THE 

University  of  California. 

GIFT  OF 

SiX^oj-lj^ ^nx-. I'L^rtr-wJw 

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Digitized  by  the  Internet  Archive 

in  2007  with  funding  from 

IVIicrosoft  Corporation 


http://www.archive.org/details/contractstatutorOObuffrich 


CONTRACT 

AND 

STATUTORY  LIENS 

i:n^  califor:n^ia 

and  their  enforcement. 


THE  LAW  OF  MORTGAGES,  PLEDGES,  MECHANICS'  LIENS, 
vendors'  LIENS,  AND  OF  OTHER  CONTRACT  AND  STATUTORY 
LIENS;  DEALING  ALSO  WITH  THEIR  ENFORCEMENT  BY  AC- 
TION, BY   ACT   OF   THE   LIENOR,  OR   BY    OTHER    PROCEEDINGS. 


BY 

CHARLES    M.    BUFFORD. 


SAN  FRANCISCO: 

BANCROFT-WHITNEY  COMPANY, 

LA.W  Publishers  and  Law  Booksellers. 

1903. 

OF  THE 

UNIVERSITY 

^         OF 


P  M  "^  T 


9pyriglit,   1903 

BY 

CHAELES   M.   BUFFORD. 


San  Francisco: 

The  Filmer  Brothers  :^lectrotype  Company, 

Typographers  and  Stereotypers. 


1 


OSAS 

Ati 

Si 


),   October   IJ^,    ISOJS. 


m; 


r:. 


C'^ 


ee 


41 


;  to  the  University  Libra- 
;  and  Statutory  Liens  in 
ccept  it  with  my  best 
11  prove  of  sone  inter- 


I  of  '98,  U.  C. 


IV  PREFACE. 

trated  by  copious  notes  referring  to  statutes  and 
decisions. 

This  book  has  been  called  ^^Contract  and  Statu- 
tory Liens/^  because  the  phrase  is  familiar;  yet 
in  the  pages  which  follow  the  term  "lien^^  is  used 
in  its  original  sense  of  a  security  imposed  by 
operation  of  law,  the  broader  expression,  Encum- 
brances Created  for  Security  Only,  being  used  to 
designate  both  contract  and  statutory  securities. 
Charles  M.  Bufford. 

San  Francisco,  July  1,  1903. 


TABLE  OF  CONTENTS. 


(Numbers  Refer  to  Pages.) 

Citations  of  Statutes ix 

Introduction 3 

PART  ONE. 

MATTERS    COMMON    TO    ALL    ENCUMBRANCES 
FOR  SECURITY  ONLY. 

Title  1.    Nature  of  Encumbrances  for  Security        7 

Title  2.     Priorities M 

Title  3.     Rights  and  Duties  of  Parties 24 

Title  4.     Special  Events  Affecting  Encumbrances 
Chapter  1.     Death  of  Owner  of  Encumbered  Prop- 
erty       38 

Chapter  2.     Bankruptcy. 

Article  1.     Relationship  of  Federal  and  State 

Legislation  to  Each  Other G4 

Article  2.     Bankruptcy  Under  Federal  Law.  .     80 

Article  3.'    Insolvency  Under  State  Law 137 

Chapter  3.     Partition  of  Encumbered  Immovable 

Property 155 

Title  5.    Extinction  of  Encumbrances  for  Security  162 
Title  6.    Enforcement   of  Encumbrances   for   Se- 
curity. 

Chapter  1.'    Modes  of  Enforcement 170 

Chapter  2.     Enforcement  by  Judicial  Sale, 

Article  1.     Nature  of  Foreclosure  Action.  .  .  .   172 
Article  2.     Scope    of    Judicial    Authority    in 

Foreclosure  Action 176 

Article  3.     Venue  of  Actions  Against  Immov- 
able Property 187 

Article  4.     Parties  in  Actions  Against  Immov- 
able Property 192 

(V) 


TABLE    OF    CONTENTS. 

Article  5.     The  Foreclosure  Judgment 220 

Article  6.     Sale  of  Encumbered  Propierty.  . .  .  238 

Article  7.     The  Deficiency  Judgment   29o 

Article  8.     Eedemption  from  Sale 303 

Article  9.     Appeal  Bonds  in  Foreclosure  Ac- 
tions    354 


PART  TWO. 

ENCUMBRANCES  FOR  SECURITY  CREATED  BY 
CONTRACT. 

Introductory  Propositions    361 

Title  1.  Contract  Encumbrances  Dependent  on 
Possession.'  (Against  Movable  Property.) 
Pledge. 

Article  1.     Nature    of   Pledge    364 

Article  2.     Operation   of   Pledge    379 

Article  3.     Rights  and  Duties 394 

Article  4.     Pledgelender 404 

Article  5.     Pledgeholder 406 

Article  6.     Pledge  a  Cumulative  Security...   409 

Article  7.     Enforcement  of  Pledge   411 

Title  2.     Contract  Encumbrances  Independent  of 

Possession. 
Chapter  1.     Mortgage. 

Article  1.     Nature  of  Mortgage    417 

Article  2.     Recordation     of     Instrument     of 

Mortgage 455 

Article  3.     Operation  of  Mortgage   465 

Article  4.'     Rights  and  Duties  of  Parties 522 

Article  5.     Assignment    of    Mortgage 585 

Article  6.     Transfer  of  Mortgaged  Imrjiovable 

Property 590 

Article  7.     Extinction  of  Mortgage    597 

Article  8.     The  Mortgage  a  Primary  Security  607 
Article  9.     Enforcement  of  Mortgage  Obliga- 
tion      6J9 

Chapter  2.  Equitable  Lien  in  Nature  of  Mort- 
gage     G59, 

Chapter  3.     Trust  Deed  in  Nature  of  Mortgage..   657 
Chapter  4.     Vendor 's  Security Q6() 


TABLE  OF  CONTENTS. 


PART  THREE. 


ENCUMBEANCES  IMPOSED   BY  OPERATION  OF 
LAW— LIENS. 

Propositions   Common   to   All  Liens    681 

Title  1.     Liens  Dependent  on  Possession.  (Against 
Movable  Property.) 

In  General 681 

Chapter  1.     Banker 's  Lien 686 

Chapter  2.     Factor's  Lien 687 

Chapter  3.     Laundryman 's  Lien 689 

Chapter  4.     Liens  of  Various  Trustees 690 

Chapter  5.     Lien    of    Vendor    of    Movable   Prop- 
erty    696 

Chapter  6.     Lien    for    Improvement    of    Movable 

Property    703 

Chapter  7.'    Lien  of  Carrier  of  Goods   706 

Chapter  8.     Agistor's  and  Stable-keeper's  Lien..   70S 

Chapter  9.     Lien   of  Depositary  for  Hire    710 

Chapter  10.     Lien  of  Finder  of  Lost  Articles....   712 

Chapter  11.     Innkeeper 's  Lien 713 

Chapter  12.     Lien  of  Carrier  of  Passengers 717 

Chapter  13.     Sheriff's   Lien    718 

Chapter  14.     Liens  Against  Trespassing  Anin^als.   719 
Title  2.     Liens    Independent    of    Possession:     1. 
Against  Movable  Property. 

Chapter  1.'    Logger 's   Lien    765 

Chapter  2.     Thresher's  Lien   771 

Chapter  3.     Lien  in  Favor  of  Owner  of  Propagat- 
ing Animal   773 

Chapter  4.     Liens  Established  Against  Vessels  by 
State  Law. 
Article  1.     Federal  and   State  Control  Over 

Liens   Against  Vessels    776 

Article  2.'    Maritime    Liens    Established    by 

State  Law 788 

Article  3.     Nonmaritime     Liens     Established 

by  State  Law 798 

Chapter  5.     Lien    of     Corporation     on    Its    Own 

Stock 803 


Viii  TABLE    OF    CONTENTS. 

Title  3.     Liens    Independent    of    Possession:     2. 

Against  Immovable  Property. 
Chapter  1.     Lien  of  Vendor  of  Immovable  Prop- 
erty     807 

Chapter  2.     Lien     of    Purchaser     of    Immovable 

Property 822 

Chapter  3.     Liens   for   Improvements   to   Immov- 
able Propterty   (Mechanics'  Liens).... 824 

Article  1.     Preliminary  Provisions    82o 

Article  2.     The  Improvement  Contract    831. 

Article  3.'     The  Lien-claim 857 

Article  4.     Duties    of    Owner    of    Liened    In- 
terest     900 

Article  5.     The  Perfected  Lien 906 

Article  6.     Equitable  Subrogation  to  Moneys 

'     Owing  Original   Contractor    948 

Article  7.     Amounts   of  Liens    959 

Article  8.     Priority    of    Improvement    Liens 

Among  Themselves    977 

Article  9.     Improvement   Lien   a    Cumulative 

Security    970 

Article  10.     Enforcement      of      Improvement 

Lien    981 

Article  11.     Indemnity   Against   Liens    989 

Chapter  4.     Lien   for    Abating   Insect  Pest   Nui- 
sances)     993 

Chapter^  5.     Liens  for  Partition  Fences    990 

Chapter  6."    Mining  Partner's  Lien 1002 

Chapter  7.     Lien  of  Alimony 1005 

Chapter  8.     Judgment   Liens    1007 

Chapter  9.     Tax  Liens   1026 

Chapter  10.     Assessment   Liens    1030 

Index   1071 


CITATIONS  OF  STATUTES. 


UNITED  STATES. 

CONSTITUTION. 

Art.  1,   sec.  8    64 

Art.  1,   sec.    10    06 

Art.  3,  sec.  2   77S 

14th  Amend 558,  559,  1048 


BANKEUPT  ACT  of  1898. 

1 71,  74,  93   67  84,  85 

4a  71   67a  87,  90,  91 

4b 72,  77   67b  87,  91 

11 113   67d  95 

21e 112   67e 101,  105,  107 

57g  101   67f 92,93,1019 

57h 115,  117   70 112 

«0a  99   70a  90 

60b 100,  101   70^ 88,  91 

•65a  127 


CALIFOENIA. 

CONSTITUTION  of  1879. 

Art.  6,  sec.  5  187 

Art.  11,  sec.  5  233 

Article  11,  sec.  12  1034,  1035 

Art.  11,  sec.  13  1038 

Art.  13  1035 

Art.  13,  sec.  1 1034,  1035,  1036 

(ix) 


X  CITATIONS  OF  STATUTES. 

Art.  13,  sec.  4 546,  548,  564,  566,  568,  569 

Art.  13,  sec.  5 546,  564,  571 

Art.  17,  sec.  1    20 

Art.  20,  sec.  15 897 

Art.  22,  sec.  3   188 


CONSTITUTION  of  1849. 

Art.  4,  sec.  37   1032 

Art.  11,  sec.  13 1036 


INSOLVENT  ACT  of  1895. 


'?,5 

152 

692 

...147,  150,  151,  152 

50 

1.50 

32  .. 

48  .. 

59  

60 

143,  145 

378 

CODE  OF  CIVIL  PEOCEDURE. 


4 

.721 

667 228,  260,  392 

12  ...... 

.251 

669  39,  lOlS 

78 

.187 

671 

335 

.629 

39,  299,  1008,  1010, 

337 

.629 

1014,  1016. 

338 

1029 

674  ....1011,  1012,  1015 

339 

.821 

681-709 239,  248 

346 

.581 

681 299,  1021,  1022 

347 

.581 

682  ..247,  249,  260,  1021 

360  

633, 

635 

683  263 

392 

.190 

684 

405 

.782 

224,  338,  241,  246, 

409 

.206 

247,  249,  256. 

473 

.218 

685 243,  1021,  1022 

537 

686 246,  1023,  1024 

609,  617,  670, 

706, 

687 249 

820. 

688  242,  391 

542  

391, 

520 

690  ...499,  683,  829,  830 

543 

.391 
.391 

691   293 

545 

692  250,  252 

564 

533, 

,  641 

693  ...250,  252,  253,  254 

627 

.392 

694 254,  255,  259 

815 

.801 

816 

.  .80} 

824 

.  802 

827  .  . . . 

,  .802 

897 

,1032 

900  . . . , 

.1012, 

1013 

943 

35!) 

945  .... 

...354 

,  356 

1183-1203 

.832 

1183 

825, 

832, 

833, 

837, 

838, 

842, 

844, 

847, 

849, 

851, 

.854, 

855, 

858, 

860, 

861, 

869, 

872, 

873, 

875, 

877, 

883, 

901, 

903, 

90 1, 

949, 

955, 

957, 

960, 

961, 

966, 

967, 

968, 

973. 

11831^  .  . 

...833 

,  841 

1184  . . . . 

CITATIONS  OF  STATUTES. 

695 261 

696  262 

698  230,  269,  273 

699  269,  273 

700-707  3]:) 

700 

270,  271,  273,  274, 

276,  319,  331. 

701 40,  329,  333,  349 

702  ...309,  311,  313,  338 
703 

276,  284,  341,  345, 

348,  350,  353. 

704 342 

705  ...329,  333,  336,  345 

706 276,  321,  328 

707 321,  342,  346 

726-728 450 

726 

204,  210,  221,  223, 

226,  229,  233,  235, 
'  238,  247,  249,  292,       825,  838,  872,  948, 

295,  297,  409,  532,       949,  951,  957,  95S, 

607,  608,  609,  613,       963,  965,  966,  967, 

614,  616,  618,  621,       970,  975,  980. 

623,  627,  628,  643,   1185 825,  867,  870 

671.  1186  18,  879,  943 

727 292    1187 

728  ...177,  244,  245,  255       825,  900,  903,  905, 

729  .  .  .233,  234,  262,  263       908,  909,  910,  913, 

744  468,  622       915,  917,  920,  923, 

754 156     '  924,  926,  928,  932. 

755 156   1188  940,  041 

761 156    1189 767,  774,  922 

762 157   1190 981 

768 160    1191 

769 158       881,  882,  903,  904, 

771 158,  159       940,  966. 

772  160  1192 

786 161       869,  .870,  877,  878,  882 

787 158  1193  .  .  .852,  945,  972,  974 

813 1194 295,826,977 

22,  782,  788,  791,  792,  1195  .  .  .769,  770,  983,  985 

'  794,  796,  800.  1196 829 

814 800  1197  768,  852 


CITATIONS   OF   STATUTES. 

^jode  of    Civil  Procedure,    Continued. 

1505 39,  334,  1023 

1506  39,  1019 

1539 51 

1569 

45,  50,  51,  52,  53, 
1016. 

1570  ....45,  54,  55,  102 i 

1582 201 

1616 694 

1618  694 

1700 694 

1771 694 

1776 694 

1856  572 

1971 946 

1972 946 


1214  18,  19 

1215 19,  469,  947 

1217  17 

1227  470 

1241 

20,  21,  513,  514,  515, 

516,  1021. 

1242 518 

1243- 518 

1244 518 

1245-1259 517 

1479 36 

148-5 ' 164 

1643 39 

1846 408 

1852 395,  407 

1856 710 

1857 711 

1861  684,  713,  714 

.1862  ..713,  714,  715,  710 

1869  712 

18'.  ) 712 

1892 25 


1198  

1199  

1200 

173 

173,  355 

970 

1201 

89S 

1202 

348,  851 

1203  

1469 

1*  854,*939,  954 

889-896 

44 

1475 

41,  42 

1493  

1494 

61 

62 

1497  

47.  62 

1500 

38,  41, 
61. 
1502   . .  . . 

45,  57,  59,  60, 
43  61 

1504 

4 

1019 

Civil 
721 

139 

140  

141 

...  .....1005 

....1005,  1006 

1006 

146 

324  ...... 

331-349  .. 

456 

660-662  .. 
715 

1006 

.396,  398,  804 

805 

450 

489 

660 

716 

660 

761  

841 

660 

996 

858 

445 

871 

664 

1045 

438 

1046 

43S 

1047 

438 

1091 

, 947 

1107  

1170  

1213-1215  . 
1213 

272,  587 

457 

.....  ....456 

10 

CITATIONS   OF  STATUTES.  xiil 

1893 25  2903 26,  537 

1920 02  2904 2^ 

2027 68S  2905 163,  164,  599 

2127  697,  698  2909-2913 162 

2128 698  2909  9,  162' 

2144 700  2910 166,  167 

2191 717  2911  165,  582,  59S 

2204 707  2912  16^^ 

2273  694,  695  2913 169 

2274 694  2920 419 

^275 693  2921 438 

2309 419  2922 419,  632,  653- 

2369 387  2923  419,  451 

2405  445  2924  426,  445 

2514 1002,1003,1004  2925  429 

2-517 1002  2926 489 

2518 1003  2927 444 

2541  541,  544  2928 8 

2542 544  2929  52a 

2547 546  2930 471 

2549 546  2931 621 

2792 474  2932 445,  447^ 

2831 615  2933 419 

2832 477  2934  587,  588 

2849 615  2935 588 

2850 615  2936 585 

2854 593  2937 456 

2872 681  2938 602. 

2873 682  2939 602 

2874 682  29391/2 605 

2875 682  2940 603 

2876 27  2941 603 

2881 7,  681  2947 438^ 

2882  682  2948 420 

2883 361  1^950 485 

2888 468  2952  455,  45^ 

2889  534  2955-2973 459 

2890  ..8  2955  

2891 9       440,  444,  502,  505,  523 

2892 25  2956 42a 

2897 11  2957 458,  496,  498 

2898 15  2958 459 

2899 32  2959 461 


:^1V  CITATIONS   OF   STATUTES. 


Civil  Cod€j  Continued. 

2960 463   3008 416 

2961 463   3009 400 

2962 461,  496   3010  415 

2963 464   3011 259,  411 

2964 464   3046 807,  810,  823 

2965 462,  500   3047 817 

2966 ^.  .462,  530   3048  810,  823 

2967 621    3049  696,  702 

2968 519,  520   3050 810,  822,  823 

2969  519,  520   3051  

2970 521  689,  703,  706,  708,  710 

2972 50U  3052  .  .684,  703,  704,  705 

2986 364   3053 .....! .6S7 

2987 365   3054 686 

2988  366,  382  '  3055 791 

2989 380   3056 790 

2990 378   3057  87,  718 

2991 386,389   306O  ..790 

2992  404,  405   3076 697 

2993 406   3077 699 

2994 404,  405 


3078  699 

2995 407  3079 700 

2996  406  3080 701* 

2997  395,  407  333^  .  .392^  507^  508,  500 

2998  408  3338 392,507,503 

2999 ,.401  3432  !..... 363 

3000 411  3433  30  147 


COOl 413 


3439 362 


3002 414  3440 

3003  414 

3004 413 

3005 414  3442  ........  ' 362 

3006 412  3450  71 

3007 399  3471  . 691 


83,  140,  141,  367,  374, 
382,  385,  442,  804. 


PENAL  CODE. 


4 

721 

534 

517 

501 

378 

5372 

529 

5021/2  .... 

. .  ..329,  527 

538 

52S 

CITATIONS  OF   STATUTES. 


POLITICAL  CODE. 

4 721    3717  1026,  1028 

19  719,  996    3718  1026,  1027 

2432 796    3860 1028 

3136-3142 712    4235  922 

3493% 1043   4236 922 

3627  540   4237 271 

3650 1028   4480-4484  456 

3716  1026,  1029 


CONTRACT 

AND 

STATUTORY    LIENS 

IN 

CALIFORNIA 

AND 

THEIR   ENFORCEMEISJ^T. 


THE    LAW   OF    ENCUMBRANCES 

CREATED  FOR  SECURITY 

ONLY. 


(1) 


NOTE. 

In  the  quotation  of  many  code  sections,  a  system 
of  symbols  has  been  used  to  indicate  the  changes 
which  the  sections  have  undergone.  The  portions  of 
the  sections  which  have  been  altered  or  added  since 
its  enactment  are  inclosed  within  markers  pointing 
toward  each  other,  thus,  }-  |- .  .  .  .  -j  ^  ;  the  legislative 
year  in  which  the  alteration  was  made  being  inserted 
in  each  marker,  thus,  [99  \-  .,.,-{  99  -^  .  A  letter  is 
also  inserted  in  each  marker,  thus,  }■  93f  }►.... 
■{  f  93  -\  ,  to  show  the  nature  of  the  alteration  or  that  an 
addition  was  made:  ^'f  indicating  a  change  merely 
in  phraseology;  ^'m,"  a  change  in  meaning;  **n, ''  new 
matter   added. 

In  other  places  brackets  are  found  which  inclose 
the  number  of  a  legislative  year  with  the  letter  '^o'* 
or  ''v^'  also  inclosed,  thus,  [97ol,  or  [73-4v]:  ''o,'\ 
indicating  that  at  the  session  of  the  legislature  in- 
dicated there  was  an  omission  of  substantial  matter 
at  that  point;  and  ''v''  that  there  was  a  mere  verbal 
omission. 

(2) 


INTEODTJOTION. 


The  department  of  law  treated  in  this  hook  is 
characterized  by  the  presence  of  three  fundamental 
facts:  (1)  the  existence  of  a  legal  demand  in 
favor  of  one  person  against  another;  (2)  the 
hypothecation  of  property  as  security  therefor; 
and  (3)  the  power  of  the  obligee  to  cause  the 
property  to  be  appropriated  to  the  satisfaction  of 
his  demand. 

The  secured  demand  may  be  absolute  or  contin- 
gent^ liquidated  or  unliquidated,  and  may  sound 
in  contract  or  in  tort;  but  in  every  case  the  exist- 
ence of  a  demand  in  favor  of  one  person  against 
another  is  essential,  and  the  extinction  of  this  de- 
mand by  payment,  or  in  any  other  way  known  to 
law,  ipso  facto  terminates  the  legal  relation  herein 
considered. 

The  hypothecation  is  always  of  certain  specific 
property.  It  may  be  made  with  the  full  consent 
of  the  owner,  as  in  the  case  of  a  mortgage  or 
pledge ;  or  the  law  may  itself  hypothecate  the  prop- 
erty, either  because  the  obligee  has  performed  some 
service  about  the  property^  or  suffered  some  detri- 

1  Mechanic's   lien. 

(3) 


INTRODUCTION. 


ment  from  it^  that  gives  him  a  claim  against  it^  or 
because  the  obligee  has  parted  with  it  in  consider- 
ation of  the  demand  which  he  has  obtained  against 
the  obligor  and  ought  not  to  lose  his  property  if 
the  consideration  for  it  fails^^  or  because  the  ob- 
ligee has  been  compelled  by  law  to  render  personal 
services  to  the  obligor  for  which  his  compensation 
should  be  rendered  as  certain  as  possible.'*  Some- 
times the  property  hypothecated  belongs  not  to  the 
obligor^  but  to  a  third  person.  Thus,  a  third  per- 
son may  mortgage  his  property  for  accommoda- 
tion, or  become  a  pledgelender ;  and  the  law  of  its 
own  motion  hypothecates  land  as  security  for 
_debts  incurred  for  labor  or  materials  bestov/ed 
upon  it  by  a  person  under  contract  with  its  owner, 
_or  a  vessel  for  the  damages  which  may  be  caused 
by  it  through  the  negligence  of  its  commander. 

The  third  characteristic  of  this  legal  relation  is 
the  power  of  the  obligee  to  cause  the  hypothecated 
property  to  be  appTopriated  to  the  satisfaction  of 
the  secured  demand  upon  default  in  its  perform- 
ance. Under  the  common  law,  indeed,  there  were 
certain  liens  which  consisted  merely  in  the  right 
to  detain  the  property,  but  in  California  there  is 
in  every  case  an  established  method  for  appropri- 
ating the  hypothecated  property  to  the  satisfaction 

2  Lien  against  vessel  for  its  tortj  lien  against  tres- 
passing  animal. 

3  Vendor's  lien. 

4  Innkeeper's  lien. 


INIRODUCTION. 


of  the  demand.  The  most  general  mode  of  appro- 
priation, and  one  in  every  case  available,  is  a  fore- 
closure proceeding ;  thus  the  rules  governing  that 
proceeding  occupy  a  prominent  place  in  this  book. 
The  subject  of  attachments  has  not  been  con- 
sidered in  this  book.  For  an  attachment  on 
mesne  process,  although  constantly  spoken  of 
in  the  reports  as  a  lien,  does  not  come  up  to  the 
exact  meaning  of  the  term,  as  an  attachment  is 
but  a  process  of  court  by  which  certain  property 
is  sequestered  for  the  benefit  of  the  creditor, 
while  a  lien  is  a  right  in  or  against  specific  prop- 
erty. An  attachment  is  a  matter  of  procedure; 
an  encumbrance  a  property  right.  An  attach- 
ment creditor  is  not  an  encumbrancer  for  value. 


PART  ONE. 

MATTERS  COMMON  TO  ALL  ENCUM- 
BRANCES  FOR  SECURITY  ONLY. 


TITLE  1 

NATUEE  OF  ENCUMBRANCES  FOR  SE- 
CURITY ONLY. 

1.  Encumbrances,   how   created. 

2.  Creation  of  encumbrance  does  not  imply  personal 

obligation. 

3.  Encumbrance   deemed   accessory   to   obligation   se- 

cured. 

4.  Encumbrance  transfers  no  title. 

5.  Encumbrance    is   security  for   designated  purposes 

only. 

1.  Encumbrances,  How  Created. 

A  charge  or  enciunbrance  against  specific  prop- 
erty as  security  for  the  performance  of  an  obliga- 
tion is  created: 

(1)  by  act  of  the  parties;  or 

(2)  by  operation  of  law.^ 

2.  Creation   of    Encumbrance    does   not   Imply 
Personal  Obligation. 

The  creation  of  an  encumbrance  for  security 

1  See  Civ.  Code,  sec.  2881. 
(7) 


8  ENCUMBRANCES.  §    2 

only  does  not  of  itself  imply  that  any  person  is 
bonnd  to  perform  the  obligation  secured  thereby.^ 

2  Personal    Obligation    not    Implied.— Civil    Code, 
section    2890:    ^'The    creation    of    a   lien    does   not    of 
itself  imply  that  any  person  is  bound  to  perform  the. 
act  for  which  the  lien  is  a  security/' 

Civil  Code,  section  2928:  ^^A  mortgage  does  not 
bind  the  mortgagor  personall}^  to  perform  the  act 
for  the  performance  of  which  it  is  a  security,  unless 
there  is  an  express  covenant  therein  to  that  effect/' 

Moore  v.  Eeynolds,  1  Cal.  351;  London,  Paris  & 
American  Bank  v.  Smith,  101  Cal,  415.  419,  35  Pac, 
1027.  Compare  Shafer  v.  Bear  Eiver  etc.  Min.  Co., 
4  Cal.  294;  Brown  v.  Orr,  29  Cal.  120.  " 

*^  Liens  upon  property,  where  no  person  is  bound 
to  perform  the  obligation,  are  common  in  our  law, 
especially  in  cases  of  taxation;  and  in  cases  of  this, 
character  [that  is,  of  street  improvements  to  be  paid 
for  by  special  assessment  in  a  case  where  the  mu-; 
nicipal  corporation  letting  the  contract  for  street  im* 
provement  was  exempted  from  personal  liability],, 
no  personal  liability  can  constitutionally  be  imposed 
upon  the  property  owner":  Hellman  v.  Shoulters, 
114  Cal.  136,  139,  44  Pac.  915,  45  Pac.  1057. 

Illustrations.— In  the  absence  of  a  direct  agree- 
ment to  pay  the  money  specified  in  a  mortgage,  the 
mortgage  holder  is  confined  to  his  remedy  against 
the  mortgaged  property,  and  can  have  no  personal 
judgment  against  the  mortgagor:  Union  Water  Co. 
V.  Murphy 's  Flat  Pluming  Co.,   22  Cal.  620,  626. 

A  mortgage  providing  that  ^^this  conveyance  is 
intended  as  a  conveyance  to  secure  the  payment  of 
the  sum  of  five  hundred  dollars  of  a  certain  promis- 
sory note  made  by  K.,  October  18,  1894,  for  five  thou- 
sand two  hundred  and  twelve  dollars  and  eleven 
cents,  which  said  note  is  payable  to  C,  or  order, 
and  these  presents  shall  be  void  if  such  payment  be 
made  according  to  the  tenor  and  effect  thereof," 
does  not  create  any  personal  obligation  to  pay  the 
sum  of  five  hundred  dollars,  but  the  land  becomes 
the    guarantor    of    the    payment    of    the    note    to    the 


r§    :3  NATURE    THEREOF.  9 

3.  Encumbrance   Deemed  Accessory  to   Obliga- 
tion Secured. 

An  encumbrance  for  security  only  is  deemed 
accessory  to  the  obligation  for  the  performance  of 
which  it  is  a  security^  whether  any  person  is  bound 
for  such  performance  or  not.^ 

4.  Encumbrance  Transfers  No  Title. 

IS^otwithstanding  any  agreement  to  the  contrary, 
mo  encumbrance  for  security  only,  nor  contract  to 
I  create  such  encumbrance,  transfers  any  title  -to 
the  property  affected  thereby.* 

5.  Encumbrance  is  Security  for  Designated  Pur- 
poses Only. 

An  encumbrancer  cannot  require  as  a  condition 
precedent  to  the  discharge  of  his  encumbrance 
against  the  property  the  performance  of  any  obli- 
gation the  performance  of  which  is  not  secured  by 
that  specific  encumbrance.^ 

extent   of   the  five   hundred   doHars:    Carson   v.   Eeid, 
]37  Cal.  253,   70  Pae.  89. 

3  See  Civ.  Code,  see.  2909.  This  section  refers  to 
perfected  and  subsisting  liens,  not  to  the  mere  right 
of  obtaining  a  lien  (see  section  550  below).  The 
thresher  ^s  lien  being  a  perfected  and  subsisting  lien 
is  thus  an  incident  of  the  primary  obligation — the 
debt  due  the  laborer:  Duncan  v.  Hawn,  104  Cal.  10, 
12,   37   Pac.   626. 

4  See  Civ.  Code,  sec.  2888.  Also  Haber  v.  Brown, 
301  Cal.  445,  452,  35  Pac.  1035. 

5  Encumbrance  Security  for  Designated  Purposes 
Only.— Civil  Code,  section  2891,  provides:  ^^The  exist- 


10  ENCUMBRANCES.  §    5 

ence  of  a  lien  upon  property  does  not,  of  itself,  en- 
title the  person  in  whose  favor  it  exists  to  a  lien 
upon  the  same  property  for  the  performance  of  any 
other  obligation  than  that  which  the  lien  originally'' 
secured. ' ' 

^^The   general   rule  is,   that   the  mortgagee   cannot 
require  as  a  condition  of  redemption  the  payment  of 

any  other  debt  not  a  lien  upon  the  land It  is 

argued,  however,  that  as  the  plaintiff  is  here  seeking 
the  aid  of  a  court  of  equity,  he  should  be  compelled 
to  do  equity,  but  this  maxim  of  equity  jurisprudence 
only  applies  when  the  relief  sought  by  plaintiff  and 
the  right  demanded  by  defendant  belong  to  or  grow 
out  of  the  same  transaction.  It  has  no  application 
where  the  demand  of  the  defendant  is  based  upon 
a  contract  separate  and  distinct  from  that  which 
forms  the  subject  of  the  plaintiff's  action'':  Mahoney 
V.  Bostwick,  96  Cal.  53,  01,  31  Am.  St.  Kep.  175,  30 
Pac.    1020. 


TITLE  2. 

PEIOKITIES. 

6.  First   in   point   of   time   generally  first   in   right. 

7.  Encumbrance  generally  superior  to  subsequently 

acquired   interest   in   same  property. 

8.  Eights  of  inferior  encumbrancer. 

9.  Superiority  of  purchase  money  mortgage. 

10.  Eelative  priority  of  unrecorded  immovable  prop- 

erty mortgages. 

11.  Operation    of    encumbrances    as    respects    home- 

stead. 

12.  Loggers'  liens  and  liens  against  vessels  outrank 

others. 

13.  Priority   of   encumbrances   dependent    on   posses- 

sion. 

14.  Maritime  liens  preferred  in  inverse  order  of  time. 

15.  Tax  liens  paramount  to  all  others. 

6.     First  in    Point  of  Time    Generally  First  in 
Right.i 

Other  things  being  equal,  different  nonmaritime 
encumbrances  for  secnrity  only  and  attachment 

1  First  in  Time,  First  in  Eight.— Civil  Code,  sec- 
tion 2897:  '*^ Other  things  being  equal,  different  liens 
upon  the  same  property  have  priority  according 
to  the  time  of  their  creation,  except  in  cases  of 
bottomry  and  respondentia.^'  In  adjusting  the  con- 
flicting rights  of  encumbrancers  by  mortgage  and 
mechanics'    lien,    the    familiar    rule,    in    equity,    that 

(11) 


12  PRIORITIES.  §    5 

liens  against  the  same  property  have  priority  as 
of  the  time  at  which  they  accrue^  against  the 
property. 

he  has  the  better  right  who  is  first  in  point  of 
time  governs:  Preston  v.  Sonora  Lodge,  39  Oal.  116, 
118. 

Illustrations.— A.  mechanic's  lien  is  preferred  to  an 
attachment  filed  after  the  mechanic's  lien  attached: 
Tuttle  V.  Montford,  7  Cal.  358. 

Where  certain  mechanics'  lienors  commenced  work 
before  the  execution  of  a  mortgage  upon  the  same 
property,  and  others  after  its  execution,  the  last  cI^^h 
have  a  lien  upon  the  property  as  encumbered  by  the 
mortgage,  and  subordinate  to  it,  while  the  first  class 
have  a  lien  upon  the  property  as  unencumbered  an'* 
superior  to  the  mortgage.  The  first  class  would  be 
paid  in  full,  then  the  mortgage,  then  the  last  class: 
Crowell  v.  Gilmore,  18  Cal.  370,  See,  also,  Soule  v^ 
Dawes,  7  Cal.  575;  Crowell  v.  Gilmore,  13  Cal.  54; 
Germania  Bldg.  etc.  Assn.  v.  Wagner,  61  Cal.  349,  355; 
Avery  v.  Clark,  87  Cal.  619,  627,  22  Am.  St.  Eep. 
272,  25  Pac.  919;  Pacific  etc.  Ins.  Co.  v.  Fisher,  106 
Cal.   224,   226,   39  Pac.   758. 

A  mortgage  of  a  leasehold,  executed  as  an  im- 
movable property  mortgage,  is  superior  to  a  subsequent 
attachment  levied  upon  a  fixture  upon  the  mortgaged 
property:  Bovce  Ice  Machine  Co.  v.  Gould,  73  Cal. 
153,   14  Pac.  "^609. 

A  mortgage  is  postponed  to  an  attachment  levied 
before  its  execution:  Eiley  v.  Xance,  97  Cal.  203,  31 
Pac.  1126,  32  Pac.  315;  Eeilly  v.  Wright,  117  Cal. 
77,   80,  48  Pac.  970. 

The  lien  of  a  person  improving  a  street  under  sec- 
tion 556  below,  the  work  being  commenced  after  the 
recordation  of  a  mortgage  upon  the  land  affected; 
therebv,  is  postponed  to  the  mortgage:  Warren  v.  Hop-; 
kins,    iio    Cal.    506,    511,    42    Pac.    986. 

A  mortgage  in  movable  property  is  prior  to  a  lien 
for  service  afterward  rendered  upon  the  mortgaged 
property  (though  necessary  for  its  preservation) :  Wil- 


§    7  PRIORITIES.  13 

7.     Encumbrance  Generally  Superior    to    Subse- 
quently Acquired  Interest  in  Same  Property. 

Other  things  being  equals  an  encumbrance  is 
superior  to  every  interest  acquired  in  the  en- 
cumbered property  from  the  owner  of  the  en- 
cumbered interest  after  the  attachment  of  the 
encumbrance.^ 

son  V.  Donaldson,  121  Cal.  8,  66  Am.  St.  Eep.  17,  53 
Pac.   404. 

A  meclianic^s  lien  is  postponed  to  a  previous 
vendor  ^s  lien  upon  the  same  property  of  which  the 
mechanic's  lienor  had  notice:  Kuschel  v.  Hunter  (Cal.), 
50  Pac.  397,  398A. 

Where  a  receiver  was  appointed  at  the  instance  of 
mortgagees  of  property,  which  was  subject  to  prior 
encumbrances,  the  receiver's  lien  is  subject  to  the 
charge  oi  the  prior  encumbrancers:  Ephraim  v.  Pacific 
Bank,  129  Cal.  589,  592-594,  62  Pac.  177. 

I'he  mere  fact  that  a  prior  recorded  mortgage  was 
made  without  consideration  does  not,  without  proof 
that  it  was  made  to  delay  or  defraud  creditors,  render 
it  inferior  to  a  mechanic's  lien  which  attached  subse- 
quently to  the  recordation  thereof:  Bewick  v.  Muir,  8?. 
Cal.  368,  371,  23  Pac.  389. 

2  Time  of  Attachment. — In  general,  an  immovable 
})roperty  mortgage  attaches  as  of  the  time  of  execu- 
tion and  delivery,  though  afterward  recorded:  Eoot  v. 
Bryant,  57  Cal.  48;  Bank  of  Ukiah  v.  Petaluma  Sav. 
Bank,  100  Cal.  590,  35  Pac.  170.  Compare  Walker  v. 
Euffandeau,  63  Cal.  312. 

As  to  Time  of  Attachment  of  MovaUe  Property  Mort- 
gages, see  sections  290-294  below. 

As  to  Mechanics^  Liens,  see  sections  578-580,  below. 

3  Encumbrance  Superior  to  Subsequently  Acquired 
Interest  in  Property.— The  interest  of  the  lessee  in 
property  mortgaged  at  the  time  of  making  the  lease, 
the  lessee  having  actual  or  constructive  notice  of 
the    mortgage    at    such    time,    is    dependent    for    its 


14  PRIOlflTIES.  §    S 

8.     Rights  of  Inferior  Encumbrancer. 

No  alteration  in  a  superior  encumbrarsce  can 
impair  in  any  respect  the  security  of  a  subordi- 
nate encumbrancer.^     A  superior  encumbrance  is 

duration,  except  as  limited  by  the  terms  of  the  lease, 
upon  the  enforcement  of  the  mortgage.  So  long  as 
the  mortgage  remains  unenforced,  the  lease  is  valid; 
but  with  its  enforcement  the  leasehold  interest  is 
determined:    McDermott    v.    Birke,    16    Cal.    580,    589. 

The  purchaser  of  immovable  property  affected  by  a 
valid,  recorded  mortgage  takes  his  interest  subject,  to 
the  mortgage,  and  any  interest  in  such  property 
derived  from  the  purchaser  is  likewise  subject  not- 
withstanding any  agreement  between  such  person  and 
the  purchaser  to  the  contrary:  Foster  v.  Bowles,  138 
Cal.  346,  71  Pac.  649.  Compare,  also,  Harris  v. 
Foster,  97  Cal.  292,  295,  33  Am.  St.  Eep.  187,  32  Pac. 
246. 

On  the  Other  Hand,  a  termor  of  land  under  a  lease 
antedating  the  mortgage,  the  lease  being  duly  recorded, 
has  an  interest  paramount  to  the  mortgage  which  can- 
not be  cut  off  by  the  foreclosure  action:  Enos  v.  Cook, 
65  Cal.  175,  3  Pac.  632. 

4  Illustrations. — While  a  mechanic's  lien  is  pre- 
ferred to  a  mortgage  made  after  the  commencement 
of  work  by  the  lien  claimant,  yet  the  force  of  the 
mortgage  cannot  be  impaired  by  any  alteration  of 
the  building  contract:  Soule  v.  Dawes,  7  Cal.  575;  14 
Cal.  247. 

The  enforcement  of  a  mechanic's  lieu  cannot  be 
postponed  in  consideration  of  the  payment  of  interest 
thereon  to  the  detriment  of  a  subsequent  mortgagee: 
Gamble  v.  Voll,  15  Cal.  507,  510. 

Where,  as  in  1869,  there  was  a  difference  in  the 
value  of  legal  tender  notes  and  gold,  the  rights  of  a 
subsequent  encumbrancer  cannot  be  impaired  hj  the 
alteration  of  the  currency  in  which  a  prior  mortgage 
was  payable  from  money  generally  to  gold:  Belloc  v. 
Davis,  38  Cal.  242,  254-259.  (Poett  v.  Stearns,  31  Cal. 
78,  wherein  the  contrary  was  held,  was  overruled  in 
Belloc  V.   Davis.) 


§    8  PRIORITIES.  15 

not^  however^  avoided  as  against  an  inferior  en- 
cumbrance against  the  same  property  by  a  mere 
change  in  the  form  of  the  superior  encumbrance, 
there  being  no  material  increase  in  the  burden 
upon  the  property.^ 

9.     Superiority  of  Purchase  Money  Mortgage. 

A  mortgage  given  against  any  immovable  prop- 
erty at  the  time  of  its  conveyance  to  a  purchaser 
as  security  for  the  payment  of  the  purchase  money 
thereof  has  priority  over  all  other  encumbrances 
accruing  against  such  property  as  security  for 
the  obligations  of  the  purchaser  and  his  succes- 
sors in  interest,  subject  to  the  operation  of  the 
recording  laws.^  Where  the  purchase  money  was 
advanced  to  the  purchaser  by  a  third  person,  a 

A  first  mortgage  continued  by  the  mortgagor  after 
the  execution  of  a  second  mortgage  upon  the  same 
property  is  postponed  thereto:  California  Bank  v. 
JBrooks,  126  Cal.  198,  59  Pac.  302.  See  section  394 
below. 

5  Mere  Change  in  Form  of  Superior  Encumbrance 
Does  not  Avoid  Same.— Thus  a  change  of  an  encum- 
brance from  vendor  ^s  security  to  purchase  money 
mortgage  does  not  cause  the  same  to  be  postponed: 
Stanton  v.   Quinan,  91   Cal.   1,  27  Pac.  517. 

«  Purchase  Money  Mortgage  has  Priority.— Civil 
Code,  section  2898:  ^^A  mortgage  given  for  the  price 
of  real  property,  at  the  time  of  its  conveyance,  has 
priority  over  all  other  liens  created  against  the  pur- 
chaser, subject  to  the  operation  of  the  recording 
laws. '  ^ 

Dillon  V.  Bryne,  5  Cal.  455,  456. 

Illustrations.— A  mortgage  under  which  money  is 
advanced  by  a  third  person  to  the  purchaser  of  land 


1*6  PRIORITIES.  I  .5 

mortgage  given  to  him  by  the  purchaser  as  se- 
curity for  such  advance  will  be  recognized  as  a 
purchase  money  mortgage  only  when  the  money 
was  advanced  by  the  mortgagee  for  the  express 
purpose  of  paying  the  purchase  price  of  the  prop- 
erty therewith.'' 

at  the  time  of  the  purchase  to  pay  the  purchase  price 
is  a  purchase  money  mortgage,  and  has  priority  over 
any  declaration  of  homestead  thereon  made  by  the 
purchaser:  Lassen  v.  Vance,  8  Cal.  271,  68  Am.  Dec. 
322. 

Where  a  person  in  possession  of  land  under  a  verbal 
agreement  of  sale  employed  a  builder  to  erect  a 
house  thereon,  and,  after  work  had  begun,  a  deed  of 
the  land  was  given  to  such  person,  and  at  the  same 
time  a  purchase  money  mortgage  was  executed  to  the 
vendor,  the  mortgage  is  an  encumbrance  superior  to 
a  mechanic's  lien  filed  bv  the  builder:  Guy  v.  Carriere, 
5  Cal.  511. 

Where  a  person  about  to  become  the  purchaser  of 
land  mortgaged  it  to  a  mortgagee  with  notice  that  the 
j.urchase  had  not  been  consummated,  and  afterward, 
upon  receiving  a  conveyance  of  it  from  the  vendor, 
executed  to  the  vendor  a  purchase  money  mortgage, 
such  purchase  money  mortgage  has  priority:  Mont- 
gomery V.  Keppel,  75  Cal.  128,  7  Am.  St.  Kep.  125, 
19   Pac.    178. 

The  same  conclusion  was  reached  in  a  case  where  it 
does  not  appear  that  the  mortgagee  had  notice  that 
the  sale  had  not  been  consummated:  Tolman  v.  Smith, 
85   Cal.   280,   285,   286,   24  Pac.    743. 

Likewise,  the  interest  of  a  transferee  of  land  which 
the  transferor  had  not  paid  for  at  the  time  of  the 
transfer,  the  transferee  having  actual  notice  of  that 
fact,  is  postponed  to  a  purchase  money  mortgage 
afterward  given  by  the  transferor  to  the  vendor: 
Stanton  v.  Quinan,  91  Cal.  1,  27  Pac.  -517. 

7  Van  Loben  Sels  v.  Bunnell,  120  Cal.  680,  684, 
53   Pac.    266. 


§    10  PRIORITIES.  17 

10.     Relative  Priority  of  Unrecorded  Immovable 
Property  Mort^ages.^ 

An  nnrecorcled  immovable  property  mortgage 

is  valid^  as  against  everyone  except 

(1)  a  bona  fide  purchaser  or  encumbrancer  for 
value  of  the  mortgaged  property,  or  some  part 
thereof,  whose  conveyance  is  first  recorded  ;^^ 

8  On  validity  of  immovable  property  mortgages, 
see   sections  280  and  281,  below. 

On  validity  and  priority  of  unrecorded  movable 
property  mortgages,  see  sections  288-294  below. 

0  Civil  Code,  section  1217,  provides:  **An  un- 
recorded instrument  is  valid  as  between  the  parties 
thereto,  and  those  who  have  notice  thereof. '' 

Illustrations.— A  second  mortgage  taken  with  notice 
of  the  existence  of  a  prior  unrecorded  mortgage  upon 
the  identical  land  is  postponed  thereto:  Woodworth 
V.  Guzman,  1  Cal.  203;  Wallace  v.  McKenzie,  104  Cal. 
130,   37   Pac.   859. 

The  rights  of  a  purchaser  of  land  whose  purchasing 
agent  had  actual  notice  of  an  unrecorded  mortgage 
upon  the  purchased  property  are  postponed  to  such 
mortgage:  De  Leon  v.  Higuera,  15  Cal.  483,  496. 

10  Void  as  Against  Bona  Fide  Purchaser  for  Value 
Whose  Conveyance  First  Recorded:  Van  Eeynegan  v. 
Revalk,  8  Cal.  75;  Odd  Fellows^  Sav.  Bank  v.  Prouty, 
46  Cal.  603,  607;  Warnock  v.  Harlow,  96  Cal.  298,  306, 
31  Am.  St.  Eep.  209,  31  Pac.  166;  Bank  of  Ukiah  v. 
Petaluma  Sav.  Bank,  100  Cal.  590,  35  Pac.  170; 
Prouty  V.  Devin,  118  Cal.  2o8,  260,  50  Pac.  380; 
County  Bank  of  San  Luis  Obispo  v.  Fox,  119  Cal.  61, 
-63,  51  Pac.  11;  Commercial  Bank  v.  Pritchard,  126  Cal. 
600,  604,  59  Pac.  130;  Farmers'  Exch.  Bank  v.  Purdy, 
130  Cal.  455,  457,  458,  62  Pac.  738. 

An  averment  of  the  facts  necessary  to  make  a  per- 
son a  bona  fide  holder  for  value  is  necessary:  Evers- 
don  V.  Mayhew,  65  Cal.  167,  3  Pac.  641;  County  Bank 
,of  San  Luis  Obisp-o  v.  Fox,  119  Cal.  61,  64,  51  Pac.  11. 
Liens— 2 


18  PRIORITIES.  §    10 

(2)  a  holder  of  an  immovable  property  improve- 
ment lien  who  commenced  to  furnish  work  or 
materials  before  its  recordation  without  actual 
notice  thereof  ;^^  and 

(3)  a  holder  of  a  judgment  affecting  the  title, 
rendered  in  an  action  of  which  the  notice  of 
pendency  was  filed  before  the  recordation  of 
the  mortgage. ^^ 

An  assignee  of  a  second  mortgage,  who  took  after 
the  recordation  of  the  prior  mortgage,  has  con- 
structive notice  thereof,  and  is  not  a  bona  fide  pur- 
chaser: Mahoney  v.  Middleton,  41  Cal.  41;  Clark  v. 
Sawyer,  48  Cal.  133.  See  code  sections  quoted  under 
Lote  12  below. 

31  Void  as  Against  Mechanic's  Lienor  Before 
Recordation  Without  Notice.— By  section  1186  of 
the  Code  of  Civil  Procedure  as  enacted  in  1872,  a 
mechanic's  lien  was  made  superior  to  a  mortgage 
executed  before  the  time  of  the  attachment  of  the 
lien,  but  of  which  the  mechanic 's  lienor  had  no 
actual    nor    constructive   notice. 

The  court  must  find  as  a  fact  that  the  lienor  had 
no  notice  of  the  then  unrecorded  mortgage  in  order 
to  give  a  mechanic's  lien  priority  over  an  unrecorded 
mortgage. 

Historical.— For  earlier  enactments,  see  Stats.  1850, 
p.  211,  c.  87,  sec.  9;  Stats.  1855,  p.  156,  c.  130,  sec.  0; 
Stats.  1856,  p.  203  c.  134,  sees.  3,  4;  Stats.  1862,  p. 
384,  c.  297,  sec.  3;  and  Stats.  1867-68,  p.  589,  c.  448, 
sec.  3.  These  enactments  are  considered  in  Ferguson 
V.  Miller,  6  Cal.  402,  and  Munie  v.  Eose,  4  Cal.  173. 

13  Void  Against  Holders  of  Certain  Judgments.— 
Civil  Code,  section  1214,  provides:  ^^ Every  convey- 
ance of  real  property,  other  than  a  lease,  for  a  term 
not  exceeding  one  year,  is  void  as  against  any  sub- 
sequent purchaser  or  mortgagee  of  the  same  property, 
or  any  part  thereof,  in  good  faith  and  for  a  valuable 
consideration,  whose  conveyance  is  first  duly  recorded, 


§    10  PRIORITIES.  19 

An  attaclimeiit  creditor  or  judgment  creditor  i? 
not  a  bona  fide  purchaser  or  encumbrancer  for 
value  within  the  meaning  of  this  section  ;^*^ 
but  a  purchaser  at  execution  sale,  whether  the 
judgment  creditor  or  a  third  party,  is  a  bona 
fide  purchaser  for  value,  and  takes  his  title  sub- 
ject merely  to  those  encumbrances,  easements,  and 
equities  to  which  it  was  subject  in  the  possession 
of  the  defendant  in  execution,  and  of  which  such 
purchaser  had  actual  or  constructive  notice  at  the 
time  of  the  filing  of  the  certificate  of  sale,  being 
however  protected  against  all  latent  claims 
therein.*^ 

and  as  against  any  judgment  affecting  the  title, 
unless  such  conveyance  shall  have  been  duly  recorded 
prior  to  the  record  of  notice  of  action/^  As  amended, 
m  effect  March  12,  1895. 

Section  1215  provides:  ''The  term  'conveyance,' 
an  used  in  sections  1213  and  1214,  embraces  every  in- 
strument in  writing  by  which  any  estate  or  interest 
in  real  property  is  created,  alienated,  mortgaged,  or 
encumbered,  or  by  which  the  title  to  any  real  property 
may   be   affected,    except   wills.'' 

13  Attachment  Creditor  not  Bona  Fide  Purchaser: 
Bank  of  Ukiah  v.  Petaluma  Sav.  Bank,  100  Cal.  590, 
Sri  Pac.  170. 

Thus,  an  attachment  is  postponed  to  a  deed  of  the 
attached  property  unrecorded  at  the  time  the  writ 
of  attachmeni;  was  perfected,  but  recorded  before  the 
sale  under  the  attachment:  Hoag  v.  Howard,  55 
Cal.  564. 

14  Purchaser  at  Sale  Bona  Fide  Purchaser:  Hunter 
V.  Watson,  12  Cal.  363,  377,  73  Am.  Dec.  543;  Foor- 
man  v.  Wallace,  75  Cal.  552,  17  Pac.  680;  Eiley  v. 
Martinelli,  97  Cal.  575,  33  Am.  St.  Eep.  209,  32  Pac. 
576;   Duff  v.   Eandall,   116   Cal.   226,   231,  58   Am.   St. 


20  PRIORITIES.  §    11 

11.     Operation    of    Encumbrances    as    Respects 
Homestead. 

A  homestead  is  subject  to  the  operation  of  liens 
for  improvements  to  immovable  property  and  of 
vendors'  liens^  and  may  be  sold  in  satisfaction  of 
the  obligations  secured  thereby  ;^^  but  cannot  bo 

Rep.  158,  48  Pac.  66;  Cady  v.  Purser,  131  Cal.  552, 
559,  82  Am.  St.  Eep.  391,  63  Pac.  844. 

15  Homestead  Subject  to  Mechanics*  and  Vendors* 
Liens. — Civil  Code,  section  1241,  in  part,  provides: 
'^The    homestead    is    subject    to    execution    or   forced 

sale    in    satisfaction    of    judgments    obtained 

2.  On  debts  secured  by  mechanics,  contractors,  sub- 
contractors, artisans,  architects,  builders,  laborers  of 
every  class,  materialman's  or  vendors'  liens  upon  the 
premises." 

Section  1241,  having  been  adopted  pursuant  to 
the  mandate  of  the  constitution  (article  17,  section 
1),  that  *Hhei  legislature  shall  protect  by  law  from 
forced  sale  a  certain  portion  of  the  homestead  and 
other  property  of  all  heads  of  families,''  is  the  con- 
trolling law:  Lee  v.  Murphy,  119  Cal.  364,  372-374, 
•51  Pac.  549,  51  Pac.  955. 

^^The  judgment  on  a  debt  secured  by  a  vendor's 
lien,  mentioned  in  section  1241  of  the  Civil  Code,  is  a 
judgment  in  a  suit  brought  to.  have  a  vendor's  lien 
and  its  amount  declared  and  enforced  upon  the  real 
property  sold  and  conveyed  by  the  vendor  claiming 
the  lien.  Such  a  judgment  relates  bacjk  to  the  date 
when  the  conveyance  was  made,  or  when  the  court 
of  equity  decrees  the  equity  of  the  vendor  attached, 
and  if  the  homestead  declaration  was  filed  after  that 
date,  declarant  cannot  avail  himself  of  his  home- 
stead protection  against  the  lien  of  his  vendor": 
Fitzell  V.  Leaky,  72  Cal.  477,  485,  14  Pac.  198. 

Thus,  where  the  lien  of  a  vendor  for  the  purchase 
money  attached  before  the  property  was  impressed 
with  the  homestead  character,  neither  husband  nor 
wife  can  hold  the  property  except  in  subordination  to 
the   lien:    Williams   v.   Young,   17   Cal.   403. 


I    11  PRlOlllTJES.  21 

affected"  by  an  equitable  lien  in  the  nature;  of  a 
mortgage  unless  the  instrument  whereby  the  lien 
is  evidenced  is  recorded  before  the  declaration  of 
homestead  is  filed>^  The  operation  of  mortgages 
upon  prior  and  subsequent  homesteads  is  herein- 
after considered.^'' 

12.     Loggers'  Liens  and    Liens  Against  Vessels 
Outrank  Others. 

Loggers'  liens  and  liens  against  vessels  take 
preference  over  all  other  demands  against  the 
same  property,  except  tax  and  assessment  liens. ^^ 

Historical.— 'Prior  to  March  9,  1887,  homesteads 
were  by  section  1241  above,  subject  to  execution 
or  forced  sale  only  in  satisfaction  of  judgments 
obtained  '^on  debts  secured  by  mechanics',  laborers', 
or  vendors'  liens,  upon  the  premises."  As  the  sec- 
tion omitted  from  the  liens  for  which  the  property 
could  be  sold  that  of  materialmen,  the  court,  in 
Eichards  v.  Shear,  70  Cal.  187,  11  Pac.  607,  held  that 
one  who  furnished  materials  for  the  construction  of 
a  building  on  immovable  property  after  it  had  been 
impressed  with  a  homestead,  could  not  obtain  a  lien 
thereagainst  for  the  materials  furnished;  and  in 
Walsh  V.  McMenomy,  74  Cal.  356,  360-361,  16  Pac.  17, 
the  court,  per  Searles,  C.  J.,  Paterson,  McKinstry, 
Sharpstein,  McFarland,  and  Temple,  JJ.,  Thornton,  J.^ 
dissenting,  further  held  that  the  lien  could  not  be 
obtained,  although  the  homestead  was  not  declared 
until  after  the  materials  were  furnished. 

16  Campan  v.  Molle,  124  Cal.  415,  417,  57  Pac. 
208. 

17  See  sections  315-320,  below. 

IS  Stats.  1877-78,  p.  747,  c.  484,  sec.  1:  **A  person 
who  labors  at  cutting,  hauling, "  rafting,  or  driving 
logs  or  lumber,  or  who  performs  any  labor  in  or  about 


22  PRIORITIES.  §    13 

13.  Priority    of    Encumbrances    Dependent    on 

Possession. 

Where  different  encumbrances  against  the  same 
property  are  of  equal  rank^  the  demand  of  an  en- 
cumbrancer who  holds  the  property  "under  an  en- 
cumbrance dependent  on  possession  must  be  satis- 
fied before  he  can  be  compelled  to  surrender  the 
possession  of  the  property.^^ 

14.  Maritime  Liens  Preferred  in  Inverse  Order 
of  Time.20 

Other  things  being  equal,  the  last  of  different 
maritime  liens  against  the  same  vessel,  whether 

a  logging  camp  necessary  for  the  getting  out  or 
transportation  of  logs  or  lumber,  shall  have  a  lien 
thereon  ....  which  shall  take  preference  over  all 
other  claims. '' 

Code  of  Civil  Procedure,  section  813:  ^^  Demands 
for  these  several  causes  constitute  liens  upon  all 
steamers,  vessels  and  boats,  and  ....  have  prefer- 
ence   over    all    other    demands.  ^^ 

19  As  the  lien  of  an  encumbrancer  whose  en- 
cumbrance is  dependent  on  possession  entitles  him  to 
the  possession  of  the  property,  he  is  also  a  bailee 
thereof,  and  cannot  be  deprived  of  the  possession 
until  his  claims  have  been  satisfied.  To  deprive  him 
of  its  possession  would  cause  the  loss  both  of  his 
encumbrance  against  the  property  and  of  his  special 
interest    therein. 

20  Maritime  Liens  Preferred  in  Inverse  Order  of 
Time. — In  every  case  the  last  lien  given  will  super- 
sede the  preceding.  The  vessel  must  get  on;  this  is 
the  consideration  which  controls  every  other;  and  not 
only  the  vessel,  but  even  the  cargo,  is  sub  modi 
subjected  to  this  necessity:  The  St.  Jago  de  Cuba,  2li 
U.  S.  (9  Wheat.)  409,  418,  6  Law  ed.  405. 


§    14  PRIORITIES.  23 

arising  by  the  general  maritime  law  as  recognized 
in  the  United  States  or  by  state  law,^^  takes  pref- 
erence over  every  other  maritime  and  over  every 
nonmaritime  lien. 

15.     Tax  Liens  Paramount  to  All  Others. 

Tax  and  assessment  liens  created  by  law  as 
security  for  the  payment  of  taxes  and  assessments 
levied  under  the  sovereign  authority  of  govern- 
ment constitute  charges  against  the  property 
against  which  they  accrue  paramount  to  every 
other  encumbrance  thereagainst.^^ 

Maritime  liens  take  preference  over  all  prior  claims 
against  a  vessel,  unless  for  seamen  ^s  wages  or  sal- 
vage: The  J.  E.  Eumbell,  148  U.  S.  1,  9,  13  Sup.  Ct. 
Eep.  498,  37  Law  ed.  345. 

21  Whether  Arising  "by  General  or  by  State  Law.— 
A  maritime  lien  created  by  state  statute  has  like  pre- 
cedence over  a  prior  mortgage  that  is  accorded  a 
maritime  lien  recognized  by  the  general  maritime  law 
as  adopted  in  the  United  States:  The  J.  E.  Eumbeil, 
148  U.  S.  1,  17-19,  13  Sup.  Ct.  Eep.  498,  37  Law  ed.  345. 

23  Tax  and  Assessment  Liens  Paramount. 

Illustrations. — A  tax  lien  whether  antedating  a 
mortgage  or  not  is  superior  to  it:  Williams  v.  Coopier, 
124  Cal.   666,  57  Pac.  577. 

Likewise  an  assessment  lien  levied  by  an  irrigation 
district:  Weinreich  v.  Hensley,  121  Cal.  647-656,  54 
Pac.    254. 

Likewise  a  street  assessment  lien:  Wilson  v.  Cali- 
fornia Bank,  121  Cal.  630,  54  Pac.  119. 

A  tax  upon  the  personalty  of  a  person  constitutes 
a  first  lien  against  all  his  immovable  property,  para- 
mount to  a  mortgage  thereagainst  executed  prior  to 
the  levy  of  the  tax:  California  Loan  etc.  Co.  v.  Weis, 
118  Cal.  489,  491-495,  50  Pac.  697. 


TITLE  3. 

EIGHTS  AND  DUTIES  OF  PAETIES. 

J.6.     Kelative    rights    of    encumbrancer    in    possession 
and   owner   of  property. 

17.  Interested    person    may    discharge    encumbrance 

when   due. 

18.  Inferior  encumbrancer  may  in  case  of  necessity 

satisfy   superior   encumbrance   before   maturity. 

19.  Subrogation    of    inferior    encumbrancer    to    claim 

which    he    is    compelled    to    pay. 

20.  Subrogation    to    security    canceled    by    mistake 

of  fact. 

21.  Eights    of   superior   encumbrancer   as   limited   by 

rights   of   inferior   encumbrancer. 

22.  Application     of     proceeds     when     securing     two 

obligations. 

16.     Relative  Rights  of  Encumbrancer  in  Posses- 
sion and  Owner  of  Property. 

The  holder  of  propert}^  by  virtue  of  an  encum- 
brance thereagainst  is  not  entitled  to  compensa- 
tion from  the  owner  thereof  for  any  ordinary  ex- 
penses which  he  incurs  respecting  it.  But  the 
owner  must  compensate  the  holder  for  expenses 
necessarily  incurred  by  him  to  preserve  the  prop- 
erty from  unexpected  and  unusual  injury,  unless 
he  surrenders  the  property  to  the  holder  in  exon- 
(24) 


§    16  RIGHTS    AND    DUTIES.  25 

Dration  of  this  liability^  and  must  indemnify 
him  for  damage  caused  by  defects  or  vices  there- 
in AYhich  he  knew  at  the  time  of  parting  with  the 
possession  of  the  property  and  concealed  from 
the  person  to  whom    he  transferred    the  posses- 


1  Relative  Rights  of  Encumbrancer  and  Owner.— 

Civil  Code,  section  2892,  provides:  *' One  who  holds 
property  by  virtue  of  a  lien  thereon  is  not  entitled 
to  compensation  from  the  owner  iPhereof  for  any 
trouble  or  expense  which  he  incurs  respecting  it,  ex- 
cept to  the  same  extent  as  a  borrower,  under  sections 
1892  and  1893/' 

Section  1892:  ^^The  borrower  of  a  thing  for  us6 
liiust  bear  all  its  expenses  during  the  loan,  except 
such  as  are  necessarily  incurred  by  him  to  preserve 
it  from  unexpected  and  unusual  injury.  For  such 
expenses  he  is  entitled  to  compensation  from  the 
lender,  who  may,  however,  exonerate  himself  by  sur- 
rendering the  thing  to  the  borrower. '' 

Section  1893:  **The  lender  of  a  thing  for  use  must 
indemnify  the  borrower  for  damage  caused  by  defects 
or  vices  in  it,  which  he  knew  at  the  time  of  lending 
and   concealed  from  the  borrower. '^ 

In  Bank  of  British  Columbia  v.  Freese,  116  Cal. 
9,  14,  47  Pac.  783,  where  an  obligation  was  secured 
by  the  pledge  of  a  cargo  of  rice,  and  the  pledged 
property  had  been  exhausted  without  satisfying  the 
secured  obligation;  the  question  arose  whether  the 
proceeds  of  the  sale  of  the  pledged  propierty  had 
been  properly  applied,  and  the  court  held  that 
reasonable  charges  for  storage,  insurance  upon  the 
rice  while  stored,  cartage,  brokerage,  freightage,  and 
customs  duties,  properly  incurred  in  caring  for,  pre- 
serving and  selling  the  rice,  are  properly  deducted 
from  the  gross  receipts,  no  question  being  raised  as 
to  the  necessity  or  propriety  of  these  acts. 


26  RIGHTS    AND    DUTIES.  §    17 

17.  Interested    Person  may    Discharge  Encum- 
brance When  Due. 

At  any  time  after  an  obli^tion  secured  by  an 
encumbrance  against  any  property  becomes  due, 
and  before  a  sale  which  may  have  been  made  of 
the  encumbered  property  in  satisfaction  of  the 
secured  obligation  has  become  final,  any  person 
having  an  interest  in  the  encumbered  property 
whose  interest  is  affected  by  the  encumbrance,  or 
holding  a  subordinate  encumbrance  thereagainst, 
has  a  right  to  satisfy  such  secured  obligation, 
whereupon  the  property  is  discharged  from  the 
encumbrance  whereby  the  obligation  was  secured.^ 

18.  Inferior    Encumbrancer    may    in    Case    of 

Necessity    Satisfy    Superior    Encumbrance 
Before  Maturity.^ 

Whenever  necessary  for  the  protection  of  his 

2  Carpentier  v.  Brenham,  40  Cal.  221,  237. 

Civil  Code,  section  2903:  ^^  Every  person,  having 
an  interest  in  property  subject  to  a  lien,  has  a  right 
to  redeem  it  from  the  lien,  at  any  time  after  the 
claim  is  due,  and  before  his  right  of  redemption  is 
foreclosed.'' 

Section  2904:  ''One  who  has  a  lien  inferior  to 
another,  upon  the  same  property,  -has  a  right: 
1.  To  redeem  the  property  in  the  same  manner  as  its 
owner   might   from   the    superior   lien''.  .  .  . 

But  ''a  stranger  to  the  title  of  a  mortgagor— one 
who  claims  no  subsisting  interest  under  him,  and 
who  does  not  act  by  his  authority— has  no  right  to 
make  a  tender  of  the  debt  or  otherwise  intermeddle 
in  the  relations  created  by  the  mortgage":  Hazen  v. 
Kicholls,  126  Cal.  327,  329,  58  Pac.  816.    • 

3  Civil  '  Code,    section    2904,    last    clause,   provides: 


§    18  EIGHTS     AND    DUTIES.  27 

interests^  an  inferior  encumbrancer  may  satisfy 
any  superior  encumbrance  or  trust  deed  in  the 
nature  of  a  mortgage^  against  the  property  af- 
fected by  his  encumbrance  and  be  subrogated  to 
the  benefits  thereof. 

19.     Subrog^ation  of  Inferior    Encumbrancer    to 
Claim  Which  He  is  Compelled  to  Pay. 

An  encumbrancer  or  cestui  que  trust  under  a 
trust  deed  in  the  nature  of  a  mortgage,  who  is 
compelled  to  satisfy  a  paramount  claim  against 
the  encumbered  property  for  his  own  protection, 
may  enforce  payment  of  the  amount  so  paid  by 
him  as  a  part  of  the  claim  secured  by  his  own  en- 
cumbrance.^ 

*^One  who  has  a  lien  inferior  to  another,  upon 
the  same  property  has  a  right:  ....  2.  To  be  sub- 
rogated to  all  the  benefits  of  the  superior  lien,  when 
necessary  for  the  protection  of  his  interests,  upon 
satisfying    the    claim    secured    thereby." 

So  where  a  pledgee  is  compelled  to  satisfy  the  lieu 
of  a  bailee  of  the  pledged  property  in  order  to 
obtain  possession  thereof,  he  will  be  subrogated  to 
such  lien  as  against  a  subsequent  attaching  creditor 
of  the  pledgor:  Rohrbough  v.  Johnson,  107  Cal.  144, 
150,  40  Pac.  37. 

4  This  pro/ision  applies  to  a  superior  trust  deed: 
Swain  v.  Stockton  Sav.  etc.  Soc,  78  Cal.  600,  12  Am. 
St.  Rep.   118,   21  Pac.  365. 

5  Subrogation  of  Inferior  Encumbrancer  to  Claim 
Paid  by  Him:   See  Civ.  Code,  sec.  2876. 

Illustrations.— Sums  paid  by  a  mortgagee  to  extin- 
guish a  reclamation  district  assessment  lien  are 
reasonable  expenses  chargeable  to  the  mortgagor  even 


28  RIGHTS    AND    DUTIES.  §    20 

20.  Subrogation  to  Security  Canceled  by  Mis- 
:         take  of  Tact/* 

«\  A    person  holding    or  acquiring  any    right  in 

Vhen  the  validity  of  the  lien  is  contested:  Weinreich 
V.  Hensley,   121  Cal.   647,   656,  6o7,  54  Pac.  254. 

Where  the  cestui  que  trust  under  a  trust  deed  in  the 
nature  of  a  mortgage  is  compelled  to  satisfy  street 
assessment  liens  and  taxes  against  the  trust  property, 
he  is  subrogated  to  such  liens:  Sav.  etc.  Soc.  v.  Bur- 
nett,  106   Cal.   514,   536,   39  Pac.   922. 

Where  a  mortgage  was  made  by  a  deed  absolute  in 
form,  if,  while  the  legal  title  thus  apparently  stood 
in  the  mortgagee,  the  mortgagee  was  obliged  to 
protect  his  security  by  paying  off  other  mortgages 
against  the  land,  equity  will  give  him  a  lien  there- 
against  to  the  extent  of  the  payments:  Combs  v. 
Hawes,   8   Pac.   59/,   598. 

o  Subrogation  to  Security  Canceled  by  Mistake  of 
Fact. 

Rationale.— '^  The  principle  running  through  all 
cases  of  this  class  is  that  when  the  legal  rights  of 
parlies  have  been  changed  by  mistake,  equity  re- 
stores them  to  their  former  conditions  when  it  can 
be  done  without  interfering  with  any  new  rights 
acquired  •  on  the  faith  and  strength  of  the  altered 
Condition  of  the  legal  rights,  and  without  doing  in- 
justice to  other  persons' ':  Shaffer  v.  McCloskey,  101 
Cal.  576,  581,  36  Pac.   196. 

The  further  principle  is  also  involved  in  some  of 
the  cases  that  equity  will  interpose  to-  prevent  a  mer- 
ger where  it  is  apparent  from  the  circumstances  that 
it  was  not  the  intention  of  the  grantee  that  a  merger 
should  take  place;  and  where  it  appears  to  be  for 
the  interest  of  the  grantee  that  there  should  be  no 
merger  of  the  lesser  estate,  such  will  be  presumed  to 
be  his  intention:  Carpentier  v.  Brenham,  40  Cal.  221, 
235,  236;  Rumpp  v.  Gerkens,  59  Cal.  496;  Scrivner  v. 
Dietz,  84  Cal.  295,  299,  24  Pac.  171;  Davis  v.  Randall, 
17  Cal.  12,  16,  17,  48  Pac.  906;  Hines  v.  Ward,  121 
Cal.  115,  53  Pac.  427. 


§    20  RIGHTS     AND     DLTIES.  29 

The  principle  of  this  section  is  not  applicable, 
however,  in  cases  of  mistake  of  law  merely:  Guy  v. 
Du  Uprey,  16  Cal.  195,  76  Am.  Dec.  518,  in  which  the 
cases  of'Carr  v.  Caldwell,  10  Cal.  380,  70  Am.  Dec. 
740,  and  Swift  v.  Kraemer,  13  Cal.  526,  73  Am.  Dec. 
603,   were   disapproved. 

So  a  person  who  advances  money  upon  a  voici 
mortgage  without  mistake  of  fact,  a  portion  of 
which  money  was  used  to  satisfy  a  first  mortgage 
upon  the  same  premises,  which  was  thereupon  can- 
celed, is  not  entitled  to  be  subrogated  to  the  rights 
of  the  original  mortgagee:  Guy  v.  Du  Uprey,  16  Cal. 
195,  76  Am.  Dec.  518;  Brown  v.  Eouse,  125  Cal.  645, 
651,  58  Pac.  267.  Compare  Brown  v.  Eouse,  104  Cal. 
672,   676,   38  Pac.  507. 

Illustrations.— A  purchaser  at  a  judicial  sale  held 
pursuant  to  the  foreclosure  of  a  superior  encumbrance 
upon  certain  land,  without  notice  of  a  subsec|uent 
encumbrance  upon  the  same  land,  as  against  the 
holder  of  such  encumbrance  with  notice  of  the 
superior  encumbrance,  may  assert  so  much  of  the 
superior  encumbrance  as  was  satisfied  by  his  pur- 
chase:  Carpentier  v.  Brenham,  40  Cal.   221. 

Where  the  purchaser  of  land  under  an  executory 
contract  of  sale  mortgages  his  interest  therein  to  a 
third  party,  and  afterward,  upon  receiving  a  convey- 
ance of  the  property,  executes  a  purchase  money 
mortgage  to  the  vendor  in  satisfaction  of  which  he 
subsequently  reconveys  the  property  to  the  vendor, 
the  vendor  may,  upon  the  foreclosure  of  the  mort- 
gage executed  to  the  third  party,  assert  the  purchase 
money  mortgage  as  a  superior  encumbrance,  and  a 
merger  will  not  take  place:  Hawkins  v.  Harlan,  68 
Cal.  236,  9  Pac.   108. 

A  mortgagee  of  land  who  takes  a  conveyance  of 
the  mortgaged  land  in  satisfaction  of  the  secured 
obligation  and  thereupon  cancels  the  mortgage,  with- 
out actual  notice  of  the  existence  of  a  second  mort- 
gage thereon,  as  against  the  second  mortgagor  with 
notice  of  the  first  mortgage,  may  assert  such  mort- 
gage: Brooks  V.  Kice,  56  Cal.  428;  Eumpp  v.  Ger- 
kens,  59  Cal.  576,  580. 


30  RIGHTS    AND    DUTIES.  §    20 

respect  to  specific  property/  (a)  who  satisfies,  or 
(b)  the  purchase  money  for  whose  purchase  is 
used  in  whole  or  in  part  to  satisfy^  any  obligation 
secured  by  such  property,  which  security  is  there- 
upon  canceled  of  record,    without  actual  notice^ 

A  person  who  without  actual  notice  of  the  exist- 
ence of  a  second  mortgage  on  certain  land  pays  off 
the  first  mortgage  and  takes  in  consideration  thereof 
a  new  mortgage  upon  the  same  property  may  assert 
the  first  mortgage,  although  canceled,  as  against  the 
second  mortgagee:  Tolman  v.  Smith,  85  Cal.  280, 
285,  286,  24  Pac.  743. 

A  mortgagee  of  land  who  without  actual  notice  of 
a  judgment  lien  thereon  and  a  sale  pursuant  thereto 
satisfies  a  superior  mortgage  thereon,  which  there- 
upon is  canceled,  as  against  the  poirchaser  at  execu- 
tion sale  with  notice  of  the  existence  of  the  original 
m.ortgage  at  the  time  of  the  attachment  of  the  judg- 
ment lien,  may  assert  the  original  mortgage:  Matzen 
V.  Shaeffer,  65  Cal.  81,  3  Pac.  92. 

Where,  however,  the  sale  is  made  after  the  can- 
cellation of  the  superior  mortgage  to  a  person  with- 
out notice  of  the  equities  of  the  person  satisfying 
the  superior  mortgage,  the  purchase  will  be  pro- 
tected, and  the  mortgagee  may  not  assert  the  original 
mortgage:  Eichards  v.  Griffith,  92  Cal.  493,  28  Pac. 
484,  27  Am.  St.  Eep.  156. 

A  mortgage  holder  who  afterward  makes  further 
advances  to  the  mortgagor,  and  thereupon  cancels 
his  mortgage,  taking  instead  a  new  mortgage  for  the 
entire  obligation,  which  mortgage  was  subsequent  to 
a  homestead  or  trust  deed  in  the  nature  of  a  mort- 
gage upon  the  same  property,  as  against  the  home- 
stead or  trust  deed,  may  assert  his  mortgage  to  the 
amount  of  the  original  mortgage:  Birrell  v.  Schie,  9 
Cal.  104,  107  (trust  deed);  Dillon  v.  Byrne,  5  Cal. 
455  (homestead) ;  Himmelmann  v.  Schmidt,  23  Cal. 
117,  120  (homestead).  Compare  Van  Sandt  v.  Alvis, 
109  Cal.  165,   169,  41  Pac.   1014,  50  Am.  St.  Eep.  25, 


§    20  EIGHTS     AND     DUTIES.  31 

wherein  it  does  not  appear  whether  or  not  the  mort- 
gagee had  actual   notice   of  the  homestead. 

•A  tenant  in  common  of  land  who  satisfies  and 
cjiuses  to  be  canceled  a  first  mortgage  on  such  land 
made  by  the  cotenants  jointly,  without  notice  that 
the  other  tenant  had  placed  a  second  mortgage  on 
his  interest,  as  against  the  second  mortgagee,  may 
assert  the  original  first  mortgage:  Shaffer  v.  Mc- 
Closkey,   101   Cal.  576,  36  Pac.   196. 

A  mortgagee  of  land  who  takes  a  conveyance  of 
the  mortgaged  property  in  satisfaction  of  the  secured 
obligation,  and  thereupon  cancels  the  mortgage  with- 
out actual  notice  of  the  existence  of  a  judgment  lien 
thereon  subsequent  to  the  mortgage,  as  against  the 
judgment  lienor  with  notice  of  the  first  mortgage, 
may  assert  such  mortgage:  Hines  v.  Ward,  121  Cal. 
115,   53   Pac.   427. 

A  purchaser  of  land  who  without  actual  notice  of 
the  existence  of  a  judgment  lien  thereon  satisfies  and 
causes  to  be  canceled  a  prior  trust  deed  thereon,  as 
against  the  holder  of  the  judgment  lien  with  notice 
of  the  deed,  may  assert  the  trust  deed:  Darrough  v. 
Herbert  Kraft    Co.  Bank,  125  Cal.  272,  57  Pac.  983. 

Where,  however,  the  person  who  satisfied  and 
caused  to  be  canceled  the  original  mortgage  did  not 
take  another  mortgage,  and  a  third  person,  relying 
upon  the  discharge  of  the  original  mortgage,  there- 
after advanced  money  and  received  a  mortgage 
upon  the  same  land,  the  person  paying  the  original 
mortgage  cannot  assert  it  against  the  new  bona  fide 
mortgagee:  Persons  v.  Shaeffer,  65  Cal.  70,  3  Pac.  94. 

7  A  person  only  holding  or  acquiring  some  right 
in  the  property  may  be  subrogated.  So  a  mere 
volunteer  who  without  any  duty  pays  the  debt  of 
another  cannot  in  the  absence  of  fraud,  accident,  or 
mistake  of  fact  have  the  original  encumbrance  re- 
instated and  himself  substituted  to  the  place  of  the 
secured  creditor  whose  debt  was  paid:  Guy  v. 
Du  Uprv?y,  16  Cal.  195,  76  Am.  Dec.  518;  Brown  v. 
Eouse,   125  Cal.  645,  651,  58  Pac.  267. 

8  Without  Actual  Notice  of  the  Encumbrance.— 
Mere  constructive  notice  of  the  existence  of  the  in- 
ferior  encumbrance,   through  the  recordation  thereof, 


32  RIGHTS   AND  DUTIES.  §    20 

of  the  then  existence  of  any  encumbrance,  deed 
of  trust,  or  homestead  upon  such  property  subse- 
quent to  the  obligation  canceled,  as  against  any 
holder  of  such  subsequent  right  therein  with 
notice  of  his  equities,  is  deemed  the  equitable 
assignee  of  and  may  assert  the  superior  encum- 
brance at  any  time  before  it  is  barred  by  lapse  of 
time. 

21.     Eights  of  Superior  Encumbrancer  as  Lim- 
ited by  Rights  of  Inferior  Encumbrancer.^ 

Where  one  person  has  an  encumbrance  against 
several  pieces  of  property,  and  other  persons  have 

does  not  impair  the  right  to  be  subrogated  to  the 
superior  encumbrance:  Shaffer  v.  McCloskey,  101 
Cal.   576,   580,   36  Pac.   196. 

*»  Rights  of  Superior  Encumbrancer  as  Limited  by 
Rights  of  Inferior. 

See  Civ.  Code,  sec.  2899. 

Compare,  also.  Civil  Code,  section  3433,  providing: 
^^  Where  a  creditor  is  entitled  to  resort  to  each  of 
several  funds  for  the  satisfaction  of  his  claim,  and 
another  person  has  an  interest  in,  or  is  entitled  to 
resort  as  a  creditor  to  some,  but  not  all,  of  them,  the 
latter  may  require  the  former  to  seek  satisfaction 
from  those  funds  to  which  the  latter .  has  no  such 
claim,  so  far  as  it  can  be  done  without  impairing  the 
right  of  the  former  to  complete  satisfaction,  and 
without  •  doing  injustice   to   third  persons. ' ' 

^^  Whenever  one  buys  land  which  is  subject  to  a 
lien,  which  is  also  a  lien  upon  other  lands  belonging 
to  the  vendor,  the  vendee  may  require  the  creditor 
to  proceed  in  the  first  instance  against  the  latter 
land,  not  conveyed  by  the  conveyance.  This  rule 
not  only  applies  to  a  vendee,  but  to  anyone  having 
a    substantial    and    valuable    interest    in    any    of    the 


§    21  RIGHTS    AND    DUTIES.  33 

subordinate  encumbrances  against,  or  interests 
in,  some  but  not  all  such  pieces  of  property,  the 
person  having  the  superior  encumbrance,  if  he 
can  do  so  without  risk  of  loss  to  himself,  or  of  ii^- 
justice  to  other  persons,  must,  in  the  absence  of  a 
special  agreement,*^  resort  to  the  property  in  the 

separate  parcels  of  land.  It  has  been  applied  in 
favor  of  judgment  creditors,  and  in  fact  to  almost 
all  the  transactions  of  business  in  which  the  rights 
of  creditors,  mortgagees,  grantees,  and  lessees  are 
involved  before  a  court  of  equity  ^^  Mack  v.  Shafer, 
135  Cal.  113,  67  Pac.  40. 

Illustrations.— Where,  in  order  to  secure  his  in- 
debtedness, a  debtor  gave  a  mortgage  against  certain 
property  of  his,  and  subsequently,  after  he  had  re- 
ceived a  further  accommodation,  gave  another  mort- 
gage to  secure  his  indebtedness  upon  land  jointly 
owned  by  himself  and  a  third  person,  and  the  third 
l^erson  jointly  executed  this  second  mortga'ge,  the 
third  person,  being  a  surety,  may  require  the  mort- 
gagee to  exhaust  the  land  of  the  principal  debtor 
before  recourse  is  had  to  his  interest:  Eaun  v.  Rey- 
nolds, 11  Cal.  14,  20. 

Where  one  person  has  a  lien  against  two  pieces  of 
property,  and  another  person  has  a  subsequent  lien 
against  one  of  them  only,  such  other  person  has  the 
right  to  require  the  first  person  to  first  resort  to  ,the 
])roperty  against  which  he  has  an  exclusive  lien: 
Kent  V.  Williams,  114  Cal.  537,  542,  46  Pac.  462; 
Kent  V.  San  Francisco  Sav.  Union,  130  Cal.  400,  404, 
62  Pac.  420. 

10  In  Absence  of  Special  Agreement.— ''The  doc- 
trine of  selling  mortgaged  property  which  has  been 
alienated  by  the  mortgagor  in  the  inverse  order  of 
alienation  is  not  so  unyielding  but  that  it  may  be 
controlled  by  circumstances.  A  familiar  example 
of  this  is  to  be  found  in  cases  where  in  a  sale  of  a 
part  of  the  premises  the  grantee  has  bound  himself 
Liens— 3 


34  RIGHTS  AND  DUTIES.  §    21 

following  order  upon  demand  of  any  interested 
person : 

(1)  to  the  property  against  which  he  has  an  ex- 
clusive encumbrance; 

(2)  to  the  property  which  is  subject  to  the  fewest 
inferior  encumbrances ; 

(3)  in  like  manner  inversely  to  the  number  of 
subordinate  encumbrances  against  the  sam.e 
property;  and 

(4)  when  several  pieces  of  property  are  within 
one  of  the  foregoing  classes  and  subject  to  the 
same  number  of  encumbrances,  resort  must  be 
had : 

(a)  to  the  property  which  has  not  been  trans- 
ferred since  the  superior  encumbrance  was 
created, 

(b)  secondly,  to  the  property,  which  has  been 
so  transferred  without  a  valuable  considera- 
tion, and 

(c)  lastly,    to    the  property    which    has  been 
•    transferred    for  a  valuable    consideration  in 

the  inverse  order  of  transfer. 

to  pay  the  mortgage ^^:  Irvine  v.  Perry,  119  Cal.  352, 
356,  51  Pac.  544,  51  Pac.  949. 

Illustrations.— Where  two  parcels  of  land  were 
covered  by  a  mortgage,  and  the  mortgagor  sold  them 
to  different  pairchasers,  each  of  whom  agreed  to  pay 
a  certain  proportion  of  the  mortgage  indebtedness, 
one  of  them  in  fact  paying,  but  the  other  failing  to 
do  so,  and  the  mortgagee  maintained  an  action  to 
foreclose     his     mortgage,    the    parcel     of     land     the 


§    22  RIGHTS     AND    DUTIES.  35 

22.     Application    of    Proceeds    When    Securing 
Two  Obligations.^^ 

Where  certain  property  is  held  as  security  for 
-two  obligations^  one  of  which  is  also  otherwise 
secured^  in    the    absence    of  a  modifying  agree- 

grantee  of  Avhicli  had  not  paid  his  pro  rata  must  first 
he  sold:  Weyant  v.  Murphy,  78  Cah  278,  12  Am.  St. 
Eep.  oO,  20  Pac.  568. 

11  Application  of  Proceeds  When  Securing  Two 
Obligations. — The  principle  underlying  this  section 
is  stated  in  Murdock  v.  Clarke,  88  Cal.  384,  390,  391, 
26  Pac.  601,  as  follows:  '^When  neither  party  to  the 
tiansaction  makes  any  application  of  the  payment 
and  there  are  different  debts  due  from  the  debtor  to 
the  creditor,  the  law  will  make  the  application  in 
such  a  manner,  in  view  of  all  the  circumstances  of 
the  case,  as  is  most  in  accordance  with  justice  and 
equity,  and  will  best  protect  and  maintain  the  rights 
of  both  parties.  One  of  the  elements  underlying 
the  rule  for  the  protection  of  each  party  in  his  rights 
i«5,  that  the  burden  shall  be  made  as  light  upon  the 
debtor  as  is  consistent  with  giving  the  creditor  all 
that  the  debtor  has  bound  himself  to  pay.  If  the 
creditor,  by  any  application  that  may  be  made  for 
him, can  receive  all  for  which  the  debtor  is  under  any 
cbligation  to  him,  it  is  but  equity  that  it  should  be 
applied  in  such  a  mode  as  will  be  least  onerous  to 
the  debtor.  On  the  other  hand,  when  the  interest 
of  the  debtor  cannot  be  promoted  by  any  particular 
application  of  the  payment,  or  when  it  is  a  matter 
of  indifference  to  him  in  which  mode  the  application 
is  made,  the  law  raises  a  presumption  that  the  pay- 
ment was  actually  received  in  the  way  that  was  of 
most  advantage  to  the  creditor.  If  the  application 
can  be  so  made  as  to  discharge  all  the  obligations  of 
the  debtor  without  increasing  his  burden,  it  will  be 
deemed  indifferent  to  him  upon  which  obligation  the 
payment  shall  be  applied.  The  principles  of  this 
rule  find  their  application  in  cases  where  it  is  held 
that  a  payment  is  to   be   applied  to   interest   instead 


36  RIGHTS   AND  DUTIES.  §    22 

ment  or  of  intervening  rights  of  third  parties, 
the  encTimbrancer  is  entitled  to  have  the  pro- 
ceeds of  the  sale  of  such  property  applied  in 
liquidation  of  the  obligation  which  is  most  pre- 
carious by  reason  of  being  least  secured. ^^  In 
general,  the  law  will  so  apply  the  proceeds  of  the 

of  principal;  to  an  interest-bearing  debt  in  prefer- 
ence to  one  bearing  no  interest;  to  the  payment  of 
legal  interest  instead  of  that  which  is  usurious;  to  a 
debt  that  has  matured  rather  than  to  one  which  is 
not  yet  due;  to  the  payment  of  legal  items  in  an 
account  rather  than  those  which  are  illegal;  and,  on 
the  other  hand,  for  the  purpose  of  protecting  the 
rights  of  the  creditor,  a  payment  will  be  applied  to 
the  earlier  items  of  an  account  in  preference  to 
later^  ones;  to  an  unsecured  debt  in  preference  to  one 
for  which  he  holds  security;  and  when  he  has  more 
than  one  security,  to  that  debt  for  which  the  secur- 
ity is  most  precarious.  No  specific  rule  can  be  laid 
down  that  will  embrace  all  the  cases  that  may  arise 
for  its  application,  inasmuch  as  the  infinite  variety 
of  human  transactions  cannot  be  included  within 
the  limits  of  a  formulated  rule;  and  therefore  courts 
must  be  governed  by  principles  rather  than  by  fixed 
rules.  Tn  this  state  an  attempt  has  been  made  for 
the  guidance  of  courts  in  this  matter,  but  the  rules 
there  prescribed  are  insufficient  for  all  occasions,  and 
do  not  embrace  even  the  conditions  of  the  present 
case.'' 

The  rule  formulated  in  the  code  is  found  in  Civil 
Code,   section  1479,  subdivision  3. 

12  So  where  certain  logs  were  held  as  security 
for  the  payment  of  two  notes,  one  of  which  was 
also  secured  by  sureties,  the  pledgee  was  entitled 
to  have  the  proceeds  of  the  sale  of  the  logs  credited 
to  the  pavment  of  the  note  not  otherwise  secured: 
California "^Nat.  Bank  v.  Ginty,  108  Cal.  148,  152,  153, 
41  Pac.  38. 


[ 


§    22  RIGHTS    AND    DUTIES.  37 

sale  of  encumbered  property  as  will  best  protect 
and.  maintain  the  rights  of  both  parties.^** 

13  So  where  four  thousand  dollars  was  realized 
by  the  sale  of  encumbered  property,  the  law 
will  apply  it  first  to  the  payment  of  interest  and 
afterward  to  the  secured  obligation:  Haber  v. 
Brown,  101  Cal.  445,  455,  35  Pac.  1035. 


TITLE   4. 

SPECIAL   EVEI^TS   AEFECTIN^G   EXCUM- 
BEANCES. 

CHAPTER    1. 

DEATH    OF    OWNEK    OF   ENCUMBERED 
PROPERTY. 

ARTICLE  1. 

VALIDITY  OF  ENCUMBEANCE   AGAINST  PEOP- 
EETY   OF   DECEDENT. 

23.  Encumbrance  not  affected  by  death  except  when 
against  homestead. 

23.     Encumbrance  not  Affected  by  Death  Except 
When  Against  Homestead. 

An  encumbrance^    for  security  only    subsisting 

1  Encumbrance  not  Aif acted  by  Deatli.— Compare 
Code  of  Civil  Procedure,  section  1500:  '*No  holder 
of  any  claim  against  an  estate  shall  maintain  any 
action  thereon,  unless  the  claim  is  first  presented  to 
the  executor  or  administrator,  except  in  the  follow- 
ing case:  an  action  may  be  brought  by  any  holder  of 
a  mortgage  or  lien  to  enforce  the  same  against  the 
property  of  the  estate  subject  thereto,  where  all  re- 
course against  any  other  property  of  the  estate  is 
(38) 


§    23  OF   DEATH.  39 

txpressly  waived  in  the  complaint;  but  no  counsel 
fees  shall  be  recovered  in  such  action  unless  such 
claim  be  so  presented.'' 

Judgment  Lien  not  Extinguished  hy  DeatJi.—^ '  Other 
sections  of  the  code  [of  Civil  Procedure  besides  671, 
quoted  under  section  623,  note  2,  below,  of  this  book] 
confirm  rather  than  negative  the  continuance  of  the 
lien  after  the  death  of  the  debtor.  Section  669  of 
the  Code  of  Civil  Procedure,  in  making  provision  for 
the  entry  of  a  judgment,  says:  ^If  a  party  die  after 
a  verdict  or  decision  upon  an  issue  of  fact,  and  be- 
fore judgment,  the  court  may,  nevertheless  render 
judgment  thereon.  Such  judgment  is  not  a  lien 
upon  the  real  property  of  the  deceased  party,  but  is 
payable  in  tlie  course  of  administration  on  his 
estate.'  And  in  the  title  devoted  to  the  estates  of 
deceased  persons  the  same  provision  is  re-enacted: 
Code  Civ.  Proc,  sec.  1506.  It  is  impossible  to  resist 
the  effect  of  this  express  provision  as  implying  that 
the  judgment  in  other  cases  is  a  lien.  If  every  judg- 
ment ceased  to  be  a  lien  upon  the  death  of  a  debtor, 
why  make  special  provision  that  this  judgment,  ren- 
dcaed  before  the  death,  should  not  be  a  lien? 

*  *  There  is  also  an  apparent  recognition  of  the  con- 
tinuing lien  of  judgments  in  section  1643  of  the 
Code  of  Civil  Procedure.  In  that  section,  in 
making  provision  for  the  payment  of  debts, 
there  is  given  to  ^judgments  rendered  against 
the  decedent  in  his  lifetime'  the  same  prefer- 
ence against  the  general  assets  which  is  given 
to  mortgages  against  the  particular  property  covered 
by  the  lien  of  the  mortgage.  The  payment  of  judg- 
ments ^in  the  order  of  their  dates'  is  the  enforce- 
ment of  their  liens. 

^^And  what  is  more  persuasive  still,  to  the  same 
end,  is  the  following  provision  of  section  1505:  'A 
judgment  creditor,  having  a  judgment  which  was 
rendered  against  the  testator  or  intestate  in  his  life- 
time, may  redeem  any  real  estate  of  the  decedent 
from  any  sale  under  foreclosure  or  execution  in  like 
manner  and  with  like  effect  as  if  the  judgment 
debtor  were  still  living.'  This  provision,  read  in  con- 
nection with  the  definition  of   a  redemptioner    (Code 


40  EFFECT    ON    ENCUMBRANCES.  §    23 

against  any  property,  unless^  the  property  is  a 
homestead  selected  and  recorded  during  the  life- 
time^ and  continuing  after  the  death     of  the 

Civ.  Proc,  see.  701,  subd.  2),  is  a  recognition  of  the 
existence  of  the  posthumous  judgment  lien.  It 
might  be  argued  that  such  a  provision  is  unnecessary 
if  the  continuance  of  the  judgment  lien  were  an  ad- 
mitted and  recognized  fact.  But  the  provision  is  a 
part  of  the  section  which  provides  that  no  execution 
shall  issue  upon  the  ordinary  money  judgment,  but 
that  the  juclgment  must  be  presented  as  a  claim 
against  the  estate;  and  then  as  if  to  give  assurance 
that  the  judgment  loses  no  other  attribute,  comes 
this  provision  that  the  right  to  make  a  redemption 
(to  which  the  existence  of  a  lien  is  essential)  re- 
mains  unimpaired. 

^^The  concurrent  provisions  of  the  general  prac- 
tice and  of  the  probate  procedure  seem  to  leave  no 
doubt  of  the  intention  of  the  code  not  to  extinguish 
the  lien  upon  the  death   of  the  debtor. 

'^The  only  apparent  uncertainty  arises  from  the 
fact  that  the  judgment  is  required  to  be  paid  by  the 
executor  or  administrator  in  the  course  of  adminis- 
tration, and  is  not  enforceable  by  execution.  But 
this  provision  is  not  inconsistent  with  the  continu- 
ance of  the  lien;  and  within  the  provision  itself  lies, 
as  we  have  seen,  a  quasi  recognition  of  the  lien  rank- 
ing   it    with    the    recognized     lien    of    the    mortgage. 

''To  look  at  the  consequence  of  any  other  conclu- 
sion than  the  above  is  to  find  additional  confirmation 
for  the  conclusion.  If  the  judgment  debtor  could 
transfer  his  property  and  then  die,  leaving  to  his 
creditor  the  barren  remedy  of  a  claim  against  a  de- 
pleted estate,  judgment  liens,  which  have  been  so 
much  favored  by  the  enactment  of  1895,  would  lose 
nearly  all  their  value'':  Morton  v.  Adams,  124  Cal. 
229,  230,  231,  71  Am.  St.  Kep.  53,  56  Pac.  1038. 

Thus,  although  the  owner  of  the  liened  property 
dies  before  the  expiration  of  two  years  after  the 
accrual   of   a   judgment   lien,    the   lien   continues   two 


§    23  OF   DEATH.  41 

years  (or  five,  as  the  case  may  be)  from  its  inception 
whether  or  not  execution  is  levied:  Estate  of  Wiley, 
138  Cal.  301,  71  Pac.  441. 

2  Unless  Encumbered  Property  is  Homestead.— 
Compare  Code  of  Civil  Procedure,  section  1475,  in 
part:  ''If  there  be  subsisting  liens  or  encumbrances 
ui>on  the  homestead,  the  claims  secured  thereby  must 
be  presented  and  allowed  as  other  claims  against  the 
estate.  ^ ' 

Construing  this  code  provision  with  section  1500 
quoted  in  the  preceding  note,  the  operation  of  1500 
is  limited  to  encumbrances  against  other  property  of 
the  decedent  than  the  homestead;  but  secured  claims 
against  his  homestead  must  be  presented;  otherwise 
they  cannot  be  foreclosed  at  all,  whether  the  fore- 
closure action  was  commenced  before  or  after  the 
death  of  the  owner  of  the  homestead:  Camp  v. 
Grider,  02  Cal.  20;  Wise  v.  Williams,  72  Cal.  544,  '547, 
14  Pac.  204;  Bollinger  v.  Manning,  79  Cal.  7,  11,  12, 
2 J  Pac.  375;  Mechanics^  Bldg.  etc.  Assn.  v.  King,  83 
Cal.  440,  23  Pac.  376;  Hearn  v.  Kennedy,  85  Cal.  55, 
24  Pac.  606;  Eosenberg  v.  Ford,  85  Cal.  610,  612,  24 
Pac.  779;  Sanders  v.  Eussell,  86  Cal.  119,  122,  21  Am. 
St.  Rep.  26,  note,  24  Pac.  852;  Perkins  v.  Onyett,  86 
Cal.  348,  24  Pac.  1024;  Wise  v.  Williams,  88  Cal.  30, 
33,  25,  Pac.  1064;  McGahey  v.  Forrest,  109  Cal.  63,  66- 
68,  41  Pac.  817;  Hibernia  Sav.  etc.  Soc.  v.  Thornton, 
109  Cal.  427,  50  Am.  St.  Rep.  52,  42  Pac.  44. 

3  Homestead  Must  Have  Been  Selected  and  Re- 
corded During  Lifetime.— ''Section  1475  enumerates 
the  things  to  be  affected  by  its  provisions,  viz.: 
Homesteads  'selected  and  recorded  prior  to  the 
death  of  the  decedent,'  and  by  implication  excludes 
all  others.  It  follows  that  homesteads  set  apart  by 
the  order  of  the  superior  court  during  the  pendency 
of  probate  proceedings,  and  which  had  no  existence 
prior  to  the  death  of  the  decedent,  are  not  included 
in  section  1475,  but  are  left  to  the  control  of  section 
1500  of  the  same  code,  and  that  a  prior  lien  thereon 
may  be  enforced  without  the  necessity  of  presenting 
the  claim  secured  thereby  to  the  executor  or  admin- 
istrator, provided  the  holder  is  willing  to  expressly 
waive  in  his  complaint,  and  does  waive,  all  recourse 


42  EFFECT    O^    ENCUMBRANCES.  §    23 

owner^  thereof,  is^  as  distinguished  from  the  obli- 
gation secured,  thereby;,  not  affected  nor  im- 
paired by  the  death  of  the  owner.  But  the  holder 
of  a  demand  secured  by  a  subsisting  encumbrance 
against  any  such  homestead  belonging  to  the 
estate  of  a  decedent  must^  when  presentation  is 
possible^  present  his  claim  for  allowance  or  rejec- 
tion,^ and  in  case  of  allowance  such  claim  must 

against  any  other  property  of  the  estate'':  Mc- 
Gahey  v.  Forrest,  109  Cal.  63,  69,  41  Pac.  817;  Brown 
V.  Sweet,  127  Cal.  832,  335,  59  Pac.  774. 

4  Homestead  Must  Continue  After  the  Death.— 
The  principle  that  a  secured  demand  against  the 
homestead  must  be  presented  does  not  apply,  how- 
ever, when  the  homestead  was  selected  from  the 
separate  property  of  the  wife  and  was  mortgaged  to 
secure  the  husband's  debts,  and  the  husband  dies,  as 
in  that  case  the  homestead  is  not  a  part  of  his  es- 
tate, and  vests  in  the  wife  upon  his  death:  Bull  v. 
Coe,  77  Cal.  54,  63,  11  Am.  St.  Eep.  235,  18  Pac.  808. 

The  same  is  true  concerning  a  homestead  selected 
by  the  wife  from  the  separate  property  of  the  hus- 
band without  his  consent,  as  it  terminates  upon  his 
death:  Weinreich  v.  Hensley,  121  Cal.  647,  653,  656, 
54  Pac.  2'54- 

Likewise,  where  a  homestead  was  declared  on  mort- 
gaged community  property  and  before  the  enforce- 
ment of  the  mortgage  the  wife  died,  as  upon  the 
death  the  property  vested  in  the  huslDand,  no  pres- 
entation of  the  mortgage  against  the  estate  of  the 
wife  is  necessary  as  a  prerequisite  to  the  foreclosure 
of  the  mortgage:  Bay  City  Bldg.  etc.  Asstl.  v.  Broad, 
336    Cal.    525,    69   Pac.   225. 

5  Secured  Demand  Against  Homestead  Must  be  Pre- 
sented.—Code  of  Civil  Procedure,  section  1475,  in 
part:  ^^If  there  be  subsisting  liens  or  encumbrances 
on  the  homestead,  the  claims  secured  thereby  must 
be  presented  and  allowed  as  other  claims  against  the 


'§    23  OF    DEATH.  43 

he  paid  proportionately  with  other  valid  claims 
against  the  estate;  and  the  encumbrance  can  be 
foreclosed  against  such  homestead  merely  for 
such  portion  of  the  secured  demand  as  may  re- 
main unpaid  after  the  final  distribution  of  the 
funds  of  the  estate  to  the  creditors,  although  the 
foreclosure  action  was  pending  at  the  time  of  the 
death. ^     But  where  the  entire  estate  is  set  apart 

estate.  If  the  funds  of  the  estate  be  adequate  to 
pay  all  claims  against  the  estate,  the  claims  so  se- 
cured must  be  paid  out  of  such  funds.  If  the  funds 
of  the  estate  be  not  sufficient  for  that  purpose,  the 
claims  so  secured  shall  be  paid  proportionately  with 
other  claims  allowed,  and  the  liens  or  encumbrances 
on  the  homestead  shall  only  be  enforced  against  the 
homestead  for  any  deficiency  remaining  after  such 
payment.''     As   amended,   in   effect   April   16,   1880. 

Rationale. — The  purpose  of  the  legislature  in  pro- 
viding that  secured  claims  against  the  homestead 
must  be  presented  and  allowed  as  other  claims 
against  the  estate  is  to  preserve  the  homestead  if 
possible:  Camp  v.  Grider,  62  Cal.  20;  Bollinger  v.. 
Manning,  79  Cal.  7,  11,  21  Pac.  375. 

Thus,  a  claim  against  a  homestead  secured  by  a 
judgment  lien  must  be  presented:  Sanders  v.  Eussell, 
86  Cal.  119,  122,  21  Am.  St.  Eep.  26,  note,  24  Pac.  852. 

«  Must  be  Presented  Even  Though  Action  was 
Pending  at  the  Death.— Code  of  Civil  Procedure,  sec- 
tion 1502:  ^'If  an  action  is  pending  against  the 
decedent  at  the  time  of  his  death,  the 'pilaintiff  must 
i^  like  manner  present  his  claim  to  the  executor  or 
administrator  for  allowance  or  rejection,  authenti- 
cated as  in  other  cases;  and  no  recovery  shall  be 
had  in  the  action  unless  proof  be  made  of  the  pre- 
sentations required. ' ' 

^^ Section  1502  of  the  Code  of  Civil  Procedure  sim- 
ply means  that  when  an  action  is  pending  against 
a    decedent    at    the   time    of   his    death,    the    plaintiff 


44  EFFECT  ON  ENCUMBRANCES.  §    23 

for  the  support  of  the  family  without  adminis- 
tration^ an  encumbrance  may  be  enforced  with- 
out presentation  of  the  secured  demand  having 
been  first  made,  although  accruing  against  such  a 
homestead.'' 

therein  is  not  relieved  from  the  duty  of  presenting 
for  allowance  the  claim  upon  which  it  is  based,  when 
the  claim  is  of  that  character  that  he  would  have 
been  required  to  make  such  presentation  in  order 
to  preserv'j  its  validity  as  a  claim  against  the  es- 
tate if  such  action  had  not  been  brought  in  the  life- 
time of  the  decedent'':  Hibernia  Sav.  etc.  Soc.  v, 
Wackenreuder,    99   Cal.   503,   507,   34  Pac.    219. 

7  It  seems  that  in  cases  where  Code  of  Civil  Pro- 
cedure, section  1469,  authorizes  the  court  to  assign 
the  entire  estate  for  the  use  and  support  of  the 
family,  subject  to  liens  and  encumbrances,  and  pro- 
vides that  there  must  not  be  any  further  proceed- 
iugs  in  the  administration,  thus  forbidding  notice  to 
creditors  and  the  presentation  of  claims,  a  mortgage 
on  a  homestead  might  be  enforced  without  presenta- 
tion: Browne  v.  Sweet,  127  Cal.  332,  335,  59  Pac.  774. 

And  in  Fairbanks  v.  Eobinson,  64  Ca.l  250,  30  Pac. 
812,  the  general  proposition  was  laid  down  that  a 
mortgage  is  not  discharged  by  setting  aside  the  en- 
tire estate,  includir  g  the  mortgaged  property,  to  the 
minor  children  of  a  deceased  mortgagor  under  sec- 
tion   1469. 


§    24  OF   DEATH.  45 


AETICLE  2. 

PEOOF   OF   SECUEED   DEMAND. 

1:4.  EncumbranceT  may  present  secured  demand  for 
allowance— Effect  thereof. 

25.     Manner    of   presentation   of    secured    demand. 

2Q.  Security  where  claim  allowed  as  unsecured  some- 
times cannot  be  asserted. 

24.  Encumbrancer  may  Present  Secured  Demand 
for  Allowance— Effect  Thereof.^ 

A  creditor  of  a  decedent  whose  demand  is  se- 
cured   by  an  encumbrance    against    prope]-ty  be- 

1  **Tlie  holder  of  a  claim  secured  by  a  mort- 
gage [against  the  property  of  a  decedent]  has  .... 
two  modes  in  which  he  may  enforce  its  payment. 

^^He  may  institute  an  action  for  its  foreclosure 
under  section  1500,  in  which  the  amount  of  his  re- 
covery will  be  limited  to  the  proceeds  of  his  se- 
curity, or  he  may  present  his  claim  to  the  admin- 
istrator or  executor  for  allowance,  and,  under  section 
1569  of  the  Code  of  Civil  Procedure,  receive  the 
amount  allowed  therefor  from  the  proceeds  of  a  sale 
made  under  the  supervision  of  the  probate  court,  and 
if  those  proceeds  be  insufficient  therefor,  may  share 
equally  for  the  deficiency  with  the  other  creditors'^: 
Visalia  Sav.  Bank  v.  Curtis,  135  Cal.  350,  352,  67 
Pac.   329. 

A  movable  property  mortgagee  does  not  waive  any 
right  or  interest  in  the  mortgaged  property  by  pre- 
senting a  claim  for  the  amount  due  to  the  executor 
of  the  deceased  mortgagor:  Mathew  v.  Mathew,  138 
Cal.  334,  71  Pac.  344.  See  Code  Civ.  Proc,  sees.  1569 
and  1570,  as  cited  sections  27,  note  1,  28,  note  5, 
and  29,  note  8,  below. 


46  EFFECT    ON     ENCUMBRANCES.  §    24 

longing  to  the  estate  of  the  decedent  may,  with- 
out affecting  or  impairing  his  encumbrance,^ 
present  his  demand  for  allowance  or  rejection, 
and  in  case  of  the  allov»^ance  of  his  claim  is  en- 
titled to  receive  in  liquidation  thereof  as  a  prefer- 
ence the  value  of  the  encumbered  propert}^  less 
the  expenses  of  its  sale,  where  a  sale  is  made,  up 
to  the  amount  of  his  claim,  and  if  the  encum- 
bered property  is  insufficient  in  value  to  wholly 
liquidate  his  claim,  such  creditor  may  share  in 
the  liquidation  of  the  residue  of  his  claim  the 
general  assets  of  the  estate  equally  with  the  gen- 
eral creditors  of  the  estate.  In  case  the  secured 
demand  is  rejected,  and  the  claimant  thereupon 
sues  and    recovers    judgment    against  the  estate 

2  Encumbrance  not  Impaired  by  Presentation  of 
Secured  Demand. 

The  presentation  and  allowance  of  a  claim  secured 
by  judgment  lien  as  a  valid  demand  against  the  estate 
of  a  decedent  does  not  impair  nor  destroy  the  lien 
either  as  against  the  property  of  the  decedent  or 
against  that  of  a  third  person  to  whom  the  decedent 
had  transferred  the  property  since  the  accrual  of  the 
lien:  Morton  v.  Adams,  124  Cal.  229,  232-234,  71  Am. 
St.   Eep.   53,   56   Pac.   1038. 

In  Morton  v.  Adams,  it  was  urged  that  the  judg- 
ment was  merged  in  the  allowance  of  the  claim  and 
thus  its  lien  destroyed.  But  the  court  pointed  out 
that  to  so  hold  ^^ would  make  the  creditor's  security 
retrograde,  rather  than  advance,  by  the  merger, '^ 
Imt  that  ^^the  essential  idea  of  the  merger  is  a  bene- 
fit to  the  creditor,  to  give  him  a  stronger  and  bet- 
ter position, '^  and  that  consequently  the  judgment 
was  not   so   merged. 


§    24  OF   DEATH.  47 

upon  the  demand,  such  judgment  establishes  the 
claim  with  the  same  effect  as  though  it  had  been 
allowed  in  the  first  instance,  and  does  not  affect 
nor  impair,  but  merely  confirms,  the  encum- 
brance whereby  it  is  secured.^ 

25.     Manner  of  Presentation  of  Secured  Demand.^ 

A  demand  against  an  estate  of  a  decedent  when 
secured  by  an  encumbrance  evidenced  in  writing 
is  founded  on  ()oth  the  encumbrance  and  the  se- 
cured demand,  and  if  presented  must  be  accord- 
ingly presented,^  except  that  a  reference  to  the 

3  Estate  of  Wiley,  138  Cal.  301,  71  Pac.  441  (case 
of   judgment    lien). 

4  See  Code  of  Civil  Procedure,  section  1497, 
second  and  third  sentences:  ^^If  the  claim  is  founded 
on  a  bond,  bill,  note,  or  other  instrument,  a  copy 
of  such  instrument  must  accompany  the  claim, 
and  the  original  instrument  must  be  exhibited,  if 
demanded,  unless  it  be  lost  or  destroyed,  in  which 
case  the  claimant  muSt  accompany  his  claim  by  his 
fjffi davit,  stating  its  loss  or  destruction.  If  the 
claim,  or  any  part  thereof,  be  secured  by  a  mortgage, 
or  other  lien  which  has  been  recorded  in  the  of&ce 
of  the  recorder  of  the  county  in  which  the  land 
affected  by  it  lies,  it  shall  be  sufiicient  to  describe 
the  mortgage  or  lien,  and  refer  to  the  date,  volume, 
and  page   of  its  record.^' 

Instances  where  the  presentation  was  held  suffi- 
cient: Consolidated  Nat.  Bank  v.  Hayes,  112  Cal.  75, 
79,  44  Pac.  469;  Moore  v.  Eussell,  133  Cal.  297,  299, 
85   Am.   St.   Eep.   166,   65  Pac.   624. 

5  Where  an  obligation  is  secured  by  a  recorded 
encumbrance,  the  claim  is  founded  on  both  instru- 
ments, and  both  must  be  set  forth  as  required, 
or    the    security    referred    to    as   permitted.     A    mere 


48  EFFECT     ON     ENCUMBRANCES.  §    25 

date^  volume  and  page  of  a  recorded  encumbrance 
msij  be  substituted^  for  a  copy  of  the  written 
evidence  thereof.  Where  such  demand  is  secured 
by  an  encumbrance  not  evidenced  in  writing,  no 
statement  as  to  the  security  is  requisite  to  a  valid 
presentation.'' 

26.     Security  Where  Claim  Allowed  as  Unsecured 
Spmetimes  cannot  be  Asserted. 

Where  a  demand  against  the  estate  of  a  dece- 
dent which  is  in  fact  secured  by  an  encum- 
brance evidenced  in  writing  is  presented  and 
allowed    as    an    unsecured    claim,    the    holder 

recital  in  a  note  presented  that  it  is  secured  bv  mort- 
gage does  not  amount  to  a  presentation  of  the  mort- 
gage: Bank  of  Sonoma  v.  Charles,  86  Cal.  322,  326, 
327,  24  Pac.  1019;  Perkins  v.  Onyett,  86  Cal.  348,  349, 
350,  24  Pac.  1024;  Evans  v.  Johnston,  115  Cal. 
180,  182,  46  Pac.  906;  Estate  of  Turner,  128  Cal. 
388,  392,  393,  60  Pac.  967.  Compare  Otto  v.  Long, 
J  27   Cal.'  471,   475,    59   Pac.   895. 

6  Reference  to  Date,  Volume  and  Page  May  be 
Substituted. — ^^In  the  absence  of  this  provision,  it 
would  be  necessary  for  the  holder  of  the  mortgage  to 
present  it  in  its  entirety  the  same  as  a  claim  upon 
finy  other  contract,  and  the  failure  to  present  it  in 
the  abridged  form  provided  by  the  statute  operates 
equally  as  would  a  failure  to  present  a  claim  upon 
any  other  instrument^' :  Estate  of  Turner,  128  Cal. 
S8S,   392,   60  Pac.   967. 

7  When  Encumbrance  not  Evidence  in  Writing  No 
Statement  Rectuired.— *^The  claim  [against  the  estate, 
although  by  vendor's  lien]  was  not  secured  by  mort- 
gage or  recorded  lien,  and  therefore,  it  was  not 
necessary  for  it  to  contain  any  statement  as  to  the 
claim  of  lien'':  Selna  v.  Selna,  125  Cal.  357,  361,  362, 
73  Am.  St.  Rep.  47,  58  Pac.  16. 


§    26  OF    DEATH.  49 

thereof  cannot,  after  the  expiration  of  the  time 
limited  for  the  presentation  of  claims,  and  more 
than  six  months  after  the  presentation  thereof 
against  the  estate,  be  permitted  to  amend  his 
claim  by  asserting  his  security.^ 

8  Estate    of    Turner,    1^8    Cal.    388,    393,    394,    60 
Pac.  967. 

Liens— 4 


50  EFFECT  OX  encumb:?ances.  §  27 


AETICLE  3. 

CONTEOL  OF  PROBATE  COUKT  OVEE  EN- 
CUMBERED PROPERTY. 

27.  I5ale   in   proper   case   may   be   made   free   of   en- 

cumbrances. 

28.  Disposition    of   proceeds   of    sale. 

29.  Manner  of  payment  when  holder  of  liquidated  en- 

cumbrance purchases. 

27.     Sale  in  Proper  Case  may  be  Made  Free  of 

Encumbrances.^ 
.  The  probate  court  must,  in  ease  a  sale  of  any  of 
the  property  of  an  estate  of  a  decedent  which  is 

1  Code   of   Civil  Procedure,   section   1569,   in  part: 
*'When  any   sale  is  made  by  an  executor  or   admin- 
istrator,  pursuant   to   the  provisions  of   this   chapter, 
of  lands  subject  to  any  mortgage  or  other  lien,  which 
is  a  valid  claim  against  the  estate  of  the  decedent, 
and    has   been   presented    and    allowed,    the    purchase 
money  must   be   applied,    after   paying   the   necessary 
expenses  of  the   sale,   first,   to  the  payment   and   sat- 
isfaction of  the  mortgage  or  lien.  .....  The  land  is 

subject  to  such  mortgage  or  lien  until  the  purcliase 
money  has  been  actually  so  applied The  pur- 
chase money,  or  so  much,  thereof  as  may  be  sufficient 
to  pay  such  mortgage  or  lien,  with  interest,  and  any 
lawful  costs  and  charges  thereon,  may  be  paid  into 
the  court,  to  be  received  by  the  clerk  thereof, 
whereupon  the  mortgage  or  lien  upon  the  land  must 
cease. '^ 

A  judgment  lien  is  a  lien  within  this  section,  al- 
though execution  thereon  has  not  issued:  Estate  of 
Wney,  138  Cal.  301,  71  Pac.  441. 


§    27  OF   DEATH.  51 

affected  by  an  encumbrance  for  security,  the  obli- 
gation secured  by  which  has  been  presented  and 
allowed  as  a  valid  claim  against  the  estate,  be- 
comes proper,  order  such  property  to  be  sold  free 
and  clear  of  any  such  encumbrances^^  and  upon 
due  disposition  being  made  of  the  procced'S  of  the 

2  To  be  Sold  Free  of  Encumbrances  which  Secure 
Obligations  Allowed  as  Valid  Claims.— By  code  sec- 
tion 1569,  as  quoted  above,  provision  is  made  for 
the  payment  of  the  amount  of  an  encumbrance  which 
has  been  presented  and  allowed  as  a  valid  claim 
against  the  estate  of  a  decedent  from  the  proceeds 
of  the  sale,  and  it  is  stated  that  until  this  payment 
has  actually  been  made  the  encumbrance  continues. 
In  this  latter  statement  is  doubtless  implied  the 
converse,  that  when  the  payment  has  been  actually 
made  the  encumbrance  is  discharged.  Thus,  it  is 
clear  that  the  property  is  sold  free  and  clear  of 
encumbrances  subsisting  thereagainst  which  secure 
obligations  which  have  been  allowed  as  valid  claims 
against  the  estate. 

On  the  other  han<l,  it  is  not  stated  that  the  proceeds 
of  the  sale  are  to  be  applied  to  the  discharge  of  en- 
cumbrances securing  obligations  which  have  not  been 
presented  and  allowed.  In  Estate  of  Turner,  128  Cal. 
388,  392,  60  Pac.  967,  the  court  held  that  the  holder 
of  such  an  encumbrance  could  not  avail  himself  of 
tne  provisions  of  section  28  below,  and  the  provi- 
sions of  the  Code  of  Civil  Procedure,  section  1539, 
do  not  seem  to  be  well  calculated  to  giving  due  no- 
tice and  an  opportunity  to  be  heard  to  an  encum- 
brancer who  has  not  made  himself  a  party  to  the 
proceeding  for  the  settlement  of  the  estate  of  the 
proposed  sale.  It  is  thus  a  fair  inference  that  the 
sale  is  not  to  be  made  free  and  clear  of  encumbrances 
which  secure  obligations  which  have  not  been  pre- 
sented and  allowed,  but  is  to  be  made  free  and  clear 
only  of  ^incumbrances  which  secure  obligations,  which 
have,  been  presented  and  allowed  as  valid  claims 
against  the  estate  of  the  decedent. 


52  EFFECT     ON     ENCUMBRANCES.  §    27 

sale^  or  the  payment  of  the  amount  of  the  secured 
demands  into  court  for  the  encumbrancers,  such 
encumbrances  are  discharged.^  [Such  a  sale 
should  not  be  ordered,  however,  where  the  rights 
of  third  parties  have  intervened  which,  though 
subject  to  the  encumbrance,  cannot  be  determined 
in  the  probate  proceeding.]'* 

28.     Disposition  of  Proceeds  of  Sale.^ 

The  proceeds  of  such  sale  of  encumbered  prop- 
erty must  forthwith  be  applied  to  the  payment  of 

3  Upon  due  disposition,  or  payment  into  court,  en- 
cumbrance discharged:  See*  last  provision  of  code, 
section  1569,  quoted  under  note  1  above. 

4  Sale  Should  not  be  Made  in  Case  Rights  of  Third 
Parties  Intervene.— (1873)  Where  property  of  a  de- 
cedent which  is  affected  by  a  mortgage  is  sold,  and 
the  mortgage  obligation  has  been  allowed  as  a  valid 
claim  against  the  estate  of  the  decedent,  the  mort- 
gagee, upon  purchasing  at  the  sale  which  was  sub- 
sequently confirmed,  does  not  take  by  relation  the 
title  which '  the  mortgagor  had  at  the  date  of  his 
mortgage,  but  only  such  title  as  the  mortgagor  had 
at  the  time  of  his  death  and  such  title  as  the  estate 
may  subsequently  have  acquired.  The  sale  by  the 
probate  court  is  in  its  effect  equivalent  to  a  fore- 
closure of  the  mortgage,  for  the  pl'obate  court  is 
not  a  court  of  equity  and  has  no  power  to  fore- 
close a  mortgage.  Thus,  the  purchaser  does  not 
obtain  a  title  which  was  good  as  against  a  trans- 
feree of  the  property  subsequent  to  the  mort- 
gage, but  before  the  death  of  the  decedent  mort- 
gagor: Meyers  v.  Farquharson,  46  Cal.  190,  199,  200. 
Compare  section  58  below,  especially  note  40. 

5  Code  of  Civil  Procedure,  section  1569,  in 
part:  ^'The  purchase  money  must  be  applied,  after 
paying  the  necessary  expenses   of   the   sale,   first,   to 


§    28  OF   DEATH.  53 

(1  )   the  necessary  expenses  of  tlie  sale,^  and 
(2)   the   amounts   which  have  been  allowed  as 
valid    claims    against    the  estate  and    are  se- 
cured   by    the    property  sold/  with    interest, 
thereon,  and 

the  payment  and  satisfaction  of  the  mortgage  or 
lien,  and  the  residue,  if  any,  in  due  course  of  ad- 
ministration. The  application  of  the  purchase  money 
to    the    satisfaction    of    the    mortgage    or    lien    must 

be   made  without   delay The   purchase  money, 

or  so  m-uch  as  may  be  sufficient  to  pay  such  mort- 
gage or  lien,  with  interest,  and  any  lawful  costs  and 
charges  thereon,  may  be  paid  into  the  court,  to  be 
received  by  the  clerk  thereof,  whereupon  the  mort- 
gage or  lien  upon  the  land  must  cease  and  the  pur- 
chase money  must  be  paid  over  by  the  clerk  of  the 
court  without  delay,  in  payment  of  the  expenses  of 
the  sale,  and  in  satisfaction  of  the  debt  to  secure 
which  the  mortgage  or  other  lien  was  taken,  and  the 
surplus,  if  any,  at  once  returned  to  the  executor  or 
administrator,  unless  for  good  cause  shown,  after  no- 
tice to  the  executor  or  administrator,  the  court  other- 
wise directs.''     As  amended,  in  effect,  April  16,  1880. 

6  Necessary  Expenses  of  Sale  Only  are  Primary 
Charge.— Under  Code  of  Civil  Procedure,  section  1569 
(Probate  Act,  section  186),  the  only  expenses  for  which 
money  may  be  withheld  from  the  incumbrancer  are 
necessary  expenses  of  the  sale;  money  cannot  be  with- 
held to  pay  the  general  expenses  of  administration: 
Estate  of  Murray,   18  Cal.  686. 

7  Valid  Secured  Claims  Against  the  Estate  to  be 
Paid. — ^^It  thus  appears  that  before  the  administrator 
can  apply  any  portion  of  the  purchase  money  to  the 
payment  and  satisfaction  of  a  mortgage  upon  the 
property  sold,  such  mortgage  must  be  a  valid  claim 
against  the  estate  of  the  decedent,  and,  if  it  be  a 
mortgage  which  was  executed  by  the  decedent  foi 
the  purpose  of  securing  a  debt  created  by  himself,  it 
cannot  become  a  valid  claim  against  his  estate,  unless 
it  has  also  been  presented  and  allowed '':  Estate  of 
Turner,   128   Cal.   388,   391,   392,   60  Pac.   967. 


54  EFFECT    ON    ENCUMBRANCES.  |    28 

(3)  any  residue  must  be  applied  in  the  due 
course  of  administration  of  the  estate. 
The  proceeds  of  sale^  or  sufficient  thereof  to 
liquidate  the  expenses  of  sale  and  the  amounts 
payable  to  encumbrancers,  may  be  paid  into 
court  to  the  clerk  thereof  to  be  by  him  without 
delay  applied  as  above  provided. 

29.     Manner  of  Payment  When  Holder  of  Liqui- 
dated Encumbrance  Purchases. 

If,  at  the  sale  of  the  encumbered  property,  the 
holder  of  a  demand  which  has  been  presented  and 
allowed  as  a  valid  claim  against  the  estate  and 
which  is  secured  by  the  property  sold,  becomes 
the  purchaser  thereof,  he  must  pay  to  the  court, 
or  the  clerk  thereof,  an  amount  sufficient  to  pay 
the  expenses  of  the  sale,  but  as  to  the  remainder 
of  the  purchase  price,  his  receipt  for  an  amount 
payable  to  him  from  the  proceeds  of  the  sale  on 
account  of  his  secured  demand  is  a  sufficient 
payment  of  such  portion  of  the  purchase  price.^ 

8  Maimer  of  Payment  When  Holder  of  Liquidated 
Eucmnbrance  Purchases.— Code  of  Civil  Procedure, 
section  1570:  ^^At  any  sale,  under  order  of  the 
court,  of  lands  upon  which  there  is  a  mortgage 
or  lien,  the  holder  thereof  may  become  the  purchaser, 
and  his  receipt  for  the  amount  due  him  from  the  pro- 
ceeds of  the  sale  is  a  payment  pro  tanto.  If  the 
amount  for  which  he  purchased  the  property  is  in- 
sufficient to  defray  the  expenses  and  discharge  his 
mortgage  or  lien,  he  must  pay  to  the  court,  or  the 
clerk  thereof,  an  amount  sufficient  to  pay  such  ex- 
penses.^'    As  amended,  in  effect,  April  16,  1880. 


§    29  OF  DEATH.  55 

A  judgment  lien  is  a  lien  within  the  meaning  of 
this  section,  although  execution  has  not  issued 
thereon:   Estate  of  Wiley,   138  Cal.  301,  71  Pac.  441. 

' '  The  provisions  in  section  1570  of  the  Code  of  Civil 
Procedure,  that  the  holder  of  a  mortgage  may  be- 
come a  purchaser  at  any  sale  uijder  order  of  the 
court  of  the  lands  included  in  the  mortgage,  'and 
his  receipt  for  the  amount  due  him  from  the  pro- 
ceeds of  the  sale  is  a  payment  pro  tanto,'  is  to  be 
read  in  connection  with  the  provisions  of  the  previous 
section.  The  purchaser  who  is  the  holder  of  a  mort- 
gage upon  the  property  sold  is  not  authorized  to  make 
the  payment  for  his  purchase  in  this  manner,  unless 
his  mortgage  is  a  valid  claim  against  the  estate 
and  has  been  presented  and  allowed.  The  adminis- 
trator is  bound  to  account  to  the  court  for  the  en- 
tire proceeds  of  sales  made  under  its  order,  ana 
the  court  could  not  sanction  the  payment  of  the  pro- 
ceeds in  satisfaction  of  a  claim  whose  validity  had 
not  been  determined  by  it,  or  which  had  ceased  to 
be  a  valid  claim  by  reason  of  the  failure  of  the 
holder  to  present  the  same  for  allowance '':  Estate  of 
Turner,   128   Cal.   388,   392,   60   Pac.   967. 

Where  the  purchaser  of  land  at  a  probate  sale 
thereof  pays  in  cash  the  amount  of  the  expenses  of 
sale,  and  gives  a  credit  on  an  obligation  secured 
by  encumbrance  against  such  property  for  the  residue 
of  the  purchase  money,  the  credit  was  equivalent 
to  an  actual  payment  of  the  residue  in  cash,  and  the 
sale  having  been  confirmed  the  purchaser  is  forth- 
with entitled  to  a  conveyance,  and  the  probate  court 
has  power  to  compel  the  administrator  to  execute 
a  deed:   Estate   of  Lewis,   39   Cal.   306. 


56  EFFECT    ON     ENCUMBRANCES.  §    30 


AETICLE  4. 

ENFOECEMENT    OF    ENCUMBRANCES    AGAINST 
ESTATE   OF  DECEDENT. 

30.  Encumbrance  by  which  allowed  claim  is  secured 

may  be  foreclosed. 

31.  Encumbrance   may   be   foreclosed   without   allow- 

ance. 

32.  What     interest     recoverable     on     secured     claim 

when  estate  insolvent. 

30.     Encumbrance   by   Which   Allowed  Claim  is 
Secured  may  be  Foreclosed. 

Where  a  demand  secured  by  an  encumbrance 
against  property  of  a  decedent  has  been  duly  pre- 
sented and  allowed  as  a  valid  claim  against  his 
estate,  either  the  claim  may  be  paid  in  the  due 
course  of  the  administration  of  the  estate  and 
the  encumbrance  be  thereby  discharged,  or  an 
action  may  be  maintained  to  foreclose  the  encum- 
brance/ and  a  personal  deficiency  judgment  be 

1  Foreclosure  Action  may  be  Maintained  on  En- 
cumbrance   by    Which    Allowed    Claim    is    Secured: 

Hibernia  Sav.  etc.  Soc.  v.  Conlin,  67  Cal.  178,  180, 
7  Pac.  477;  Moran  v.  Gardemeyer,  82  Cal.  90,  100 
23  Pac.  6;  Moran  v.  Gardemeyer,  82  Cal.  102,  23 
Pac.   8. 

In  the  following  cases  the  question  was  apparently 
not  raised,  but  it  was  assumed  that  such  an  action 
was  permissible:  German  Sav.  etc.  Soc.  v.  Hutchin- 
son, 68  Cal.  52,  8  Pac.  627;  Wise  v.  Williams,  72  Cal. 
544,    14    Pac.    204. 


§    30  OF  DEATH.  57 

rendered  therein  where  a  deficiency  judgment  is 
allowable.^  After  a  demand  secured  by  mort- 
gage has  once  been  presented,  the  mortgagee  may 
on  foreclosure  recover  any  disbursements  m.ade 
by  him  after  the  presentation  under  authority  of 
the  mortgage  without  any  further  presentation.^ 

31.     Encumbrance    may  be    Foreclosed  Without 
Allowance. 

The^  holder  of  a  demand  secured  by  a  subsist- 
ing encumbrance  against  other  property  of  a  de- 

2  Deficiency  Judgment  may  "be  Rendered  Where 
AUowable. — It  was  manifestly  the  intention  of  the 
Code  of  Civil  Procedure,  section  1500,  as  it  was  first 
adopted  and  was  re-enacted  in  1876,  to  give  the 
holder  of  a  mortgage  which  secured  a  claim  against 
the  estate  which  when  allowed  would  rank  with  the 
acknowledged  debts  of  the  estate,  an  election  to  pre- 
sent the  claim  for  allowance,  have  it  allowed  and  pro- 
ceed to  foreclose  upon  the  whole  amount  due  on  the 
claim,  including  any  deficiency  arising  on  the  sale 
of  the  mortgaged  premises,  or  to  present  no  claim 
and  sue  on  the  mortgage  alone,  and  obtain  whatever 
might  be  realized  on  a  sale  of  the  mortgaged  premises 
under  the  judgment  of  foreclosure:  Hibernia  Sav.  etc. 
Soc.   V.   Conlin,   67   Cal.   178,   180,   7,  Pac.   477. 

3  German  Sav.  etc.  Soc.  v.  Hutchinson,  68  Cal.  52, 
8  Pac.  627;  Humboldt  Sav.  etc.  Soc.  v.  Burnham,  111 
Cal.   343,   347,   43   Pac.   971. 

4  Encumbrance  may  be  Foreclosed  Without  Allow- 
ance.—Code  of  Civil  Procedure,  section  1500:  ^'No 
holder  of  any  claim  against  any  estate  shall  main- 
tain any  action  thereon,  unless  the  claim  is  first 
presented  to  the  executor  or  administrator,  except 
in  the  following  case:  An  action  may  be  brought  by 
any  holder  of  any  mortgage  or  lien  to  enforce  the 
same    against    the     property     of     the    estate    subject 


o8  EFFECT  ON  ENCUMBRANCES.  §    31 

cedent  than  a  homestead  selected  and  recorded 
during  his  lifetime  and  continuing  after  his  der^th 
may,  upon  expressly  waiving  in  his  complaint  all 

thereto,  where  all  recourse  against  any  other  prop- 
erty of  the  estate  is  expressly  waived  in  the  com- 
plaint; but  no  counsel  fees  shall  be  recovered  in 
such  action  unless  such  claim  be  so  presented/'  As 
amended,   in   effect,   March   15,   1876. 

^^Th©  object  of  this  section  is  not  only  to  give  to 
the  holder  of  such  a  mortgage,  or  other  lien,  the 
right  to  maintain  an  action  against  the  representa- 
tive of  the  estate  to  enforce  the  same,  without  pres- 
entation of  the  claim  upon  which  the  action  is 
founded,  when  the  waiver  provided  for  is  made,  but 
also  to  relieve  the  estate  from  the  payment  of  coun- 
sel fees  stipulated  for  in  the  mortgage,  and  from 
the  payment  of  any  deficiency  judgment,  when  the 
mortgagee  elects  to  proceed  under  if:  Hibernia  Sav. 
etc.  Soc.  V.  Wackenreuder,  99  Cal.  503,  508,  34  Pac. 
219. 

'*  Under  this  section  the  plaintiff  acts  independently 
of  any  action  on  the  part  of  the  administrator  or 
executor,  and  without  any  reference  to  the  condition 
of  the  estate.  Instead  of  seeking  to  enforce  a  claim 
against  the  estate  through  the  administrator,  he  is 
seeking  a  judicial  sale  of  the  property  given  him  as 
security  for  its  payment,  irrespective  of  the  interest 
of  the  estate  in  the  property.  The  mortgagor  may 
have  parted  with  or  encumbered  the  property  in  his 
lifetime,  or  the  mortgaged  property  piay  have  been 
set  apart  to  his  family  as  a  homestead  after  his 
death,  but  in  an  action  of  foreclosure  the  property  is 
still  liable  for  the  full  amount  of  the  mortgage  debt. 
Irrespective  of  the  condition  of  the  estate.  The  court 
in  which  such  action  is  pending  is  not  called  upon 
to  *  allow '  a  claim  against  the  estate  which  is  to  be 
paid  in  the  course  of  administration,  but  merely  de- 
termines the  amount  of  the  mortgage  debt,  according 
to  its  terms,  and  directs  a  sale  of  the  mortgaged 
property' ':  Visalia  Sav.  Bank  v.  Curtis,  135  Cal.  350, 
353,    67    Pac.    329. 


§    31  OF    DEATH.  59 

The  followinjT  statement  from  Estate  of  Turner, 
128  Cal.  388,  393,  60  Pac.  967,  seems  too  broad  and  to 
disregard  the  provisions  of  code  section  1500:  ^'The 
ihortgage  could  not  be  available  as  a  claim  against 
the  estate  in  any  form,  unless  it  had  been  presented 

and  allowed By  reason  of  the  failure  to  have 

the  mortgage  allowed  as  a  claim  against  the  estate, 
the  appellant  [mortgagor]  waived  its  right  to  have 
the   same   considered   as   a   lien   upon   the  property." 

Instances  of  pledges  being  enforced  without  al- 
lowance upon  recourse  being  waived:  Estate  of  Kibbe, 
57  Cal.  407:  Mechanics^  Bldg.  etc.  Assn.  v.  King,  83 
Cal.  440,  443,  444,  23  Pac.  376;  In  re  Gailand,  92  Cal. 
293,  28  Pac.  287. 

Instances  of  mortgages  enforced  without  allow- 
ance: Security  Sav.  Bank  v.  Connell,  65  Cal.  574,  4 
Pac.  580;  Dreyfuss  v.  Giles,  79  Cal.  409,  21  Pac.  840; 
Bank  of  Sonoma  v.  Charles,  86  Cal.  322,  327,  328,  24 
Pac.  1019;  Anglo-Nevada  Assur.  Corp.  v.  Nadeau,  ,90 
Cal.  393,  397,  27  Pac.  302;  German  Sav.  etc.  Soc.  v. 
Fisher,  92  Cal.  502,  28  Pac.  591;  Hibernia  Sav.  etc. 
Soc.  V.  Wackenreuder,  99  Cal.  503,  34  Pac.  219;  Es- 
tate of  Freud,  131  Cal.  667,  673,  82  Am.  St.  Eep.  407, 
63  Pac.  1080.  Compare  Hibernia  Sav.  etc.  Soc.  v.  Con- 
lin,   67   Gal.   178,   7  Pac.   477. 

Ilistorical.— Before  January  1,  1873,  and  between 
July  1,  1874,  and  March  15,  1876,  where  the  mort- 
gaged property  belonged  to  the  estate  of  a  decedent 
and  the  principal  obligation  was  a  claim  against  such 
estate,  unless  the  claim  was  presented,  the  mortgage 
could  not  be  foreclosed:  Pitte  v.  Shipley,  46  Cal.  154; 
Harp  V.  Calahan,  46  Cal.  222;  Hibernia  Sav.  etc. 
Soc.  V.  Hayes,  56  Cal.  297.  (But  compare  Schadt  v. 
Heppe,  45'^Cal.  433;  and  in  Wright  v.  Boss,  36  Cal. 
414,  438,  439,  the  conclusion  was  reached  that,  al^ 
though  an  obligation  secured  by  a  pledge  of  property 
belonging  to  an  estate  of  a  decedent  was  not  pre- 
sented for  allowance  or  rejection,  the  pledge  was 
nevertheless  enforceable  against  the  pledged  prop- 
erty.) Where,  however,  the  claim  was  presented,  the 
mortgage  could  be  foreclosed:  Fallon  v.  Butler,  21 
Cal.  24,  81  Am.  Dec.  140;  Willis  v.  Farley,  24  Cal. 
491.     And    where    the    mortgaged    property    belonged 


60  EFFECT  ON  ENCUMBRANCES.  §    31 

recourse  against  the  property  of  the  estate^  not 
affected  by  the  encumbrance^  maintain  an  action 
to  foreclose  the  encumbrance  in  any  proper  tri- 
bunal without  having  first  presented  the  secui-ed 
demand  for  allowance  or  rejection^  or  even  afti^r 
its  rejection;^  but  a  personal  deficiency  judg- 
ment cannot  be  rendered''  nor  can  counsel  fees 
be  recovered  in  such  action  unless  the  demand  is 

to  a  different  person  from  the  decedent  whose  es- 
tate was  liable  on  the  principal  obligation,  foreclosure 
was  perniissible:  Christy  v.  Dana,  42  Cal.  174,  34  Cal. 
548;  Sichel  v.  Carillo,  42  Cal.  493.  A  claim  secured 
by  a  trust  deed  in  the  nature  of  a  mortgage  against 
property  of  the  decedent  was  likewise  required  to 
be  presented,  but  the  effect  of  nonpresentation  was 
held  to  be  the  same  as  that  of  the  statute  of  limita- 
tions—not to  extinguish  the  secured  obligation  for 
all  purposes:  Whitmore  v.  San  Francisco  Sav.  Union, 
50   Cal.   145. 

5  Encumbrancer  Must  Waive  Recourse  Against  Es- 
tate.— Where,  however,  the  secured  demand  is  not  a 
personal  charge  against  the  estate  of  the  decedent, 
neither  is  it  necessary  to  present  the  claim  against 
the  estate  nor  waive  all  recourse  against  it  before 
an  action  to  foreclose  such  encumbrance  mav  be  main- 
tained: Eyan  v.  Holliday,  110  Cal.  335,  338,  42  Pac. 
891. 

6  May  be  Maintained  After  Rejection  of  Secured 
Demand. — ^^The  proceeding  under  section  1500  is  en- 
tirely independent  of  the  administration  of  the  es- 
tate, and  may  be  conducted  in  a  different  forum  from 
that  in  which  such  administration  is  pending,  and 
may  be  taken  after  the  presentation  and  allowance 
of  his  claim,  ....  or  even  after  its  rejection'': 
Yisalia^  Bav.  Bank  v.  Curtis,  135  Cal.  350,  352,  353, 
67   Pac.    329. 

7  That  a  personal  deficiency  judgment  cannot  be 
rendered  in  such  action,  see  Bank  of  Woodland  v. 
Stephens,  137  Cal.  458',  70  Pac.  293. 


§    31  OF   DEATH.  (Ji 

SO  presented.  The  security  afforded  by  a  trust 
deed  in  the  nature  of  a  mortgage  is  not  at  all  im- 
paired by  a  failure  to  present  the  trust  deed,  and 
the  trustee  is  not  required  to  waive  recourse 
against  other  property  of  the  estate  as  a  pre- 
requisite to  its  enforcement  against  the  trust 
property  although  the  secured  demand  has  not 
been  allowed.® 

32.    What     Interest    Recoverable    on    Secured 
Claim  When  Estate  Insolvent. 

Whenever  the  estate  of  a  decedent  is  insolvent^, 
the  maximum  rate  of  interest  payable  after  the 
first  publication  of  notice  to  creditors  on  any 
claim  which  is  paid  in  due  course  of  administra- 
tion, whether  secured  by  encumbrance  or  not,  is 
seven  per  cent  per  annum  simple  interest;  but  if 

8  Waiver  not  Required  in  Case  of  Deed  of  Trust.— 

'^As  the  deed  ....  requires  no  judicial  foreclosure, 
£>nd  the  trusts  and  powers  therein  declared  are  in 
full  force,  it  follows  that  sections  1493  and  1502  of 
the  Code  of  Civil  Procedure,  prescribing  the  time 
w^ithin  which  claims  must  be  presented  against  the  es- 
tate of  a  deceased  person,  and  section  1500  of  the 
same  code,  allowing  an  action  for  foreclosure  of  a 
mortgage,  without  presentation  of  such  claim,  only 
^when  all  recourse  against  any  other  property  of  the 
estate  is  expressly  waived  in  the  complaint,'  have 
no  application  to  the  case  before  us,  and  the  right 
of  the  defendant  to  execute  the  powers  conferred  by 
the  deed,  and  apply  the  proceeds  arising  therefrom 
to  the  payment  of  the  debts  and  charges  named  in 
the  deed,  is  not  dependent  upon  a  compliance  with 
these  sections'':  More  v.  Calkins,  95  Cal.  435,  438, 
439,  29  Am.  St.  Eep.  128,  30  Pac.  583. 


62  EFFECT    ON    ENCUMBRANCES.  §    32 

the  secured  demand  is  enforced  by  a  foreclosure 
of  the  security^  the  encumbrancer  may^  until  the 
encumbrance  is  merged  in  the  foreclosure  judg- 
ment, recover  interest  at  the  conventional  rate 
provided  for  by  the  parties,  so  far  as  the  pro- 
ceeds of  the  encumbered  property  are  sufficient  to 
pay  the  same,  although  exceeding  the  rate  of  in- 
terest above  limited.^ 

9  Interest  Recoverable  When  Estate  Insolvent. 

Code  of  Civil  Procedure,  section  1494,  last  sen- 
tence: 'Mf  the  estate  be  insolvent,  no  greater  rate 
of  interest  shall  be  allowed  upon  any  claim  after  the' 
first  publication  of  notice  to  creditors  than  is  al- 
lowed on  judgments  obtained  in  the  superior  court." 

Civil  Code,  section  3920:  ^^  Interest  is  payable  on 
judgments  recovered  in  the  courts  of  this  state,  at 
■the  rate  of  seven  per  cent  per  annum,  and  no  greater 
rate,  but  such  interest  must  not  be  compounded  in 
any  manner  or  form." 

. '*The /claim'  referred  to  in  this  section  [1494]  is 
that  which^  by  the  preceding  section,  must  be  pre- 
sented to  the  administrator  or  executor  for  allow- 
ance, or  be  ^forever  barred,'  and  which,  when  'al- 
lowed' and  filed  in  the  court,  is  under  section  1497, 
'ranked  among  the  acknowledged  debts  of  the  es- 
tate, to  be  paid  in  due  course  of  administration.* 
The  rule  therein  limiting  the  rate  of  interest  is  a 
direction  to  the  administrator  or  .executor  in  de- 
termining the  amount  to  be  'allowed'  by  him  upon 
the  claim  when  the  estate  is  insolvent,  and  which  is 
to  be  paid  out  of  the  general  assets  of  the  estate, 
but  has  no  application  to  the  action  of  a  eourt  in  a 
suit  for  the  foreclosure  of  a  mortgage."  For  an  ac- 
tion for  the  foreclosure  of  the  mortgage  is  an  inde- 
pendent pioceeding.  Thus,  this  provision  is  inap- 
plicable, and  the  mortgagee  can  recover  the  interest 
provided  for  in  the  mortgage,  although  the  estate 
was  insolvent  and  the  rate  of  interest  contracted  for 


§    32  OF    DEATH.  63 

exceeded  that  allowed  on  judgments:  Visalia  Sav. 
Bank  v.  Curtis,  135  Cal.  350,  3o2,  353,  67  Pac.  329. 
Historical.— Piohsite  Act,  sec.  131,  in  part,  provided: 
''In  case  the  estate  is  insolvent,  no  claim  contracted 
after  the  passage  of  this  act  shall  bear  greater  in- 
terest than  ten  per  cent  per  annum  from  and  after 
the  time  of  issuing  letters.''  Under  this  provision 
it  was  held  that  where  the  holder  of  a  claim  sound- 
ing in  contract  and  secured  by  mortgage  presents 
his  claim  against  the  estate  of  the  deceased  obligor, 
and  the  same  is  allowed  and  paid  in  the  due  course 
of  administration,  the  estate  being  insolvent,  the 
claim  does  not  bear  more  than  ten  per  cent  interest: 
Ellis  V.  Polhemus,  27  Cal.  349. 


CHAPTER    2. 

BANKKUPTCY. 

AETICLE  1. 

RELATIONSHIP  OF  FEDEEAL  AND  STATE  LEG- 
ISLATION  TO   EACH   OTHEE. 

33.  Congress  may  enact  uniform  bankrupt  laws. 

34.  Scope   of   federal   bankrupt   laws. 

35.  Scope    of    state    insolvent    laws. 

36.  Effect  of  enactment  and  repeal  of  federal  laws 

on  state  laws. 

37.  Bankrupt  and  insolvent   defined. 

38.  Persons    embraced    within    operation    of    federal 

bankrupt  law. 

39.  Persons   embraced  within  operation  of   state  in- 

solvent  law. 

33.  Cong^ress    may    Enact    Uniform    Bankrupt 
Laws. 

The  Congress  of  the  United  States  has  power 
to  enact  uniform  laws  on  the  subject  of  bank- 
ruptcies throughout  the  United  States.^ 

34.  Scope  of  Federal  Bankrupt  Laws. 

In  the  exercise  of  its  power  to  enact  uniform^ 

1  Const.  U.  S.,  art.  1,  sec.  8,  subd.  4. 

2  Law  Must  be  Unif orm.— '  ^  The  laws  passed  on 
the    subject    must,    however,    be    uniform    throughout 

(64) 


§    34  OF  BANKRUPTCY.  65 

bankrupt  laws  Congress  may,  in  its  legislative 
discretion,  determine  the  persons  to  be  em- 
braced^ within  the  operation  of  such  laws  and  the 
effect  of  bankruptcy  upon  personal  relations  and 
property  rights^  throughout  the  United  States,, 
including  the  right  to  impair  the  obligation  of 
existing  contracts.^ 

the  United  States,  but  that  uniformity  is  geographical 
and  not  personal'^:  Hanover  Nat.  Bank  v.  Moyses,  186 
U.  S.  181,  187,  22  Sup.  Ct.  Eep.  857,  46  Law  ed.  1113. 

3  Persons  to  be  Embraced.— '^  The  conclusion  that 
an  act  of  Congress  establishing  a  uniform  system  of 
bankruptcy  throughout  the  United  States  is  constitu- 
tional, although  providing  that  others  than  traders 
may  be  adjudged  bankrupts,  and  that  this  may  be 
done  on  voluntary  petitions,  is  really  not  open  to 
discussion^'!  Hanover  Nat.  Bank  v.  Moyses/  186  U. 
S.  181,  187,  22  Sup.  Ct.  Kep.  857,  46  Law  ed.  1113. 

4  The  provision  in  the  bankruptcy  act  allowing 
the  bankrupt  the  exemptions  which  he  is  allowed 
under  the  particular  law  of  his  state  does  not  render 
the  act  unconstitutional.  ^  '■  The  system  is,  in  the  con- 
stitutional sense,  uniform  throughout  the  United 
States,  when  the  trustee  takes  in  each  state  whatever 
would  have  been  available  to  the  creditors  if  the 
bankrupt  law  had  not  been  passed.  The  general 
operation  of  the  law  is  uniform,  although  it  may 
result,  in  certain  particulars,  differently  in  different 
states'':  Hanover  Nat.  Bank  v.  Moyses,  186  U.  S. 
181,  190,  22  Sup.  Ct.  Eep.  857,  46  Law  ed.  1113. 

5  Bankrupt  Act  may  Impair  Obligation  of  Con- 
tracts.— ^^The  subject  of  ^bankruptcies'  includes  the 
power  to  discharge  the  debtor  from  his  contracts 
and  liabilities,  as  well  as  to  distribute  his  property. 
The  grant  to  Congress  involves  the  power  to  impair 
the  obligation  of  contracts,  and  this  the  states  were 
forbidden  to  do":  Hanover  Nat.  Bank  v.  Moyses, 
186  U.  S.  181,  188,  22  Sup.  Ct.  Eep.  857,  46  Law  ed. 
1113.  Liens— 5 


66  EFFECT     ON     ENCUMBRANCES.  §    35 

35.     Scope  of  State  Insolvent  Laws. 

In  the  absence  of  federal  bankruptcy  legisla- 
tion^ each  state  has  full  authority  to  enact  in- 
solvent laws ;  ^  but  such  laws  cannot,  except  when 
the  obligee  voluntarily  makes  himself  a  party  to 
the  insolvency  proceedings/  discharge  or  impair 
the  obligation  of  any  contract  existing  at  the 
time  of  enactment,^  nor  of  any  contract  to  which 
a  person  nonresident^  at  the  time  the  obligation 

«  In  Absence  of  Federal  Legislation  State  has  Full 
Authority. — So  long  as  there  is  no  national  bankrupt 
act,  each  state  has  full  authority  to  pass  insolvent 
acts  binding  persons  and  property  within  its  jurisdic- 
tion. For  each  state,  so  long  as  it  does  not  impair 
the  obligation  of  any  contract,  has  the  power  by 
general  laws  to  regulate  the  conveyance  and  distribu- 
tion of  all  property,  movable  and  immovable,  within 
its  limits  and  jurisdiction:  Brown  v.  Smart,  145  U.  S. 
454,  457,  12  Sup.  Ct.  Eep.  958,  36  Law  ed.  773. 

7  Obligee  Must  Voluntarily  Become  Party  to  Pro- 
ceeding.— ^'If  a  creditor  voluntarily  makes  himself 
a  x>arty  to  the  proceedings  under  an  insolvent  law  of 
a  state  which  discharges  the  contract,  and  accepts 
a  dividend  declared  under  such:  law,  he  will  be  bound 
by  his  own  act,  and  be  deemed  to  have  abandoned 
this  extraterritorial  immunity'':  Lowenberg  v. 
Levine,   93   Cal.   215,   221,   28  Pac.   941. 

A  state  cannot,  by  an  insolvent  law,  discharge  one 
of  its  own  citizens  from  his  coji tracts  with  citizens 
of  other  states,  unless  such  iionresidents  voluntarily 
become  parties  to  the  proceedings  in  insolvency: 
Brown  v.  Smart,  145  U.  S.  454,  457,  12  Sup.  Ct.  Eep. 
958,  36  Law  ed.  773. 

«  St^te  Cannot  Impair  Obligation  of  Existing  Con- 
tract. 

Const.    TJ.    S.,    art.    1,    sec.    10,    par.    1:    ^^No    state 


§    55  OF   BANKRUPTCY.  67 

^hall  ....  pass  any  law  impairing  the  obligation  of 
contracts.  ^ ' 

*'As  the  states,  in  surrendering  the  power,  did  so 
only  if  Congress  should  choose  to  exercise  it,  but  in 
the  absence  of  congressional  legislation  retained  it, 
the  limitation  was  imposed  on  the  states  that  they 
should  pass  no  ^law  impairing  the  obligation  of  con- 
tracts^ ^':  Hanover  Nat.  Bank  v.  Moyses,  186  U.  S. 
181,   187,  22   Sup.   Ct.   Eep.   857. 

Thus,  a  state  insolvent  law,  so  far  as  it  attempts 
to  provide  for  the  discharge  of  a  party,  as  to  future 
acquisitions  of  property,  from  debts  contracted 
-previously  to  the  enactment  of  the  law,  is  unconstitu- 
tional, because  violative  of  the  obligation  of  such 
contracts:  Sturges  v.  Crowninshield,  17  U.  S.  (4 
Wheat.)   122,  4  Law  ed.  118. 

But  insolvent  laws  providing  for  the  discharge  of 
debts  contracted  subsequent  to  their  passage  do  not 
violate  the  obligation  of  contracts:  Ogden  v. 
Saunders,  25  U.  S.  (12  Wheat.)  213,  6  Law  ed.  606. 

HistoricaL—'Under  the  California  Insolvent  Act  of 
3880,  a  discharge  could  constitutionally  be  granted 
of  a  debt  created  in  1878,  because  the  act  of  1880 
superseded  the  act  of  1852,  which  also  discharged 
the  debts  dischargeable  under  the  act  of  1880; 
Hundley  v.  Chaney,  65  Cal.  363,  4  Pac.  238;  Pomeroy 
V.  Gregory,  66  Cal.  574,  6  Pac.  492,  493;  Porter  v. 
Imus,   79   Cal.   183,   21   Pac.   729. 

»  State  Law  Does  not  Discharge  Debt  Owing  Non- 
resident.— A  state  cannot,  by  its  insolvent  law,  dis- 
charge one  of  its  own  citizens  from  his  contracts  with 
citizens  of  other  states,  though  the  contracts  were 
entered  into  after  the  passage  of  the  law,  unless  the 
nonresidents  voluntarily  become  parties  to  the  pro- 
ceedings in  insolvency:  Brown  v.  Smart,  145  U.  S. 
454,  457,  12  Sup.  Ct.  Eep.  958,  36  Law  ed.  773. 

'^  Insolvent  laws  of  one  state  cannot  discharge  the 
contracts  of  citizens  of  other  states  because  they 
have  no  extraterritorial  operation,  and,  consequently, 
the  tribunal  sitting  under  them,  unless  in  cases  where 
a  citizen  of  such  other  state  voluntarily  becomes  a 
•party  to  the  proceeding,  has  no'  jurisdiction  in  the 
case.     Legal    notice    cannot    be    given,    and,    conse- 


68  EFFECT  ON  ENCUMBRANCES.  §    35 

was  contracted^^  is  a  party,  nor  of  any  contract 
made  outside  the  state,  although  by  residents 
thereof.^^ 

quently,  there  can  be  no  legal  obligation  to  appear, 
and,  of  course,  there  can  be  no  legal  default'^:  Bald- 
win V.  Hale,  1  Wall.  (U.  S.)  234,  17  Law  ed.  531; 
Thomas  v.  Crow,  65  Cal.  470,  4  Pac.  448;  Rhodes  v. 
Borden,  67  Cal.  7,  11,  6  Pac.  850;  Bean  v.  Loryea,  81 
Cal.  151,  153,  22  Pac.  513;  Scamman  v.  Bonslett,  118 
Cal.  93,  96,  97,  50  Pac.  272. 

A  judgment  of  another  state  is  a  contract  within 
this  provision:  Bean  v.  Loryea,  81  Cal.  151,  154,  22 
Pac.    513. 

'*A  nonresident  and  nonassenting  creditor  is  not 
bound  by  the  debtor's  discharge  under  state  insolvent 
laws,  no  matter  where  the  debt  originated  or  was 
made  payable.  In  other  words,  the  citizenship  of  the 
parties  governs,  and  not  the  place  where  the  contract 
was  made  or  where  it  was  to  be  performed' ':  Lowen- 
berg  V.  Levine,   93   Cal.   215,   219,   28   Pac.   941. 

That  a  creditor  was  a  nonresident,  and  was  not 
affected  by  a  discharge  in  insolvency,  is  a  fact  to  be 
averred  and  proved:  Porter  v.  Imus,  79  Cal.  183,  185, 
21  Pac.  729. 

But  where  the  contract  (a  promissory  note  payable 
to  order)  was  made  between  two  citizens  of  this 
state,  and  the  payee  transferred  it  without  indorse- 
ment to  a  nonresident,  and  after  the  commencement 
of  the  insolvent  proceedings  against  the  payee  in- 
dorsed it,  the  title  did  not  pass  to  the  nonresident 
before  the  commencement  of  proceedings  and  the 
contract  was  discharged:  Thomas  v.  Crown,  65  Cal. 
470,  4  Pac.  448. 

10  Residence  at  Time  of  Contracting  the  Vital  Con- 
sideration.—^  ^  The  court  below  may  have  been  of 
opinion  that  the  debtor  and  creditor,  having  both 
been  citizens  of  California  at  the  date  of  the  con- 
tract, which  was  made  and  payable  in  this  state,  in 
an  action  brought  in  the  courts  of  this  state  to  en- 
force such  contract,  a  certificate  of  discharge  of  the 


§    36  OF   BANKRUPTCY.  69 

36.     Effect  of  Enactment  and  Repeal  of  Federal 
Laws  on  State  Laws. 

The  effect  of  the  exerci&e  by  Congress  of  the 
power  to  enact  uniform  bankrupt  laws  is  to  sus- 
pend and  supersede  the  operation  of  every  state 
insolvent  law  in  respect  to  all  matters  embraced 
within  the  provisions  of  the  federal  law;^^  but  a 

debtor  under  the  insolvent  law  of  this  state,  enacted 
before  the  indebtedness  accrued,  is  a  valid  defense 
to  the  action,  even  though  the  creditor  had  become 
a  citizen  of  another  state  after  the  making  of  the 
contract.  If  this  was  the  theory  of  the  court,  its 
conclusion  is  not  without  warrant  in  law^':  Scamman 
V.  Bonslett,  118  Cal.  93,  99,  oO  Pac.  272. 

11  State  Law  Does  not  Discharge  Contract  Made 
Outside  State. — State  insolvent  acts  do  not  apply  to 
contracts  not  made  within  the  state,  although  by 
residents  thereof,  when  the  obligee  does  n^t  partic- 
ipate in  the  insolvency  proceedings. 

In  this  and  the  previous  case  ^  ^  it  *is  considered  that 
the  state  does  not  possess  a  jurisdiction  coextensive 
with  the  contract  over  the  parties,  and,  therefore, 
that  the  constitution  of  the  United  States  protects 
them  from  prospective  as  well  as  retrospective  legis- 
lation'^  Lowenberg  v.  Levine,  93  Cal.  215,  221,  28 
Pac.   941. 

12  Federal  Bankrupt  Law  Suspends  State  Insolvent 
Law. — ' '  The  provision  in  the  constitution  of  the 
United  States  conferring  upon  Congress  the  power 
^to  establish  uniform  laws  on  the  subjects  of  bank- 
ruptcies throughout  the  United  States,'  of  necessity 
makes  any  act  of  Congress  passed  upon  that  subject 
the  supreme  law  of  the  land,  and  it  was  at  a  very 
early  day  determined  that  the  effect  of  such  action 
of  Congress  is  to  suspend  and  supersede  the  operation 
of  any  state  law  of  insolvency  whenever  there  is 
any  conflict  between  the  two'^  E.  H.  Herron  Co.  v. 
Superior    Court,    136    Cal.    279,    68   Pac.    814. 


70  EFFECT     ON     ENCUMBRANCES.  §    36 

state  insolvent  law  remains  operative  in  all  cases 
not  within  the  provisions  of  the  federal  law/^  and 
upon  the  repeal  of  a  federal  law  an  existing  state 
insolvent  law  again  becomes  operative,  not  only 
as  to  debts  contracted  after  the  repeal,  but  also 
as  to  those  contracted  during  its  suspension. ^^ 

37.     Bankrupt  and  Insolvent  Defined. 

Under  the  federal  bankrupt  law  any  person 
the  aggregate  of  whose  property,  exclusive  of  any 

13  State  Law  Remains  Operative  in  Cases  not  Pro- 
vided for  by  Federal  Law.— 'at  is  not  the  right  [of 
Congress]  to  establish  these  uniform  laws,  but  their 
actual  establishment,  which  is  inconsistent  with  the 
partial  acts  of  the  states.  If  the  Bankruptcy  Act 
excepts  a  class  of  cases  from  its  operation,  either  in 
express  terms  or  by  necessary  implication,  it  must  be 
considered  that  it  was  the  intention  of  Congress  not 
to  interfere  in  tfiat  class  of  cases  with  the  laws  of 
the  several  states  in  reference  thereto.  The  state 
laws  will  remain  operative  in  all  cases  which  are  not 

within   the  provisions   of   the  Bankruptcy  Act 

Each  statute  is  operative  within  its  own  jurisdiction, 
and  may  be  enforced  without  in  any  respect  in- 
fringing upon  the  jurisdiction  of  the  other '^:  E.  H. 
Herron  Co.  v.  Superior  Court,  136  Cal.  279,  68  Pac. 
814. 

14  Upon  Repeal  of  Federal  Law,  State  Law  Be- 
comes Operative  Again.— ^*  The  Insolvent  Law  of 
"this  state  was  not  repealed  by  the  passage  of  the 
Federal  Bankrupt  Law,  but  the  operation  of  the 
state  law  was  suspended  after  the  passage  and  until 
the  repeal  of  the  Bankrupt  Law,  when  it,  the  state 
law,  again  became  operative  as  to  debts  contracted 
during  such  suspension,  as  well  as  to  other  debts 
contracted  after  its  passage^':  Smith  v.  His  Cred- 
itors, 59  Cal.  267,  268;  Boedefeld  v.  Eeed,  55  Cal.  299; 


§    37  OF   BANKRUPTCY.  71 

property  which  he  may  have  conveyed,  trans- 
ferred, concealed,  or  removed,  or  permitted  to  be 
concealed  or  removed,  with,  intent  to  defraud, 
hinder,  or  delay  his  creditors,  is  insufficient,  at  a 
fair  valuation,  to  pay  his  debts  is  deemed  a  bank- 
rupt ;  ^^  under  the  state  law  any  person  who  is 
unable  to  pay  his  debts  from  his  own  means  as 
they  fall  due  is  deemed  an  insolvent.^^ 

38.     Persons    Embraced    Within    Operation    of 
Federal  Bankrupt  Law. 

Any^''  competent  natural  person  (including  a 
partnership  as  such)^^  who  owes  any  valid 
debts^^  may  avail  himself  of  the  benefits  of  the 

Lewis  V.  County  Court  of  Santa  Cruz  County,- 55  Cal. 
604;  Seattle  Coal  etc.  Co.  v.  Thomas,  57  Cal.  197,  200. 

15  Bankr.  Act,  1898,  sec.  1,  subd.  15.  This  pro- 
vision is  commented  upon  in  In  re  Doscher,  120  Fed. 
(D.  C),  408,  414. 

16  Civ.  Code,  sec.  3450. 

17  Voluntary  Bankrupts.— Bankrupt  Act  of  1898,  sec- 
tion 4a:  *^Any  person  who  owes  debts,  except  a  cor- 
poration, shall  be  entitled  to  the  benefits  of  this  act  as 
a.  voluntary   bankrupt. ^^ 

IS  Including  a  Partnership  as  Such.— For  the  pur- 
poses of  bankruptcy,  a  partnership  is  deemed  an 
entity  so  that  the  firm  may  become  bankrupt  without 
the  parties  or  all  of  them  being  adjudged  bankrupt, 
and  proceedings  in  bankruptcy  against  a  member  of 
a.  partnership  do  not  necessarily  involve  the  bank- 
ruptcy of  the  partnership:  In  re  Meyer,  98  Fed.  976, 
39  C.  C.  A.  3G8;  In  re  Sanderlin,  109  Fed.  (D.  C.)  857, 
859. 

19  Person  Must  be  (1)  Competent  and  (2)  Owe 
Valid  Debts.— A  minor  may  be  adjudged  a  bankrupt 


/2  EFFECT    ON    EXCUMBRANCES.  §    38 

bankrupt  law  as  a  voluntary  bankrupt;  and 
any^^  such  person  (including  a  partnership  as 
such)    except^^    a   wage-earner   who    works    for 

in  respect  to  debts  which  are  absolutely  binding 
upon  him;  but  as  to  debts  which  he  may  disaffirm 
upon  attaining  majority  no  such  adjudication  is  pos- 
sible:   In  re  Brice,   93   Fed.    (D.   C.)    942. 

^' In  cases  wherein  the  party,  although  giving  evi- 
dence of  insanity,  has  not  been  adjudged  insane,  but 
remains  in  possession  and  control  of  his  property, 
and  his  creditors  seek  his  adjudication  as  a  bankrupt, 
it  might  be  held  that  the  bankruptcy  court  could 
rightfully  exercise  jurisdiction,  and  could  hold  the 
party  responsible  for  his  acts  laefore  the  fact  of  his 
insanity  had  been  ascertained  and  established;  but, 
however  this  may  be,  it  cannot  be  so  held  in  cases 
like  that  now  before  the  court,  wherein  it  appears 
that,  prior  to  the  filing  of  the  petition  in  bankruptcy 
on  behalf  of  creditors,  the  party  proceeded  against 
had  been  adjudged  to  be  insane  by  a  competent  court, 
and  a  guardian  had  been  put  in  possession  of  his 
property. ' ' 

'^It  would  seem  clear  that  a  person  who,  by  reason 
of  insanity,  is  wholly  incapable  of  managing  his  busi- 
ness affairs,  cannot  be  held  to  have  intended  to 
violate  the  provisions  of  the  Bankrupt  Act  by  enter- 
ing into  transactions  which,  by  reason  of  his  mental 
disability,  would  not  be  binding  upon  him  under  the 
rules  of  the  common  law'':  In  re  Funk,  101  Fed. 
(D.   C.)    244. 

An  insane  person  cannot  be  adjudged  a  voluntary- 
bankrupt,  not  being  a  qualified  person  under  section 
59a:   In  re  Eisenberg,  117  Fed.   (D.  C.)   786. 

20  Involuntary  Bankrupts.— Bankrupt  Act,  section 
4b,  first  sentence:  '  ^  Any  natural  person,  except  a  wage- 
earner  or  a  person  engaged  chiefly  in  farming  or  the 
tillage  of  the  soil,  any  incorporated  company,  and  any 
corporation  engaged  principally  in  manufacturing, 
trading,    printing,    publishing,    mining,    or    mercantile 


§    38  OF   BANKRUPTCY.  73 

pursuits,  owing  debts  to  the  amount  of  one  thousand 
dollars  or  over,  may  be  adjudged  an  involuntary 
bankrupt  upon  default  or  an  impartial  trial,  and  shall 
be  subject  to  the  provisions  and  entitled  to  the  bene- 
fits of  this  act.''     As  amended  February  5,  1903. 

21  Certain  Persons  not  Subject  to  Involuntary 
Bankruptcy  Proceedings.— There  are  three  classes  of 
persons  excepted  from  involuntary  bankruptcy  pro- 
ceedings: 

(1)  wage-earners, 

(2)  persons  engaged  chiefly  in  farming, 

(3)  persons  engaged  chiefly  in  the  tillage  of  the  soil: 
In  re  Thompson,  102  Fed.  (D.  C.)   287. 

*^The  exemption  from  involuntary  proceedings  in 
favor  of  wage-earners  and  persons  engaged  chiefly 
in  farming  or  the  tillage  of  the  soil  is  not  intended 
as  a  means  of  escape  for  insolvents  whose  property 
was  acquired  and  whose  debts  were  incurred  in  other 
occupations  recently  engaged  in.  If  the  right  of 
the  creditors  to  institute  involuntary  proceedings  may 
thus  be  defeated  by  the  debtors  within  the  period 
allowed  for  the  commencement  of  such  proceedings, 
it  could  be  defeated  by  a  change  of  occupation  made 
coincidently  with  the  commission  of  an  act  of  bank- 
ruptcy, and  an  insolvent  debtor  would  thus  be  per- 
mitted to  dispose  of  his  stock  of  merchandise  or  other 
property,  distribute  the  proceeds  thereof  in  such 
manner  as  pleased  him,  immediately  become  for  the 
time  being  a  tiller  of  the  soil,  or  a  wage-earner 
'at  a  rate  of  compensation  not  exceeding  fifteen  hun- 
dred dollars  per  year,'  and  so  avoid  the  operation  of 
the  Bankrupt  Act.  Such  a  result  is  not  in  accord 
with  the  purpose  nor  within  the  spirit  of  the  law. 
....  The  excepted  occupations  are  not  designed  as 
a  refuge  for  insolvent  debtors  laden  with  property 
and  fleeing  from  other  callings":  In  re  Luckhardt, 
101  Fed.   (D.  C.)   807,  809,  810. 

Jnrisdictional  Fact.— The  fact  that  a  person  against 
whom  a  petition  in  bankruptcy  is  filed  is  a  wage- 
earner  or  a  person  engaged  chiefly  in  farming  or 
the  tillage  of  the  soil  is  not  a  personal  privilege 
which  can  only  be  set  up  by  the  alleged  bankrupt, 
but  a  jurisdictional  fact  the  contrary  of  which  must 


74  EFFECT    ON    ENCUMBRANCES.  §    38 

hire  at  a  rate  of  compensation  not  exceeding 
fifteen  hundred  dollars  a  year^  a  person  chiefly 
engaged  in  tillage  of  the  soil^  or  a  farmer,  and 
any  corporation  principally  engaged^^  in  mann- 

be  made  to  appear:  In  re  Taylor,  102  Fed.  728,  42 
C.  C.  A.  1. 

Wage-earner.— A  wage-earner  is  defined  in  Bankrupt 
Act,  section  1  (27),  as  *^an  individual  who  works  for 
wages,  salary,  or  hire,  at  a  rate  of  compensation 
not  exceeding  fifteen  hundred  dollars  per  year." 

Farming— Tillage  of  the  Soil. 

The  phrase  ^*  engaged  principally  in  farming  or 
the  tillage  of  the  soil"  cannot  be  restricted  to  those 
only  who  are  engaged  in  actual  labor  upon  a  farm, 
but  the  test  is  whether  the  person's  chief  occupation 
—  the  pursuit  from  which  he  expects  to  derive  his 
support  and  income — is  farming  or  something  else:  In 
re  Drake,  114  Fed.   (D.  C.)    229,  231,  232. 

^^A  person  engaged  chiefly  in  farming  is  one  whose 
chief  occupation  or  business  is  farming.  The  chief 
occupation  or  business  of  one,  so  far  as  worldly  pur- 
suits are  concerned,  is  that  which  is  of  principal  con- 
cern to  him,  of  some  permanency  in  its  nature,  and 
on  which  he  chiefly  relies  for  his  livelihood  or  as 
the  means  of  acquiring  wealth,  great  or  small"  (p. 
358).  ^'No  one  should  be  held  exempt  from  the  pro- 
visions of  the  Bankrupt  Act  on  this  ground  [that  he 
is  engaged  principally  in  farming]  unless  it  satis- 
factorily appears  that  he  comes  within  the  excep- 
tion"  (p.  359):   In  re  Mackey,  110  Fed.   (D.  0.)   355. 

The  business  of  farming  includes  the  fattening  of 
cattle  and  hogs  for  the  market  from  the  products  of 
the  farm,  and  a  person  engaged  in  such  occupation  is 
a  farmer:  In  re  Thompson,  102  Fed.  (I>.  C.)  287. 

22  Certain  Corporations  Only  Subject  to  Involun- 
tary Proceedings.— ''Under  the  Bankruptcy  Act  the 
question  is,  not  how  extensive  the  company's  powers 
may  be,  but  in  what  pursuits  the  corporation  is  in 
fact  principally  engaged  " :  In  re  New  York  and  West- 


§    38  OF   BANKRUPTCY.  75 

Chester  Water  Co.,  98  Fed.  (D.  C.)  711,  714  (a-ffirmed, 
under  the  name,  In  re  Morris,  102  Fed.  1004,  43  C.  C. 
A.  91);  In  re  Tontine  Surety  Co.,  116  Fed.  (D.  C.) 
401,  402.  See,  also.  In  re  Chicago-Joplin  etc.  Co.,  104 
Fed.   (D.  C.)   67. 

^'The  susceptibility  to  bankruptcy  of  a  corporation 
does  not  depend  wholly  upon  its  charter.  This  is 
clear,  both  from  the  language  of  the  act,  which 
speaks,  not  of  the  (corporation  ^s  charter  powers, 
but  of  the  business  in  which  it  is  principally  engaged, 
and  also  from  the  decided  cases.  A  corporation  may 
have  charter  power  to  do  that  which  is  not  its  prin- 
cipal business,  but  a  corporation  can  hardly  be 
brought  within  the  scope  of  the  bankrupt  act  by  a 
principal  business  which  is  beyond  the  authority 
given  bv  its  charter'^:  In  re  H.  J.  Quimby  Freight 
etc.  Co.,^  121  Fed.   (D.  C.)   139,  140. 

A  corporation  whose  business  was  gathering  in- 
formation and  printing  and  publishing  a  book  of  rat- 
ings with  respect  to  the  standing  of  merchants  is 
within  the  act:  In  re  Mutual  Mercantile  Agency,  111 
Fed.   (D.  C.)   152,  153. 

The  following  corporations  have  been  held  not  sub- 
ject to  involuntary  proceedings:  A  corporation  en- 
gaged principallv  in  giving  theatrical  performances: 
In  re  Oriental  Soc,  104  Fed.  (D.  C.)  975.  A  cor- 
poration engaged  in  the  mutual  insurance  of  its  own 
members:  In  re  (Jameron  Town  Mut.  Fire  etc.  ins.  Co., 
96  Fed.  (D.  C.)  756.  A  laundry  corporation.  In  re 
White  Star  Laundry  Co.,  117  Fed.  (D.  C.)  570.  A 
library  corporation  engaged  merely  in  circulating  and 
loaning  books  to  subscribers  and  members  paying 
a  certain  sum  monthly:  In  re  Parmelee  Library  (C. 
C.  A.),  120  Fed.  235. 

Mamifactv7Hng.—A  corporation  engaged  principally 
in  smelting  is  engaged  in  manufacturing:  In  re  Tecopa 
Mining   etc.    Co.,    110    Fed.    (D.    C.)    120. 

Trading— Mercantile  Pursuits. 

''The  proper  description  of  the  business  of  a  trader 
includes  both  buying  and  selling,  either  goods  or  mer- 
chandise, or  other  goods  ordinarily  the  subject-  of 
traffic.'' 


76  EFFECT    ON     ENCUMBRANCES.  §    38 

facturing,  trading,  printing,  publishing,  mining, 
or  mercantile  pursuits  (banking  corporations  ex- 
cepted ),^^  OAving  debts  to  the  amount  of  one 
thousand  dollars  or  over,  may  be  adjudged  an 
involuntary  bankrupt. 

''By  'mercantile  pursuits'  is  meant  the  buying  and 
selling  of  goods  or  merchandise,  or  dealing  in  the 
purchase  and  sale  of  commodities,  and  that,  too,  not 
occasionally  or  incidentally,  but  habitually  as  &  busi- 
ness'':  In  re  New  York  and  Westchester  Water  Co., 
98  Fed.  (D.  C.)  711,  714;  In  re  Tontine  Surety  Co., 
116  Fed.  (D.  C.)  401,  402.  See,  also.  In  re  Cameron 
Town  etc.  Ins.   Co.,  96  Fed.    (D.   C.)    756. 

The  words  ' '  trading  and  mercantile  pursuits ' '  are  to 
have  a  restricted  meaning,  and  are  not  to  be  so 
broadened  as  to  cover  the  whole  field  of  commerce  or 
commercial  pursuits:  In,  re  Philadelphia  and  Lewes 
Transp.   Co.,    114  Fed.    (D.   C.)    403. 

The  term  "  trader '^  cannot  be  enlarged  beyond  its 
technical  legal  meaning:  In  re  Surety  Guarantee  etc. 
Co.  (C.  C.  A.,  7th  Cir.),  121  Fed.  73,  75;  In  re  H.  J. 
Quimby  Freight  etc.  Co.,  121  Fed.  (D.  C.)  139,  140-141. 

"Selling  merely  the  natural  products  of  one's  own 
land  ....  does  not  constitute  trading  or  a  mercan- 
tile pursuit,  even  though  some  yearly  purchases  may 
be  made  by  the  seller  in  order  to  keep  up  his  regular 
supply.''  "These  terms  are  restricted,  also,  to  deal- 
ings in  merchandise,  goods,  or  chattels,  the  ordinary 
subjects  of  commerce."  Mere  "incidental  purchases 
or  sales  by  a  person  not  otherwise  a  trader,  will  not 
make  him  such."  "Thus,  the  principal  business  of 
a  water  company  being  merely  to  convey  the  water 
from  its  source  to  the  consumer  cannot  be  called  trad- 
ing or  mercantile  pursuit":  In  re  New  York  and 
Westchester  Water  Co.,  9^  Fed.  (D.  C.)  711,  714,  715 
(affirmed,  under  the  name.  In  re  Morris,  102  Fed.  1004, 
43  C.  C.  A.  91). 

A  corporation  chartered  as  a  common  carrier  of 
property  or  persons,  whose  actual  business  was  chiefly 
that    of   a   common   carrier,   and   in   less    degree   that 


§    38  OF   BANKRUPTCY.  77 

of  letting  teams  by  the  hour,  day,  or  week,  with  a 
subordinate  business  of  taking  horses  to  board  (the 
corporation  also  having  bought  horses,  hay,  grain, 
wagons,  harnesses,  etc.,  and  now  and  then  sold  horses 
and  wagons,  but  only  as  an  incident  of  its  general 
business),  is  not  a  trader:  In  re  H.  J.  Quimby  Freight 
etc.  Co.,  121  Fed.  (D.  C.)   139. 

A  corporation  engaged  in  the  carriage  of  passen- 
gers and  goods  for  hire  is  not  engaged  in  trading  or 
mercantile  pursuits:  In  re  Philadelphia  and  Lewes 
Transp.   Co.,    114  Fed.    (D.   C.)    403. 

A  corporation  engaged  in  buying  and  selling  stocks, 
bonds,  and  other  securities  is  not  a  trader:  In  r<? 
Surety  Guarantee  etc.  Co.  (C.  C.  A.,  7th  Cir.),  121 
Fed.  73,  74,  75. 

A  corporation  whose  principal  object  is  social  in- 
tercourse is  not  engaged  in  trading:  In  re  Fulton  Club, 
113  Fed.   (D.  C.)   997. 

A  corporation  engaged  in  keeping  a  saloon  and 
restaurant  is  not  in  trading  or  a  mercantile  pursuit. 
Such  a  business  is  like  a  hotel  business  without  the 
feature  of  lodgings:  In  re  Chesapeake  Oyster  etc.  Co., 
112  Fed.  (D.  C.)  960. 

In  Ee  Chesapeake  Oyster  etc.  Co.,  and  other  cases 
the  conclusion  reached  in  Ee  San  Gabriel  Sanatorium 
Co.,  95  Fed.  (D.  C.)  271,  that  a  private  hospital  run 
for  profit,  and  that  reached  in  Ee  Morton  Boarding 
Stables,  108  Fed.  (D.  C.)  791,  794,  that  a  boarding 
stable  is  trading  or  a  mercantile  pursuit,  is  disap- 
proved. 

Mining.— Before  the  amendment  of  1903  a  corpora- 
tion engaged  principally  in  mining  was  not  subject 
to  the  act:  In  re  Elk  Park  Min.  etc.  Co.,  101  Fed. 
(D.  C.)  422;  In  re  Eollins  Gold  etc.  Min.  Co.,  102 
Fed.  (D.  C.)  982,  983-985;  In  re  Chicago-Joplin  Lead 
etc.  Co.,  104  Fed.  (D.  C.)  67;  In  re  Woodside  Coal 
Co.,  105  Fed.  (D.  C.)  56;  In  re  Keystone  Coal  Co., 
109  Fed.  (D.  C.)  872. 

23  Except  Banking  Corporations.— Bankrupt  Act, 
section  4b,  second  sentence:  '^Private  bankers,  but  not 
national  banks  or  banks  incorporated  under  state  or 


78  EFFECT,    ON     ENCUMBRANCES.  §    39 

39.     Persons    Embraced    Within    Operation    of 
State  Insolvent  Law.^^ 

Any  corporation  except  a  banking  corpora- 
tion,^^ for  six  months  a  resident  of  California,^^ 

territorial  laws,  may  be  adjudged  involuntary  bank- 
rupts. ' ' 

^'A  private  banker  is  a  person  or  firm,  not  a  cor- 
poration, engaged  in  banking  without  having  special 

privileges  or  authority  from  the  state We  are 

of  opinion  that  the  'private  banker'  of  the  bank- 
ruptcy act  does  not  include  a  corporation' ':  In  re 
Surety  Guarantee  etc.  Co.  (C.  C.  A.,  7th  Cir.),  121 
Fed.  73,  74. 

24  AH  Persons  not  Embraced  in  the  Operation  of 
the  Federal  Law  are  Subject  to  the  State  Law.— In 
R.  H.  Herron  Co.  v.  Superior  Court,  136  Cal.  279,  282, 
283,  68  Pac.  814,  the  court  said:  **The  Bankruptcy 
Act  passed  by  Congress  in  1898  is  not  operative  upon 
all  classes  of  creditors  or  upon  all  classes  of  corpora- 
tions.'' ''It  follows  that  it  [a  corporation  which  at 
all  times  since  its  organization  has  been  engaged 
in  the  business  of  mining  in  this  state,  and  has  never 
been  engaged  in  manufacturing,  or  trading,  or  print- 
ing, or  publishing,  or  mercantile  pursuits  of  any  char- 
acter] is  not  subject  to  the  Bankruptcy  Act  of  1898, 
and  that,  consequently,  the  provisions  of  the  in- 
solvent law  of  this  state  applicable  to  such  corpora- 
tions have  not  been  suspended,  but  are  in  full  force. 
Under  section  40  of  that  act  its  provisions  apply  to 
all  corporations,  and  the  action  of  the  superior  court 
[m  declaring  the  corporation  an  involuntary  cor- 
poration]  was  therefore  within  its  jurisdiction." 

25  Except  Banking  Corporations.— Section  11  of  the 
Bank  Commissioners'  Act  (Stats.  1877-78,  p.  740,  c. 
481,  as  Amended  Stats.  1887,  p.  90,  c.  80,  was  in- 
tended by  the  legislature  to  provide  for  every  case 
involving  the  winding  up  of  the  business  of  a  bank- 
ing corporation,  and  necessarily  supersedes  the  pro, 
visions  of  the  Insolvent   Act   of   1880  so   far  as  this 


§    39  OF  BANKRUPTCY.  79 

owing,  debts  exceeding  in  amount  the  sum  of 
three  hundred  dollars,  may,  on  his  petition,  be 
adjudged  a  voluntary  insolvent  under  the  state 
insolvent  law;  and  any  wage-earner  who  works 
for  hire  at  a  rate  of  compensation  not  exceeding 
fifteen  hundred  dollars  a  year,  any  person  chiefly 
engaged  in  tillage  of  the  soil,  any  farmer,  and 
any  corporation  except  a  banking  corporation^^ 
not  embraced  within  the  operation  of  the  federal 
bankrupt  law,  owing  debts  in  this  state  amount- 
ing to  not  less  than  ^yg  hundred  dollars,  may  be 
adjudged  an  involuntary  insolvent. 

class  of  corporations  is  concerned:  People  v.  Superior 
Court,  100  Cal.  105,  114,  34  Pac.  492;  Crane  v.  Pacific 
Bank,  106   Cal.  64,   70,   39  Pac.   215. 

This  act  was  repealed  by  Stats.  1903,  March  2, 
p.  73,  c.  65,  but  the  same  purpose  was  accomplished 
by  Stats.  1903,  March  24,  p.  365,  c.  266,  section  10 
thereof  providing  that  the  bank  commission  shall 
have  charge  of  any  bank  which  becomes  insolvent 
or  unsafe. 

26  Corporation  Must  be  Resident.— Only  corpora- 
tions which  are  residents  of  a  county  for  six  months 
are  entitled  to  avail  themselves  of  the  provisions  of 
the  California  Insolvent  Law  of  1895  in  respect  to 
voluntary  bankrupts.  A  foreign  corporation  is  never 
a  resident  of  the  state — at  any  rate  when  it  has  not 
complied  with  the  conditions  upon  which  foreign 
corporations  may  sue  and  defend  in  this  state,  and 
in  such  case  cannot  become  a  voluntary  bankrupt: 
Keystone  Driller  Co.  v.  Superior  Court,  Cal.,  March 
31,  1903. 


80  EFFECT  ON  ENCUMBRANCES. 


AETICLE  2. 

BANKEUPTCY  UNDEE  FEDEEAL  LAW. 

SuMivision  1.     Validity   of  Enmimbrance  in   Case   of 
Bankruptcy. 

40.  Encumbrances    generally    not    affected   by    bank- 

ruptcy. 

41.  Contractual    encumbrance   for   present   considera- 

tion not  affected. 

42.  Encumbrances   against   exempt   property   not   af- 

fected. 

43.  Priorities    not    affected. 

44.  Contractual    encumbrance    to    secure    antecedent 

obligation    deemed    preference. 

45.  Contractual  encumbrance  when  money  knowingly 

used  to   confer  preference  voidable. 

46.  When  made  to  hinder  or  delay  or  defraud  cred- 

itors void. 

47.  When  declared  void  by  state  laws  void  in  bank- 

ruptcy. 

48.  Waiver  of  exemptions  to  encumbrancer  inures  to 

estate    when    encumbrance    void. 

49.  Undisclosed    encumbrance   lost    by   indistinguish- 

able mingling   of  property. 

Snhdivision  2.    Possessio7i  of  Encumbered  Property. 

50.  Encumbrancer    in    possession    at    time    of    filing 

petition   may   retain   possession. 

51.  When   bankrupt   in   possession   at   time   of   filing 

petition  trustee  entitled  to  possession. 


§    40  OF  BANKRUPTCY.  81 

taiuhdivision  3.     Proof  of  Secured  Demand. 

52.  Proof  of  secured  obligation  not  necessary. 

53.  Where    claim   by    mistake   proved    as   unsecured, 

mistake  may  be  corrected. 

54.  When  obligation  exceeds  property  in  value,  cred- 

itor may  prove   claim  for   excess. 

SuMivision  4.     Control  of  BanJcruptcy  Court  Over  En- 
ciimhrances. 

55.  Determination  of  value  of  encumbered  property. 

56.  Court   will   not   administer   property   encumbered 

beyond  its  value. 

57.  Court  cannot  control  property  of  third  person. 

58.  In  proper  case  encumbered  property  of  bankrui^t 

may  be  sold  free  of  encumbrances. 

59.  Encumbered   property   of  bankrupt  may  be  sold 

subject    to    encumbrances. 

Subdivision  5.    Enforcement  of  Encumbrances   Against 
Property  of  Bankrupt. 

60.  Effect   of   bankruptcy   upon   pending   foreclosure 

action. 

61.  Encumbrancer  in  possession  may  sell  if   encum- 

brance valid. 

62.  When  trustee  in  possession  bankruptcy  court  has 

exclusive    control   of   property. 

63.  Proceedings   in   excess   of   jurisdiction   cured   by 

acquiescence. 

Subdivision  1.     Validity  of  Encumbrance  in  Case 
of  Bankruptcy. 

40.     Encumbrances    Generally  not    Affected    by 
Bankruptcy. 

An  encumbrance  for  security  only^  created  by 
contract  and    accruing    against    any  property  at 
any  time  before  the  owner  thereof  becomes  in- 
Liens— 6 


82  EFFECT     OT^     EXCUMBRAXCES.  §    40 

solvent*  or  in  ease  of  his  insolvency  accruing  more 
than  four  months  before  the  filing  of  a  petition 
consequent  upon  which  the  owner  is  adjudged  a 
bankrupt^^  or  created  by  operation  of  law  and  ac- 
cruing against  such  property  at  any  time  before 
the  filing    of  the  petition^    (except  a  judgment 

1  Contract  Encumbrance  Made  Before  Owner  Be- 
comes Insolvent  Valid.— This  is  apparent  from  the 
fact  that  certain  encumbrances  are  invalidated  under 
section  44  below,  in  case  the  owner  is  insolvent 
at  the  time  of  their  creation,  only. 

3  Contract  Encumbrance  of  Four  Months*  Stand- 
ing not  Impaired  by  Bankruptcy.— ''It  is  clear  that 
a  mortgage  given  more  than  four  months  before  pro- 
<',eedings  in  bankruptcy  were  instituted,  in  good  faith, 
even  for  a  previously  existing  debt,  is  not  affected 
by  the  bankruptcy  acf :  In  re  Wright,  96  Fed.  (D. 
C.)   187,  189. 

' '  As  matter  of  law,  a  proceeding  in  bankruptcy  does 
not  affect  liens  accruing  four  months  prior  to  the 
petition  filed,  and  ....  the  trust-deed  mortgage 
....  is  a  valid  mortgage  and  first  lien  on  the  farm 
in  controversy,  in  favor  of  the  first  holder  thereof: 
In  re  Dunavant,   96  Fed.    (D.   C.)    542,   546. 

Illustrations.— A  mortgage  which  is  good  as  against 
the  mortgagor  and  also  as  against  the  unsecured  gen- 
eral creditors  of  the  mortgagor  (as  an  unrecorded 
immovable  property  mortgage)  is  valid  as  against  a 
trustee  in  bankruptcy:  In  re  Wright,  96  led.  187, 
189.  Contra,  In  re  Booth  ^s  Estate,  98  Fed.  (D.  C.) 
^75. 

An  unrecorded  movable  property  mortgage  being 
void  only  as  against  creditors  who  become  such  during 
the  time  that  the  mortgage  was  withheld  from  re- 
cordation is  not  void,  upon  the  bankruptcy  of  the 
mortgagor,  as  against  creditors  of  the  bankrupt  who 
neither  gave  nor  extended  credit  while  the  mortgage 
was  withheld  from  recordation:  In  re  Adams,  97  Fed. 
(D.   C.)    188. 


I    40  OF   BANKRUPTCY.  83 

Under  the  laws  of  Geors^ia  an  unrecorded  mov- 
able property  mortgage  being  valid  as  against  cred- 
itors of  the  mortagor,  such  a  mortgage,  when  executed 
in  good  faith  without  knowledge  on  the  part  of  the 
mortgagee  of  the  insolvency  of  the  mortgagor,  is, 
upon  the  bankruptcy  of  the>  mortgagor,  valid  as 
against  the  trustee  and  creditors  of  the  mortgagor: 
In  re  Josephson,  116  Fed.   (D.  C.)  404. 

A  pledge  of  a  thing  in  action  being  valid,  although 
not  accompanied  by  immediate  delivery  and  actual 
and  continued  change  of  possession  (see  Civ.  Code,  sec. 
3440;  sees.  191  and  201  below),  in  New  York,  a  pledge 
of  bills  receivable  where  the  bills  were  transferred 
to  the  pledgee  on  the  books  of  the  pledgor,  and  in 
Wisconsin  a  pledge  of  a  policy  of  insurance  where 
the  policy  remained  in  the  possession  of  the  insurer, 
were  held  valid  against  the  trustee  in  bankruptcy 
both  as  against  the  pledged  property  and  the  pro- 
ceeds thereof:  Young,  v.  Upson,  115  Fed.  (C.  C.)  192; 
In  re  Wittenberg  Veneer  etc.  Co.,  108  Fed.  (D.  C.) 
593;  same  case,  McDonald  v.  Daskam  (C.  C.  A.),  116 
Fed.  276. 

In  Ohio  an  unrecorded  movable  property  mortgage 
being  valid  against  everybody  except  creditors  who 
become  such  during  the  time  that  the  mortgage  is 
withheld  from  due  recordation,  and  who  during  such 
time  obtains  a  hold  on  the  mortgaged  property,  is, 
when  the  mortgage  is  subsequently  recorded  before 
the  adjudication  in  bankruptcy,  valid  as  against  a 
trustee  representing  creditors  at  large:  In  re  Shirley 
112  Fed.  301,  50  C.  C.  A.  252,  6th  Cir. 

A  lien  reserved  by  a  contracting  owner  in  a  build- 
ing contract,  whereby  the  owner  should  have  a  lien 
on  materials  actually  delivered  on  the  ground  as 
security  for  the  faithful  performance  of  his  contract 
by  the  contracting  owner,  is  valid  against  the  trustee: 
Duplan  Silk  Co.  v.  Spencer  (C.  C.  A.),  115  Fed.  689. 

3  Encumbrance  Created  by  Operation  of  Law  not 
Affected  by  Bankruptcy. — The  policy  and  construction 
of  the  law  on  this  subject  was  extensively  considered 
by  the  circuit  court  of  appeals  in  the  case  of  In 
re   Emslie,   102   Fed.   291,   42   C.   C.    A.    350,   wherein 


84  EFFECT     ON     ENCUMBRANCES.  §    40 

lien  against  such  property  founded  upon  a  per- 
sonal judgment  obtained  against  the  person  ad- 
judged bankrupt  in  an  action  wherein  his  prop- 
erty was  not  sequestered  by  attachment  or  other 
process^    during  his  insolvency  and  within  four 

the  decision  of  the  district  court  (97  Fed.  929,  98 
Ted.  716,  719-722),  which  held  that  a '  mechanic 's 
lien  obtained  under  the  laws  of  New  York  within 
four  months  of  bankruptcy  was  avoided  by  the  ad- 
judication of  bankruptcy,  was  overruled. 

The  circuit  court  of  appeals  said:  **A  trustee  in 
bankruptcy  cannot  acquire  a  better  title  than  the 
bankrupt  had,  except  as  to  property  which  has  been 
transferred  contrary  to  the  provisions  of  the  Bankrupt 
Act,  and  takes  the  estate  subject  to  all  liens  and  en- 
cumbrances other  than  those  enumerated  in  section  67. 
That  section  denies  the  privileges  of  a  lien  to  claims 
which,  for  want  of  record  or  for  other  reasons,  would 
not  have  been  valid  as  against  creditors  if  there  had 
been  no  bankruptcy,  and  enumerates  the  liens  and 
encumbrances  which  are  dissolved  by  the  adjudication 
of  bankruptcy,  or  can  be  kept  on  foot  and  enforced 
by  the  trustee  for  the  benefit  of  the  estate.  The 
latter  consist  of  two  classes— liens  obtained  through 
legal  proceedings  against  an  insolvent  debtor  with- 
in four  months  prior  to  the  filing  of  a  petition  in 
bankruptcy  against  him,  and  encumbrances  created 
by  the  act  of  the  bankrupt  within  four  months  prior 
to  the  filing  of  the  petition,  which  are  intended  to 
defraud  creditors  or  are  void  by  the  laws  of  the 
state  in  which  the  property  is  situated.  This  sec- 
tion preserves  all  liens  given  or  accepted  for  a  pres- 
ent  consideration. '' 

^'[Mechanics'  liens]  do  not.  fall  within  either  of  the 
two  classes  [above]. 

''They  are  not  within  the  first,  because  they  are 
not  created  or  obtained  through  legal  proceedings, 
whether  in  strict  definition  or  in  the  ordinary  mean- 
ing   of    the    term.     A    legal    proceeding    is    any    pro- 


§    40  OF   BANKRUPTCY.  85 

ceeding  in  a  court  of  justice  by  which  a  party  pur- 
sues a  remedy  which  the  law  affords  him.  The  term 
embraces  any  of  the  formal  steps  or  measures  em- 
ployed in  the  prosecution  or  defense  of  a  suit.  In 
the  section  [Bankr.  Act,  section  67]  it  obviously  refers 
to  the  use  of  judicial  process,  the  phraseology  being 
^levies,  judgments,  attachments,  or  other  liens  ob- 
tained through  legal  proceedings.'  The  filing  of  a 
notice  of  mechanics'  lien  has  no  necessary  relation 
to  the  institution  or  prosecution  of  a  suit.  The  filing 
is  essential  in  order  to  maintain  the  action  to  fore- 
close the  lien,  because  otherwise  the  lien  does  not 
attach;  but  it  is  no  more  a  preliminary  step  in  the 
'suit  than  is  the  protesting  of  a  note  in  a  suit  against 
an  indorser.  It  is  a  proceeding  of  the  same  kind  as 
filing  a  chattel  mortgage  or  recording  a  deed. 

^^Such  liens  are  not  within  the  second  class,  because 
they  are  not  an  encumbrance  created  by  the  debtor. 
They  are  created  by  the  statute,  or  by  the  act  of 
the  lienor  in  filing  the  statutory  notice.  The  en- 
cumbrances which  are  invalidated  by  the  section  are 
those  which  are  ^made  or  given'  by  the  person  ad- 
judged a  bankrupt.  They  include,  not  only  those 
specifically  mentioned,  *  conveyances,  transfers,  and 
assignments,'  but  all  encumbrances,  of  whatever  form, 
derived  from  his  contractual  act.  Unless  it  can  be 
said  that  the  lien  emanates  in  or  is  created  by  the 
contract  authorizing  the  labor  and  materials  to  be 
furnished,  it  arises  without  his  act.  If  it  is  a  creature 
of  the  contract,  it  is  supported  by  the  same  consid- 
eration, and,  being  given  for  a  *  present  consideration,' 
is  preserved  by  the  section. 

^*  There  are  no  equitable  considerations  in  favor 
of   the    general    creditors   of   a    debtor   which    should 

defeat  a  mechanic's  lien Statutes  giving  such 

liens  are  designed  to  enable  mechanics  and  material- 
men to  rely  upon  the  security  of  the  building  itself, 
without  looking  to  the  responsibility  of  the  owner. 
The  justice  and  expediency  of  giving  such  claims 
priority  over  the  debts  of  general  creditors  is  mani- 
fested in  the  legislation  of  the  several  states 

The  lien  under  the  New  York  statute  originates  in 
the  filing  of  the  notice   of  lien,   while  in  the  Michi- 


?.6  EFFECT    ON     ENCUMBRANCES.  §    40 

monthis  before  the  filing),^  has  the  same  validity 
against  the  trustee  in  bankruptcy  of  such  owner 
that  it  had  against  each  creditor  of  the  owner, 
respectively,  and  the  owner  himself  at  the  time  of 
the  filing  of  the  petition;  but  may  be  avoided  to 
the  amount  of  the  claims  of  all  creditors  of  the 
bankrupt  who  could  have  avoided  it  at  the  time 
of  the  filing,^  and  when    avoidable  by  the  bank- 

gan  statute  it  originates  by  the  act  of  furnishing, 
the  labor  or  materials,  and  is  thus  a  strictly  con- 
temporaneous lien.  We  do  not  discover  any  substan- 
tial distinction  between  the  two  statutes.  In  one  the 
lien  is  not  given  unless  the  notice  is  filed;  in  the 
other,  although  it  arises  when  the  labor  or  materials 
are  furnished,  it  is  lost  unless  a  notice  of  lien  is  filed 
in  a  specified  time.  The  object  of  both  statutes  is 
the  same,  and  both  accomplish  practically  the  same 
result.  In  one,  the  filing  of  the  notice  is  necessary 
to  perfect  the  lien;  in  the  other,  it  is  necessary  to 
preserve  it.  In  both,  it  is  wholly  optional  with  the 
lienor  whether  he  will  avail  himself,  or  not,  of  his 
right  of  priority.'^ 

In  the  following  cases  liens  arising  by  operation  of 
law  have  been  upheld. 

Materialman's  lien:  In  re  Georgia  Handle  Co.,  109 
Fed.  632,  48  C.  C.  A.  571;  In  re  Oconee  Milling  Co., 
109  Fed.  866,  48  C.  C.  A.  703. 

Logger's  lien:  In  re  Kerby-Dennis  Co.,  36  C.  C.  A. 
677,  95  Fed.  116,  119;  94  Fed.  (D.  C.)  818. 

Supply  lien  arising  under  the  laws  of  Virginia:  In 
re  West"  Norfolk  Lumber  Co.,  112  Fed.  (D.  C.)  759,  765. 

Laborer's  lien  arising  upon  the  happening  of  a 
certain  event:  In  re  Laird.  109  Fed.  550,  556,  557, 
48  C.  C.  A.  538.  See,  also.  In  re  Slomka,  117  Fed. 
(D.  C.)  688. 

Landlord's  lien  conferred  in  Delaware  for  the 
year's  rent  against  the  movable  property  of  the  lessee 
upon  the  leased  premises,  and  attaching  upon  default 


§    40  OF   BANKRUPTCY.  87 

in  the  payment  of  any  rent:  In  re  Mitchell,  116  Fed. 
(D.   C.)    87. 

Tax  lien:   In  re  Veitch,  101  Fed.   (D.  C.)   251. 

Under  the  Civil  Code,  section  3057  (see  section  476 
below),  an  officer  who  levies  an  attachment  has  a  lien 
on  the  goods  for  the  amount  of  his  charges;  yet  in 
Ke  Francis-Valentine  Co.,  93  Fed.  953,  the  district 
court,  evidently  overlooking  this  statutory  provision, 
held  that  where  an  attachment  was  dissolved  by  an 
adjudication  of  involuntary  bankruptcy  within  four 
months  of  the  attachment,  the  sheriff  in  whose  pos- 
session the  attached  property  had  been  may  be  com- 
pelled to  surrender  the  same  in  a  summary  proceeding. 
The  court  said: ^^ The  respondent  [sheriff]  is  not  en- 
titled to  the  possession  of  the  property  levied  upon 
by  him,  as  against  the  trustee  in  bankruptcy. 
Whether  the  respondent  is  entitled  to  have  the  costs 
incurred  by  him  in  the  attachment  proceedings  paid 
out  of  the  proceeds  arising  from  any  sale  of  the 
property  made  to  the  trustee  is  a  question  not  nec- 
essary  to   be   passed   upon   at   this   time.'' 

4  See  note  6  below. 

5  Avoidable  to  Amount  of  Claims  of  Creditors  Who 
Could  Have  Avoided  It. 

Bankrupt  Act,  section  67a:  ^*  Claims  which  for  want 
of  record  or  for  other  reasons  would  not  have  been 
valid  liens  as  against  the  claims  of  the  creditors  of  the 
bankrupt  shall  not  be  liens  against  his  estate.'' 

*'This  language  is  direct,  clear,  and  free  of  all 
ambiguity,  and  seems  to  have  been  chosen  by  the 
lawmakers  with  special  reference  to  statutes  relating 
to  fraudulent  conveyances,  like  that  of  Nebraska. 
It  means  that  any  liens  which  would  not  have  been 
valid,  if  creditors  had  a  right,  before  bankruptcy,  to 
avoid  the  same,  either  for  want  of  record  or  other- 
wise, shall  not  constitute  a  lien  against  the  estate 
in  bankruptcy":  In  re  Pekin  Plow  Co.,  112  Fed.  308, 
311,  50  C.  C.  A.  257,  8th  Cir. 

Bankrupt  Act,  sec.  67b:  ^^  Whenever  a  creditor  is 
prevented  from  enforcing  his  rights  as  against  a  lien 
created,  or  attempted  to  be  created,  by  his  debtor, 
who  afterward  becomes  a  bankrupt,  the  trustee  of  the 


88  EFFECT    ON    ENCUMBRANCES.  §    40 

estate  of  such  bankrupt  shall  be  subrogated  to  and 
may  enforce  such  rights  of  such  creditor  for  the  bene- 
fit   of   the   estate/^ 

Bankrupt  Act,  sec.  70e:  ^^The  trustee  may  avoid  any 
transfer  by  the  bankrupt  of  his  property  which  any 
creditor  of  such  bankrupt  might  have  avoided,  and 
may  recover  the  property  so  transferred,  or  its  value, 
from  the  person  to  whom  it  v/as  transferred,  unless 
he  was  a  bona  fide  holder  for  value  prior  to  the  date 
of  the  adjudication.  Such  property  may  be  recovered 
or  its  value  collected  from  whoever  may  have  re 
ceived  it,  except  a  bona  fide  holder  for  value.'' 

^'The  institution  of  proceedings  in  bankruptcy 
amounts  to  an  effectual  sequestration  for  the  benefit 
of  all  his  creditors  of  all  the  property  of  the  bank- 
rupt, including  property  transferred  by  the  bankrupt, 
before  proceedings  were  instituted,  in  fraud  of  his 
creditors.  By  such  a  proceeding  the  creditors  *  are 
using  the  courts  of  law  and  their  processes  for  the 
collection  of  their  debts,'  and  the  creditors  thereby 
make  an  effectual  seizure  of  the  property  of  the  bank- 
rupt within  the  true  meaning  of  the  decisions  of  the 

supreme  court  of  Nebraska The  trustee  chosen 

under  the  act  of  1898  becomes  the  representative  of 
all  creditors,  and  is  possessed  of  their  rights  to  at- 
tack fraudulent  conveyances":  In  re  Pekin  Plow  Co., 
112  Fed.  308,  310,  50  C.  C.  A.  257,  8th  Cir.  Any  fraud 
in  this  case  was  wholly  constructive. 

In  re  Eonk,  111  Fed.  (D.  0.)  154,  156,  was  a  case 
under  the  laws  of  Indiana  which  provided  that  a 
movable  property  mortgage  must  be  duly  recorded 
within  ten  days  after  its  execution,  otherwise  it  is 
void  as  against  all  third  parties;  from  which  it  follows 
that  a  verbal  agreement  to  mortgage  movable  prop- 
erty must  likewise  be  void  from  the  outset.  So  where 
a  verbal  agreement  to  mortgage  was  made  for  a  pres- 
ent consideration  more  than  four  months  before  the 
bankruptcy  of  the  would-be  mortgagor,  but  the  mort- 
gage itself  was  not  executed  and  recorded  until  within 
four  months  of  the  bankruptcy,  the  court  held  the 
mortgage   void,   saying: 

^ '  It  cannot  be  successfully  maintained  that  the 
verbal  agreement  created  a  valid  lien  as  against  the 


§    40  OF   BANKRUPTCY.  89 


claims  of  the  creditors;  and,  if  it  did  not  create  a 
valid  lien,  then,  by  the  terms  of  the  Bankruptcy  Act, 
it   cannot  be   enforced  as  a  lien  entitled  to   priority 

over    other    liens The    doctrine    contended    for 

by  the  mortgagee  would  necessarily  invite  and  inevi- 
tably lead  to  the  defeat  of  the  Bankruptcy  Act.  It 
would  be  easy  in  every  case  where  it  was  desired 
to  thwart  the  operation  of  the  law  and  to  give  a 
preference  to  a  relative  or  a  friend  to  make  an  agree- 
ment at  the  time  the  money  was  loaned  or  the  credit 
given  for  a  mortgage  to  be  executed  in  the  future. 
....  Such  agreements,  if  held  valid,  would  create 
secret  liens  upon  the  bankrupt's  property,  and  would 
enable  him  in  every  case  to  effect  the  very  objects 
which  it  was  the  purpose  of  the  Bankruptcy  Act  to 
prevent. ' ' 

In  South  Carolina  a  movable  property  mortgage 
which  has  never  been  recorded  being  void  against  sub- 
sequent creditors,  secured  or  unsecured,  but  valid 
against  antecedent  creditors,  in  case  of  the  bankruptcy 
of  the  mortgagor  the  trustee  must  apply  the  proceeds 
of  the  sale  of  the  property  affected  by  the  mortgage 
(1)  to  the  claim  of  subsequent  creditors  and  (2)  to 
the  mortgage  obligation:  In  re  Cannon,  121  Fed.  (D. 
C.)  582. 

Illustrations.— An  unrecorded  movable  property 
mortgage  being  void  as  against  unsecured  creditors 
becoming  such  during  the  time  that  the  mortgage  is 
withheld  from  due  recordation,  is  void  as  against  the 
trustee  in  bankruptcy  so  far  as  concerns  such  credi- 
tors: In  re  Leigh,  96  Fed.  (D.  C.)  806;  In  re  Adams, 

97  Fed.  (D.  C.)  188.     See,  also.  In  re  Booth's  Estate, 

98  Fed.  (D.  C.)  975.  Compare  City  Nat.  Bank  of 
Greenville  v.  Bruce,  109  j^'ed.  69,  70,  48  C.  C.  A.  236. 

In  Ehode  Island  a  movable  property  mortgage  being 
void  unless  recorded  within  five  days,  where  not  so 
recorded  it  is  not  a  valid  lien  against  the  bank- 
rupt's property:  In  re  Wright,  107  Fed.   (D.  C.)  428. 

In  Nebraska  an  unrecorded  movable  property  mort- 
gage being  void  merely  against  creditors  who  be- 
come such  during  the  time  that  the  mortgage  was 
withheld  from  due  recordation,  and  who  during  such 


90  EFFECT    ON     ENCUMBRANCES.  §    40 

time  obtained  a  hold  against  the  mortgaged  proyjerty, 
a  mortgage  never  recorded  is  void  as  against  a  trustee 
in  bankruptcy  who  represents  unsecured  creditors 
only:  In  re  Pekin  Plow  Co.,  112  Fed.  308,  50  C.  C.  A. 
257,  8th  Cir. 

In  California  a  movable  property  mortgage  executed 
within  four  months  of  bankruptcy  for  a  present  con- 
sideration being  void  as  against  the  creditors  of  the 
bankrupt  mortgagor  as  to  property  purported  to  be 
mortgaged  which  is  situate  in  a  county  where  the 
mortgage  is  not  recorded,  where  the  trustee  in  bank- 
ruptcy takes  possession  of  the  mortgaged  property  (a 
crop  of  apples),  and  sells  the  same^  without  the  con- 
sent of  the  mortgagee,  no  action  for  damages  for  the 
conversion  of  the  apples  is  maintainable  against  the 
trustee:  Guras  v.  Porter,  118  Fed.  (D.  C.)  668. 

A  movable  property  mortgage  void  against  creditors 
because  of  indefiniteness  of  description  of  mortgaged 
property  and  failure  to  record  is  void  as  against  the 
trustee  in  bankruptcy:  Stroud  v.  McDaniel,  45  C.  C.  A. 
453,  106  Fed.  493. 

A  mere  agreement  to  pledge  tangible  goods  without 
a  change  of  possession  of  the  property  until  within  a 
few  days  of  the  bankruptcy  is  invalid  as  against  the 
trustee,  although  the  original  agreement  was  made 
more  than  four  months  before  bankruptcy:  In  re  Sher- 
idan, 98  Fed.  (D.  C.)  406.  (For  such  a  pledge  is  void 
as  against  all  creditors  who  become  such  during  any 
time  that  the  pledged  property  remains  untransf erred.) 

Conflict  of  Authority,— There  is,  however,  a  conflict 
of  authority  on  this  point,  and  cases  holding  that  the 
encumbrance  has  greater  validity  against  the  trustee 
than  against  the  creditors  may  be  found.  But  these 
cases  overlook  the  statement  made  in  In  re  Pekin 
Plow  Co.,  112  Fed.  308,  50  C.  C.  A.  257,  8th  Cir.,  that 
the  present  Bankruptcy  Act  differs  from  the  act  of 
1867,  sections  67a  and  70a  of  the  present  act  not  being 
found  therein,  and  that  therefore  the  decisions  ren- 
dered on  this  point  under  the  act  of  1869  '  ^  are  of  lit- 
tle aid  in  construing  the  provisions  of  the  present 
acf ;  but  rely  upon  the  decisions  under  the  previous 
act. 


§    40  OF   BANKRUPTCY.  91 

Thus,  in  In  re  New  York  Economical  Printing  Co., 
110  Fed.  514,  518,  49  C.  C.  A.  133,  the  court  says: 
^  ^  The  Bankrupt  Act  does  not  vest  the  trustee  with  any- 
better  right  or  title  to  the  bankrupt's  property  than 
belongs  to  the  bankrupt  or  to  his  creditors  at  the  time 
when  the  trustee's  title  accrues.  The  present  act,  like 
all  preceding  bankrupt  acts,  contemplates  that  a  lien 
good  at  that  time  as  against  the  debtor  and  as  against 
all  of  his  creditors  shall  remain  undisturbed.  .  .  .  The 
provisions  which  have  been  quoted  [i.  e.,  sees.  67a,  67b, 
and  70e]  do  not  necessarily  touch  a  lien  which  at  the 
date  of  the  adjudication  of  bankrupcty  was  valid  as 
to  the  bankrupt,  and  could  not  then  be  disturbed  by 
any  of  his  creditors  [but  which  had  there  been  no  ad' 
judication  could  have  been  disturbed]." 

And  in  other  cases  the  court  states  that  the  trustee 
in  bankruptcy  takes  the  property  subject  to  all  valid 
claims,  liens,  and  equities  by  which  the  bankrupt 
would  be  bound,  and  cites  cases  under  the  national 
bankruptcy  acts  of  1841  and  1867  in  support  thereof: 
Chattanooga  Nat.  Bank  v.  Eome  Iron  Co.,  102  Fed. 
(C.  C.)  755,  759-761;  In  re  Kellogg,  112  Fed.  (D.  C.) 
52,   55. 

Thus  in  New  York  a  movable  property  mortgage 
being  void  as  against  any  creditor  who  obtains  a 
hold  upon  the  property  during  any  of  the  time  that 
the  mortgage  remains  unrecorded,  is  nevertheless 
valid  as  against  the  trustee  in  bankruptcy  represent- 
ing unsecured  creditors,  although  the  mortgage  was 
never  recorded:  In  re  New  York  Economical  Printing 
C»^  1,10  Fed.  514,  518,  49  C.  C.  A.  133;  In  re  Kellogg, 
112  ?t-a.  (D.  (J.)   52,  55. 

Although  in  Kentucky  an  unrecorded  movable  prop- 
erty mortgage  is  void  as  against  creditors  who  become 
such  during  the  time  the  same  is  withheld  from  due 
recordation  without  notice  thereof,  and  who  obtain  a 
hold  on  the  property  during  such  time,  yet  a  movable 
property  mortgage  which  was  never  recorded  is  valid 
as  against  the  trustee  in  bankruptcy  where  none  of  the 
creditors  have  obtained  a  valid  hold  upon  the  property 
upon  the  filing  of  the  petition:  In  re  Sewell,  111  Fed. 
(D.  C.)  791. 


92  EFFECT     ON     ENCUMBRANCES.  §    40 

rupt  at  such  time  may  be  wholly  avoided.  A 
judgment  lien  founded  upon  a  judgment  so  ob- 
tained, within  four  months  before  the  filing  is 
discharged  by  the  adjudication  of  bankruptcy, 
unless  the  liened  property  has  been  sold  in  satis- 
faction of  the  lien  to  a  bona  fide  purchaser  for 
value  without  reasonable  cause  for  inquiry.^ 

In  the  following  case  decided  under  the  California 
laws  under  the  same  facts  as  the  New  York  cases 
above  the  same  conclusion  was  reached:  In  re  Stan- 
dard Laundry  Co.,  112  Fed.  (D.  C.)  126;  (C.  C.  A.,  9th 
Cir.),  116  Fed.  476. 

In  the  circuit  court  of  appeals  the  court  said  that  in 
this  case  the  contest  was  wholly  between  the  mort- 
gagee and  the  trustee  in  bankruptcy,  as  *  *  there  was  no 
fraud  in  fact  or  in  law  against  the  creditors  of  the 
bankrupt'';  that  the  trustee  in  bankruptcy  has  the 
same  rights  as  the  bankrupt — no  more;  and  that  as 
the  bankrupt  is  estopped  from  denying  the  validity 
of  the  mortgage,  so  is  the  trustee.  Cases  under  the 
previous  bankruptcy  law,  but  none  under  the  present, 
were  cited.  The  court  forgets  that  the  mortgage  was 
wholly  void  as  against  all  creditors  who  became  such 
during  the  time  that  the  mortgage  was  withheld  from 
due  recordation,  and  that  that  which  is  absolutely 
void  cannot  become  valid  under  the  present  bank- 
ruptcy law  against  the  trustee.  Moreover,  the  Cali- 
fornia case  cited  by  the  court  has  no  reference  to 
movable  property,  but  to  an  equitable  lien  on  immova- 
ble property  which  is  governed  by  entirely  different 
principles. 

6  Judgment  Lien  Founded  upon  Judgment  Ob- 
tained Within  Four  Months  DischsLrged,  Unless  Prop- 
erty Previously  Attached. 

Bankrupt  Act,  section  67f,  provides:  *^That  all  lev- 
ies, judgments,  attachments,   or   other  liens,   obtained 
through  legal  proceedings  against  a  person  who  is  insol- . 
vent,  at  any  time  within  four  months  prior  to  the  filing 


§    40  OF    BANKRUPTCY.  93 

of  a  petition  in  bankruptcy  against  bim,  shall  be  deemed 
null  and  void  in  case  he  is  adjudged  a  bankrupt,  and 
the  property  affected  by  the  levy,  judgment',  attach- 
ment, or  other  lien  shall  be  deemed  wholly  discharged 
and  released  from  the  same;  ....  provided,  that 
nothing  herein  contained  shall  have  the  effect  to  de- 
stroy or  impair  the  title  obtained  by  such  levy,  judg- 
ment,  attachment,  or  other  lien,  of  a  bona  fide  pur- 
chaser for  value  who  shall  have  acquired  the  same 
without  notice  or  reasonable  cause  for  inquiry.^' 

Bankrupt  Act,  sec.  1,  clause  1,  provides  that  '^  ^i 
person  against  whom  a  petition  has  been  filed'  shall 
include  a  person  who  has  filed  a  voluntary  petition.'* 

*^In  our  opinion,  the  conclusion  to  be  drawn  from 
the  language  is  that  it  is  the  lien  created  by  a  levy, 
or  a  judgment,  or  an  attachment,  or  otherwise,  that  is 
invalidated,  and  that  where  the  lien  is  obtained  more 
than  four  months  prior  to  the  filing  of  the  petition,  it 
is  not  only  not  to  be  deemed  to  be  null  and  void  on 
adjudication,  but  its  validity  is  recognized.  When  it 
is  obtained  within  four  months  the  property  is  dis- 
charged therefrom,  but  not  otherwise.  A  judgment  or 
decree  in  enforcement  of  any  otherwise  valid  pre-ex- 
isting lien  is  not  the  judgment  denounced  by  the  stat- 
ute, whicn  is  plainly  confined  to  judgments  creating 
liens.  If  this  were  not  so,  the  date  of  the  acquisition 
of  a  lien  by  attachment  or  creditor's  bill  would  be 
entirely  immaterial. 

^  ^  Moreover,  other  provisions  of  the  act  render  it  un- 
reasonable to  impute  the  intention  to  annul  all  judg- 
ments recovered  within  four  months":  Metcalf  Bros. 
&  Co.  V.  Barker,  187  U.  S.  165,  23  Sup.  Ct.  Eep.  67, 
714,  overruling  the  opinions  of  the  district  court  (In 
re  Lesser,  100  Fed.  433),  and  of  the  circuit  court  of 
appeals,  holding  the  contrary. 

^*  Section  67f  avoids  certain  liens,  if  created  within 
four  months.  This  is  its  object.  It  does  not  avoid 
judgments  or  levies,   except   so   far  as  they  create  a 

lien It  releases  the  property  affected  by  levies, 

judgm.ents,  and  attachments,  so  far  as  these  create  a 
lien.  Now,  an  attachment,  in  and  of  itself,  and  with- 
out further  proceedings  creates  a  lien  in  Massachu- 
setts  Hence,  if  the  attachment  be  made  more 

than  four  months  before  the  petition  is  filed,  the  at- 


94  EFFECT    ON    ENCUMBRANCES.  §    41 

41.     Contractual  Encumbrance  for   Present  Con- 
sent Consideration  not  AffectedJ 

An  encumbrance  executed  in  good  faith  and 
not  in  contemplation  of  or  in  fraud  upon  the 
bankruptcy  act^^  in  so  far  as  supported  by  a 
present  consideration  or  given  to  secure  future 

tachment  and  the  lien  which  it  creates  are  both  pre- 
served, by  necessar^^  implication,  as  against  the  opera- 
tion of  the  Bankrupt  Act Where  ....  the  lien 

is  created  by  the  attachment,  the  judgment  and  levy 
create  no  new  or  additional  lien,  but  only  enforce  a 
lien  already  existing:  In  re  Blair,  108  Fed.  (D.  C.) 
529,  530. 

To  the  same  effect,  see  In  re  Kavanaugh,  99  Fed. 
(D.^C.)  928;  In  re  Beaver  Coal  Co.,  110  Fed.  (D.  C.) 
630.  Contra:  In  re  Lesser,  108  Fed.  (D.  C.)  ^01;  In 
re  Johnson,  108  Fed.  (D.  C.)  373. 

But  otherwise  a  judgment  lien  accruing  (or  an  at- 
tachment or  execution  levied)  upon  any  property  is 
dissolved  by  an  adjudication  of  bankruptcy  made 
against  the  owner  thereof,  either  in  involuntary  or 
in  voluntar}^  proceedings,  pursuant  to  a  petition  filed 
within  four  months  after  the  accrual  or  lew:  In  re 
Richards,  96  Fed.  935,  941,  942,  37  C.  C.  A.  634,  7th 
Cir.,  affirming  95  Fed.    (D.   C.)   258;   In  re  Fellerath, 

95  Fed.  (D.  C.)  121,  122:  In  re  Breslauer,  121  Fed. 
(D.  C.)  910,  914;  In  re  Franks,  95  Fed.  (D.  C.)  635 
(attachment);  In  re  Higgins,  97  Fed.  (D.  C.)  775  (at- 
tachment); In  re  Burrus,  97  Fed.  (D.  C.)  926,  928 
(attachment);  In  re  Vaughan,  97  Fed.  (D.  C.)  560 
(execution). 

(In  the  early  cases  of  Re  De  Lue,  91  Fed.  (D.  C.) 
510,  Re  Easley,  93  Fed.  (D.  C.)  419,  and  Re  O'Connor, 
95  Fed.  (D.  C.)  943,  the  contrary  was  held  in  case  of 
voluntary  bankruptcies.) 

Where  the  property  has  been  sold  pursuant  to  the 
lien,  although  a  bona  fide  purchaser  for  valiTC  of  the 
property  is  protected,  the  proceeds  of  the  property 
stand  in  lieu  thereof  and  may  be  recovered:  In  re 
Kenney,  97  Fed.   (D.  C.)   554,  557;  In  re  Franks,  95 


or  THi 

§    41  OF   BANKRUPTCY.     '^      UNlVEr':'       95 

\       P  ^^ 

Fed.   (D.  C.)  635   (case  of  attachmentyS^eI^~^g&ii^'' 
re  Knickerbocker,  121  Fed.   (D.  C.)   1004. 

7  Contractual  Encumbrancer  for  Present  Considera- 
tion not  Affected.— Bankrupt  Act,  section  67d:  '^  Liens 
given  or  accepted  in  good  faith  and  not  in  contempla- 
tion of  or  in  fraud  upon  this  act,  and  for  a  present  con- 
sideration, which  have  been  recorded  according  to  law, 
if  record  thereof  was  necessary  in  order  to  impart  no- 
tice, shall  not  be  affected  by  this  act. ' ' 

Comment  on  Statute.— '  ^  The  expression  *and  for  a 
present  consideration^  ....  shows  that  this  para- 
graph refers  to  liens  given  or  accepted  within  four 
months  preceding  the  bankruptcy  proceedings.  Other- 
wise [that  is,  in  case  the  lien  was  given  more  than 
four  months  preceding],  if  a  lien  had  been  given  or 
accepted,  even  though  not  for  a  present  consideration, 
but  for  an  antecedent  debt,  the  lien  would  be  good,  un- 
der all  the  provisions  of  the  act^':  In  re  Wright,  96 
Fed.  (D.  C.)  187,  189. 

In  Ee  Durham,  114  Fed.  (D.  C.)  750,  753,  the  court 
said  that  the  cases  hold  **that  pledges  to  secure  money 
loaned  at  the  time  are  valid;  that  an  exchange  of  a 
security  validly  held  for  a  new  security,  the  old  one 
being  released,  is  not  a  preference;  that  a  fair  ex- 
change of  values  may  be  made  at  any  time,  notwith- 
standing insolvency;  that  an  insolvent  is  not  bound  to 
abandon  all  dealing  with  his  property,  provided  he 
does  not  give  preference  to  antecedent  debts,  and 
does  not  so  deal  with  it  as  to  evidence  a  purpose  to 
defraud  or  delay  his  creditors;  and  that  preferences 
can  only  arise  in  case  of  antecedent  debts.'' 

s  Encumbrance  Must  be  Executed  in  Good  Faith, 
and  not  in  Fraud  of  Bankruptcy  Act.— In  Ee  Soudan 
Mfg.Co.(C.  C.  A.),113Fed.  804,  806,thecourt  says:  *^It 
is  equally  clear  that  section  67d[quoted  in  note  7  above] 
saves  from  invalidity  the  security  thus  founded  upon  a 
present  consideration,  if  '  accepted  in  good  faith  and  not 
in  contemplation  of  or  in  fraud  upon  this  act';  and  in 
the  absence  of  notice  which  impeaches  the  good  faith 
of  the  transaction  as  so  defined,  the  mortgagee  is  en- 
titled to  the  benefits  of  his  lien,  notwithstanding  the 
fraud,  if  any  there  was,  on  the  part  of  the  mort- 
gagor. ' ' 


96  EFFECT    ON    ENCUMBRANCES.  §    41 

advances  which  have  actually  been  made^  at  the 
time  of  the  filing  of  the  petition  consequent  upon 
which  the  owner  of  the  encumbered  property 
is  adjudged  a  bankrupt,  although  accruing 
within  four  months  of  the  filing  of  the  petition, 
has  like  validity,  and  may  be  avoided  to  like  ex- 
tent as  the  encumbrances  considered  in  the  pre- 
ceding section. 

In  Stedman  v.  Bank  of  Monroe  (C.  C.  A.,  8th  Cir.), 
117  Fed.  237,  where  the  mortgagor  was  actually  in- 
solvent at  the  time  of  executing  the  mortgage  in  ques- 
tion, the  court  attached  importance  to  the  fact  that 
at  the  time  of  the  execution  of  the  mortgage  the  mort- 
gagee did  not  believe  and  had  no  reasonable  cause  for 
believing  the  mortgagor  insolvent. 

9  Mortgage  Must  be  Supported  by  Present  Consid- 
eration.— A  duly  recorded  movable  property  mortgage 
given  for  a  present  consideration  by  an  insolvent 
debtor  within  four  months  is  valid:  In  re  Wolf,  98 
Fed.  (D.  C.)  84;  Davis  v.  Turner  (C.  C.  A.,  4th  Cir.),  120 
Fed.  605,  613,  614. 

A  duly  recorded  movable  property  mortgage  given 
by  a  debtor  within  four  months  of  his  bankruptcy  in 
part  for  a  present  consideration  is  valid  to  the  amount 
of  the  present  consideration:  Stedman  v.  Bank  of 
Monroe  (C.  C.  A.,  8th  Cir.),  117  Fed.  237;  Guras  v. 
Porter,  118  Fed.  (D.  C.)  668;  In  re  Durham,  114  Fed. 
(D.  C.)  750,  753;  In  re  Eonk,  111  Fed.  (D.  C.)  154, 
156. 

It  is  also  valid  as  to  amount  of  future  advances 
agreed  to  be  made  and  subsequently' advanced:  In  re 
Durham,  114  Fed.  (D.  C.)  750,  753. 

Same  holds  good  as  to  a  pledge:  In  re  Belding,  116 
Fed.  (D.  C.)  1016;  In  re  Cobb,  96  Fed.  (D.  C.)  821, 
825,  826. 

A  pledge  given  for  present  consideration  does  not 
constitute  a  preference:  In  re  Little,  110  Fed.  (D.  C.) 
621,  629,  630. 


§    42  OF   BANKRUPTCY.  97 

42.     Encumbrances    Ag-ainst    Exempt    Property 
not  Affected. 

Property,  set  apart  to  a  bankrupt  as  exempt 
under  the  laws  of  the  state  is  not  thereby  released 
from  encumbrances  otherwise  valid  against  it, 
but  they  retain  the.  same  validity  which  they 
would  have  had  irrespective  of  the  proceedings  in 
bankruptcy.*^ 

Such  a  mortgage  being  valid,  it  follows  that  where 
the  trustee  in  bankruptcy  took  possession  of  the  mort- 
gaged property  (a  crop  of  apples),  and  sold  the  same 
without  the  consent  of  the  mortgagee,  he  is  liable  tor 
the  conversion  of  the  apples:  Guras  v.  Porter,  118 
Fed.   (D.  C.)   668. 

10  Encumbrances  Against  Exempt  Property  not  Af- 
fected.— ^'AVhen  property  claimed  to  be  exempt  under 
the  provisions  of  the  law  of  the  state  is  set  apart  by 
the  trustee  and  referee,  and  delivered  to  the  bankrupt, 
it  passes  without  the  control  of  the  court  in  bank- 
ruptcy, and  parties  who  claim  liens  thereon  by  way  of 
contract,  mortgage,  or  as  vendors  must  assert  their 
rights  in  a  court  other  than  the  court  of  bankruptcy. 
The  act  of  setting  apart  the  property  as  exempt  does 
not  release  the  same  from  liens  which  are  enforceable 
against  it  under  the  provisions  of  the  sta,te  statutes. 
Setting  it  apart  as  exempt  property  declares  that  the 
trustee  has  no  right  in  or  title  thereto,  under  the  pro- 
visions of  the  Bankrupt  Act,  but  in  no  sense  is  it  an 
adjudication  of  the  rights  of  third  parties  claiming 
liens  thereon  by  way  of  mortgages  or  the  like;  and  all 
courts  other  than  the  court  of  bankruptcy  are  at  lib- 
erty to  hear  and  determine  rights  to  sucn  exempt  prop- 
erty, the  same  as  though  no  proceedings  in  bankruptcy 
had  been  instituted'^:  In  re  Little,  110  Fed.  (D.  C.) 
621,  627. 

Thus  while  only  a  creditor  who  has  security  for  his 
debt  in  a  nature  to  be  assignable  is  deemed  to  be  a 
secured  creditor,  yet  as  in  Kentucky  a  homestead  is 
Liens— 7 


98  EFFECT    ON     ENCUMBRANCES.  §    43 

43.  Priorities  not  Affected. 

The  relative  priority  of  various  valid  encum- 
brances against  the  same  property  is  not  affected 
by  an  adjudication  that  the  owner  of  such  prop- 
erty is  a  bankrupt  ;^^  and  where  the  property 
is  sold  free  and  clear  of  encumbrances,  the 
bankruptcy  court  has  the  power  to  determine  how 
the  fund  is  to  be  divided  among  the  rival  claim- 
ants thereto.  ^^ 

44.  Contractual  Encumbrance  to  Secure  Antece- 

dent Obligation  Deemed  Preference.^^ 

An  encumbrance  created  against  any  property 
by  the  contract  of  the  owner  while  he  is  insolvent. 

assignable,  the  holder  of  a  claim  secured  by  mortgage 
against  a  homestead  is  a  secured  creditor,  and  cannot 
prove  his  claim  as  unsecured  (the  homestead  having 
been  set  apart  to  the  bankrupt) ,  but  must  enforce  Ijis 
claim  against  the  homestead,  and  an  order  directing 
the  mortgagee  to  prove  his  claim  as  unsecured  and  to 
share  in  the  general  dividends  of  the  estate,  only  re- 
taining his  mortgage  for  the  balance  left  unpaid,  is 
erroneous:  Fenley  v.  Poor,  121  Fed.  (C.  C.  A.,  6th  Cir.) 
739. 

11  Relative  Priority  Preserved:  In  re  Falls  City 
Shirt  Mfg.  Co.,  98  Fed.  (D.  C.)  592. 

So  a  supply  lien  being  preferred  in  Virginia  to  a 
subsequent  pledge,  such  priority  will  be  preserved: 
In  re  West  Norfolk  Lumber  Co.,  112  Fed.  (D.  C.)  759, 
765. 

12  The  bankruptcy  court  may  determine  priorities, 
the  exercise  of  this  power  being  incidental  to  the 
right  of  disposition  of  the  fund  which  arises  from  the 
sale  of  the  property  free  from  encumbrances:  Chaun- 
cey  V.  Dyke  Bros.  (C.  C.  A.),  119  Fed.  1,  3,  4. 

13  Certain  Encumbrances  Constitute  Preferences. 


§    44  OF   BANKRUPTCY.  99 

when  made,  or,  where  recordation  is  required,  re- 
corded/^ within  four  months  prior  to  the  filing 
of  a  petition  consequent  upon  which  the  owner  is 
adjudged  a  bankrupt,  so  far  as  given  to  secure  an 
antecedent    obligation,    is,  in    case    the     encum- 

Compare  Bankruptcy  Act,  section  60a,  first  sentence: 
''A  person  shall.be  deemed  to  have  given  a  preference 
if,  being  insolvent,  he  has,  within  four  months  prior  to 
the  filing  of  the  petition,  or  after  the  filing  of  the 
petition  and  before  the  adjudication,  procured  or  suf- 
fered a  judgment  to  be  entered  against  himself  in 
favor  of  any  person,  or  made  a  transfer  of  any  of  his 
property,  and  the  effect  of  the  enforcement  of  such 
judgment  or  transfer  will  be  to  enable  any  one  of  his 
creditors  to  obtain  a  greater  percentage  of  his  debt 
than  any  other  of  such  creditors  of  the  same  class. ' ' 

In  Pirie  v.  Chicago  Title  etc.  Co.,  182  U.  S.  438,  21  Sup. 
Ct.  Eep.  906,  45  Law  ed.  1171,  the  court  points  out  that 
under  Bankruptcy  Act,  section  60a,  any  transfer  of  prop- 
erty by  an  insolvent  person  which  will  enable  any  of  his 
creditors  to  obtain  a  greater  percentage  of  their  debts 
than  other  creditors  of  the  same  class  is  a  preference 
(p.  446),  and  that  the  word  ^ transfer''  includes  every 
means  and  manner  by  which  property  can  pass  from 
the  ownership  and  possession  of  one  person  to  another^ 
and  by  which  the  result  forbidden  by  the  statute  may 
be  accomplished  (p.  444),  and  thus  includes  the  giving 
or  conveying  anything  of  value — anything  which  has 
debt  paying  or  debt  securing  power  (p.  443). 

In  Ee  Belding,  116  Fed.  (D.  C.)  1016,  the  court 
says:  "A  preference  is  not  the  less  a  preference  because 
the  bankrupt  first  gave  the  creditor,  not  the  property 
itself,  but  a  lien  thereupon,  and  the  creditor  subse- 
quently sold  the  property,  and  realized  on  the  lien,  in 
order  to  pay  the  debt.^' 

14  Bankrupt  Act,  sec.  60a,  last  sentence:  '^ Where 
the  preference  consists  in  a  transfer,  such 
period  of  four  months  shall  not  expire  until  four 
months  after  the  recording  or  registering  of  the  trans- 


100  EFFECT    ON    ENCUMBRANCES.  §    44 

brancer  had  reasonable  cause  to  believe  that  a 
preference  was  intended  thereby,  voidable  by  the 
trustee  in  bankruptcy  for  the  benefit  of  the 
estate;  ^'"^  but  if  the  encumbranoer  did  not  have 
reasonable  cause  for  believing  that  a  preference 
was  intended  by  his  encumbrance,  such  encum- 
brance has  the  same  validity  as  though  made  by  a 

fer,  if  by  law  such  recording  or  registering  is  re- 
quired/'    As  amended  February  3,  1903. 

15  Encumbrance  Knowingly  Received  by  Creditor  as 
Preference  Within  Four  Months  Voidable.— Bankrupt 
Act,  sec.  60b,  first  sentence:  '*  If  a  bankrupt  shall  have 
given  a  preference,  and  the  person  receiving  it,  or  to 
bo  benefitted  thereby,  or  his  agent  acting  therein,  shall 
have  had  reasonable  cause  to  believe  that  it  was  in- 
tended thereby  to  give  a  preference,  it  shall  be  void- 
able by  the  trustee,  and  he  may  recover  the  property 
or  its  value  from  such  "person. ' ' 

So,  where  a  mortgagee  knew  that  the  mortgage  was 
intended  as  a  preference,  and  that  the  mortgagor  was 
insolvent  at  the  time  of  its  execution,  an  immovable 
property  mortgage  executed  by  a  bankrupt  within 
four  months  before  the  filing  of  the  petition  of  volun- 
tary bankruptcy  for  a  consideration  accruing  before 
that  time  is  void:  Carter  v.  Hobbs,  92  Fed.  (D.  C.) 
594,  596. 

Likewise,    a   movable   property   mortgage   executed   ' 
under  similar  circumstances  to  secure  an  antecedent 
obligation  mav  be  avoided:  McNair  v.  Mclntyre  (C.  C. 
A.,  4th  Cir.),'ll3  Fed.  113,  114;  In  re  Wolf,  98  Fed. 
(D.  C.)  84. 

Historical.— A  mortgage  or  lien  given  after  the  pas- 
sage of  the  act,  if  otherwise  voidable,  is  not  validated 
by  reason  of  the  fact  that  such  encumbrance  was 
given  to  secure  a  oona  ^de  debt  created  before  the 
passage  of  the  act:  In  re  Nathan,  92  Fed.  (D.  0.)  590, 
592.  As  to  when  tlie  act  became  effective,  see  par- 
ticularly. In  re  Brown,  91  Fed.  (D.  C.)  358,  359. 


§   44  OF  BANKRUPTCY.  101 

solvent  person  for  a  valuable  consideration/** 
unless  made  by  the  insolvent  with  intent  on  his 
part  to  hinder  or  delay  or  defraud  any  creditor  of 
hiS;,  or  unless  void  against  his  creditors  by  the 
laws  of  the  place  in  which  the  encumbered  prop- 
erty is  situate,  in  either  of  which  cases  the  encum- 
brancer may,  at  his  option/''  either  retain  his  en- 

10  When  Intent  not  Known,  Encumbrance  Gen- 
erally Valid. — There  is  no  penalty  denounced  against 
such  preferences  by  the  Bankruptcy  Act.  as  amended 
I'ebruary  5,  1903,  the  intent  of  the  amendment  seem- 
ing to  be  to  validate  them,  although  the  fundamental 
principle  of  the  act  that  equality  is  equity  is  thereby 
disregarded. 

17  Option  to  Eetain  Preference  or  Prove  Claim 
Against  Estate.— Bankrupt  Act,  section  57g:  *'The 
claims  of  creditors  who  have  received  preferences, 
voidable  under  section  60,  subdivision  b,  [see  note  15 
above],  or  to  whom  conveyances,  transfers,  assign- 
ments, or  encumbrances,  void  or  voidable  under  sec- 
tion 67,  subdivision  e  [see  sections  46  and  47  below], 
have  been  made  or  given,  shall  not  be  allowed  unless 
such  creditors  shall  surrender  such  preferences,  con- 
veyances, transfers,  assignments,  or  encumbrances.'' 
As  amended  February  5,  1903. 

Where  the  creditor  did  not  have  cause  to  believe 
that  a  preference  was  intended,  he  may  keep  the 
property  transferred  to  him,  whether  it  be  a  complete 
or  partial  discharge  of  his  debt,  but  unless  he  sur- 
renders his  preference,  he  cannot  prove  either  the 
debt  so  preferred,  or  any  other  debts  owing  him. 
''His  election  is  between  keeping  the  preference  and 
surrendering  it.  That  is  the  favor  of  the  law  to  his 
innocence,  but,  aiming  to  secure  equality  between 
him  and  other  creditors,  can  the  law  indulge  further"? 
He  may  have  been  paid  something— maybe  a  greater 
percentage  than  other  creditors  can  be.  That  is  his 
a-dvantage  and  he  may  keep  it.  If  paid  a  less  per- 
centage, he  can  obtain  as  much  as  other  creditors  by 


102  EFFECT     ON     ENCUMBRANCES.  §    44 

cumbrance  as  a  valid  security  and  forego  the  right 
to  prove  any  claims  which  he  may  hold  against 
the  estate  of  the  bankrupt^  or  surrender  his  secur- 

sur rendering  the  payment,  and  an  equality  of  dis- 
tribution of  the  assets  of  the  bankrupt  secured^': 
Pirie  v.  Chicago  Title  etc.  Co.,  182  U.  S.  438,  447,  21 
Sup.  Ct.  Eep.  906,  45  Law  ed.  1171. 

A  pledge  made  to  secure  an  antecedent  obligation 
within  four  months  of  bankruptcy  creates  a  prefer- 
ence; and,  until  the  preference  is  surrendered,  the 
balance  of  the  claim  in  excess  of  the  security  cannot 
be  proved:   In  re  Belding,   116  Fed.   (D.  C.)    1016. 

Where  a  mortgagee  did  not  know  that  the  mort- 
gagor was  insolvent,  and  no  intent  to  give  a  prefer- 
ence was  present,  a  movable  property  mortgage 
made  within  four  months  of  the  filing  of  the  petition 
to  secure  an  antecedent  obligation  cannot  be  avoided: 
McNair  v.  Mclntyre  (C.  C.  A.,  4th  Cir.),  113  Fed. 
113;  reversing,  same  case.  In  re  Sanderlin,  109  Fed. 
(D.  C.)   857,  860. 

In  certain  cases  the  contrary  conclusion  has  been 
reached,  but  not  on  satisfactory  grounds.  Thus,  it  has 
been  held  that  a  duly  recorded  movable  property 
mortgage  made  within  four  months  of  filing  a  peti- 
tion to  secure  an  antecedent  obligation  is  void  with- 
out qualification:  In  re  Jones,  118  Fed.  (D.  C.)  673. 
And  that  a  duly  recorded  movable  property  mortgage 
made  within  four  months  of  the  filing,  so  far  as  given 
to  secure  an  antecedent  obligation,  is  void:  City 
National  Bank  v.  Bruce,  109  Fed.  69,  72,  48  C.  C.  A. 
236,  4th  Cir.;  In  re  Eonk,  111  Fed.  (D.  C.)  154,  156;  In 
re  Durham,  114  Fed.  (D.  C.)   750,  753. 

(City  National  Bank  v.  Bruce  was  decided  by  the 
same  court  that  subsequently  decided  McNair  v. 
Mclntyre  to  the  contrary,  this  decision  being  made 
before  the  case  of  Pirie  v.  Chicago  Title  etc.  Co.  was 
decided.) 

And  that  a  pledge  made  within  four  months  of 
bankruptcy  to  secure  an  antecedent  debt,  being  a 
preference,  is  void,  irrespective  of  the  knowledge  of 
the  pledgee:  In  re  Cobb,  96  Fed.   (D.  C.)   821. 


§    44  OF   BANKRUPTCY.  103 

ity  and  prove  his  claim^^  as  an  unsecured  credi- 
tor. 

But  any  sncli  encumbrance  when  created  with- 
in four  months  before  the  filing  of  the  bankrupt 
petition  by  the  predecessor  in  interest  of  the 
bankrupt  in  the  encumbered  property^  the  prop- 
erty being  transferred  to  the  bankrupt  subject  to 
the  encumbrance^  is  valid  and  cannot  be  avoided, 
not  being  deemed  a  preference.^^ 

18  May    Surrender    Security    and    Prove    Claim.— 

Where  an  encumbrancer  insists  upon  proving  his 
claim  against  the  general  estate,  it  would  seem  that 
he  will  be  held  to  have  waived  his  lien:  McNair  v. 
McTntyre    (C.    C.    A.),    113   Fed.    113,    114. 

3t>  Encumbrance  Created  by  Predecessor  of  Bank- 
rupt Valid. — If  the  encumbrance  was  created  by  the 
predecessor  in  interest  of  the  bankrupt,  within  the 
four  months,  although  for  an  antecedent  considera- 
tion, the  bankrupt  having  obtained  the  property 
subject  to  the  encumbrance,  the  encumbrance  is 
valid   as   against   the   creditors   of   the   bankrupt. 

Thus,  a  mortgage  given  by  a  partnership  within 
four  months  of  the  bankruptcy  of  a  partner  therein, 
the  mortgage  being  given  in  part  for  an  antecedent 
consideration,  is  not  invalidated  at  all  by  the  bank- 
ruptcy of  the  partner,  although,  in  the  meantime,  the 
I  firm  had  been  dissolved,  and  the  bankrupt  had  taken 
its  assets  and  assumed  its  liabilities:  In  re  Sanderlin, 
109  Fed.  (D.  C.)  857,  859;  same  case,  McNair  v.  Mcln- 
tyre  (C.  C.  A.),  113  Fed.  113.  (For  the  purposes  of 
the  bankruptcy  law,  a  partnership  is  deemed  an  en- 
tity.) 


104  EFFECT     OX     ENCUMBRANCES.  §    45 

45.  Contractual  Encumbrance  when  Money 
Knowingly  Used  to  Confer  Preference  Void- 
able. 

Whenever  an  insolvent  person^  within  four 
months  of  the  filing  of  a  petition  consequent  upon 
which  he  is  adjudged  a  bankrupt^,  hypothecates 
any  of  his  property  as  security  for  present  or 
future  advances  which  are  intended  to  be  used 
and  are  used,  in  whole  or  in  part,  to  confer  a 
preference  on  any  creditor  of  his,  and  the  encum- 
brancer has  notice  of  the  insolvency  and  of  the 
use  intended  to  be  made  of  such  advances,  the 
trustee  in  bankruptcy  may  avoid  such  encum- 
brance to  the  amount  of  the  advances  actually 
used  to  confer  preferences.^^ 

20  The  controlling  circumstance  under  this  section 
is  the  knowledge  by  the  encumbrancer  (1)  of  the 
insolvency  of  the  borrower,  and  (2)  of  the  use  in- 
tended to  be  made  of  the  advances.  For  it  is  clear 
that  under  section  41,  above,  the  transaction  is 
valid  if  the  security  was  accepted  in  good  faith 
and  not  in  contemplation  of  or  in  fraud  upon  the 
Bankruptcy  Act,  and  in  the  absence  of  notice  which 
impeaches  the  good  faith  of  the  encumbrancer,  he  is 
entitled  to  his  security,  notwithstanding  the  fraud  of 
the   owner   of   the   encumbered   property. 

If,  however,  the  encumbrancer  had  notice  of  the 
insolvency  of  the  borrower,  and  of  the  use  intended 
to  be  made  of  the  advances  secured,  the  encumbrance 
is  void:  In  re  Soudan  Mfg.  Co.  (C.  C.  A.),  113  Fed. 
804. 

Where,  within  four  months  of  adjudication  of 
bankruptcy,  a  person  gave  a  mortgage  on  his  stock 
of   goods   as   security  for   a  loan,   and   the   mortgagee 


§    46  OF   BAIS^KRITPTCY.  105 

46.     When    Made  to    Hinder  or    Delay  or  De- 
fraud Creditors  Void. 

Except  as  to  bona  fide  purchasers  and  encum- 
brancers of  the  secured  obligation  for  a  present 
fair  consideration,  an  encumbrance  made  by  a 
person  within  four  months  prior  to  the  filing  of 
a  petition  consequent  upon  which  he  is  adjudged 
a  bankrupt,  with  intent  on  hi©  part  to  hinder  or 
delay  or  defraud  any  creditor  of  his,  is  void  as 
against  the  trustee  in  bankruptcy;  and  the  prop- 
erty attempted  to  be  so  encumbered  (except  so 
far  as  exempt  from  forced  sale  by  the  law  of  the 
bankrupt's  domicile)  remains  a  part  of  his  es- 
tate 21 

knew  that  the  loan  was  to  be  used  to  pay  a  pro- ' 
existing  debt,  and  the  loan  was,  in  fact,  so  used,  and 
the  mortgage  received  an  indemnity  bond  from  the 
party  to  whom  the  loan  was  paid  by  the  mortgagor, 
upon  the  bankruptcy  of  the  mortgagor  the  mortgagee 
must  first  enforce  the  liability  on  the  bond  before 
4'ecourse  to  the  mortgaged  property,  if,  indeed,  such 
recourse  is  permissible  at  all. 

*'If  transactions  of  this  sort  are  to  be  permitted, 
then,  instead  of  the  creditor  taking  the  mortgage 
himself,  when  a  debtor  is  in  failing  circumstances,  he 
will  get  some  one  else  to  advance  the  money,  agreeing 
that  the  person  advancing  the  money  shall  suffer 
no  loss,  and  thereby  obtain  by  indirection  a  prefer- 
ence which  he  would  not  be  able  to  get  if  he  had 
scted  directly  with  the  debtor,  provided,  of  course, 
that  the  debtor,  within  four  months  thereafter,  be- 
comes a  bankrupt:  In  re  Beerman,  112  Fed.  (D.  C.) 
663,  666. 

-1  Made  to  Hinder  or  Delay  Creditors  Void.— 
Bankrupt  Act,  section  67e,  except  last  sentence:  ''That 


106  EFFECT    ON    ENCUMBRANCES.  §    47 

47.     When  Declared  Void  by  State  Laws  Void 
in  Bankruptcy. 

An  encumbrance  given  by  an  insolvent  person 
within  four  montlis  before  the  filing  of  a  petition 

all  conveyances,  transfers,  assignments,  or  encum- 
brances of  Ms  property,  or  any  part  thereof,  made  or 
given  by  a  person  adjudged  a  bankrupt  under  the  pro- 
visions of  this  act  subsequent  to  the  passage  of  this 
act,  and  within  four  months  prior  to  the  filing  of  the 
petition,  with  the  intent  and  purpose  on  his  part  to 
hinder,  delay,  or  defraud  his  creditors,  or  any  of 
them,  shall  be  null  and  void  as  against  the  creditors 
of  such  debtor,  except  as  to  purchasers  in  good  faith 
and  for  a  present  fair  consideration;  and  all  prop- 
erty of  the  debtor  conveyed,  transferred,  assigned, 
or  encumbered  as  aforesaid  shall,  if  he  be  adjudged 
a  bankrupt,  and  the  same  is  not  exempt  from  execu- 
tion and  liability  for  debts  by  the  law  of  his  domi- 
cile, be  and  remain  a  part  of  the  assets  and  estate 
of  the  bankrupt  and  shall  pass  to  his  said  trustee, 
whose  duty  it  shall  be  to  recover  and  reclaim  the 
same  by  legal  proceedings  or  otherwise  for  the 
benefit   of  the   creditors.'' 

The  language  is  either  to  hinder  or  delay  or  de- 
fraud. Thus,  a  mortgage  given  with  intent  to 
hinder  and  delay  creditors,  but  not  to  defraud  them", 
is  void  under  this  section:  In  re  Platts,  110  Fed.  (D. 
C.)   126,  132. 

Illustrations.— Morigsiges  executed  in  favor  of 
favored  creditors  who  were  not  pressing  for  pay- 
ment nor  asking  for  a  mortgage,  the  mortgages  so 
executed  covering  all  the  property  of  the  mort- 
gagors, and  having  been  made  with  the  intent 
that  the  debtors  might  thereby  force  indulgence 
from  their  creditors  not  so  secured,  are  executed 
with  the  intent  to  hinder,  delay,  or  defraud  some  of 
the  creditors  .of  the  mortgagor:  In  re  Steininger 
Mercantile  Co.,  107  Fed.  669,  46  C.  C.  A.  548. 

Although  an  unrecorded  immovable  property  mort- 
gage is  valid  in  Georgia  except  as  against  a  subsequent 


§    47  OF   BANKRUPTCY.  107 

consequent  upon  which  he  is  adjudged  a  bank- 
rupt, which  encumbrance  by  the  laws  of  the 
place  in  which  the  encumbered  property  is  situate 
is  void  against  his  creditors,  is  likewise  void  upon 
such  adjudication  of  bankruptcy  as  against  hia 
creditors   and  the   trustee   in  bankruptcy .^^ 

contract  encumbrancer  without  notice  thereof,  or  sub- 
sequent lienor  by  operation  of  law,  yet  where  the  with- 
holding of  the  mortgages  from  recordation  amounted 
to  a  fraud  upon  subsequent  creditors  (the  mortgagor 
having  mortgaged  practically  all  his  property,  the 
mortgages  having  been  withheld  from  recordation  with 
the  express  intent  of  sustaining  his  credit,  and  he  hav- 
ing subsequently  bought  a  stock  of  goods  on  such 
credit)  the  mortgage  is  void  under  the  state  law,  and 
upon  his  bankruptcy  will  be  adjudged  void  as  against 
his  creditors,  although  recorded  coincidently  with  the 
filing  of  the  petition  in  bankruptcy:  Clayton  v.  Ex- 
change Bank,  121  Fed.  (C.  C.  A.,  'sth  Cir.)  630,  per 
Shelby  and  Pardee,  Cir.  JJ.;  McCormick,  Cir.  J.,  dis- 
senting. 

Movable  property  mortgage  made  to  hinder  or  de- 
lay creditors,  being  fraudulent,  is  void  as  against 
the  creditors  and  trustee:  In  re  Hughill,  100  Fed. 
(i).  C.)  616;  Egan  State  Bank  v.  Kice  (C.  C.  A.), 
119  Fed.  107   (same  case.  In  re  Platts,  above). 

But  a  parol  agreement  between  a  mortgagor  and 
a  mortgagee  of  movable  property  that  the  mort- 
gagor should  from  time  to  time  deliver  the  mort- 
gaged property  to  a  commission  house  for  sale,  the 
net  proceeds  to  be  paid  by  the  commission  house  to 
the  mortgagee,  is  not  an  agreement  to  hinder  or  de- 
lay creditors,  but  an  agreement  for  the  application 
of  the  proceeds  of  the  sale  of  the  property  to  the 
satisfaction  of  the  secured  obligation  and  does  not 
invalidate  the  mortgage:  In  re  Durham,  114  Fed. 
(D.   C.)    7o0,  754. 

22  Bankrupt  act,  section  67e,  last  sentence:  ^^And 
all    conveyances,     transfers,    or    encumbrances     of    his 


108  EFFECT    ON    ENCUMBRANCES.  f   48 

48.  Waiver  of  Exemptions  to  Encumbrancer  In- 
ures to  State  When  Encumbrance  Void. 
Whenever  a  person  afterward  adjudged  a  bank- 
rupt has  hypothecated  any  property,  waiving  ex- 
emptions, an  undetermined  portion  of  which  to 
be  selected  by  him  would  otherwise  be  exempt 
from  forced  sale,  the  encumbrance,  if  for  any 
reason  rendered  void  against  the  nonexempt  en- 
cumbered property  by  the  subsequent  bankruptcy, 
is  likewise  avoided  as  against  the  exempt  prop- 
erty, and  exemptions  having  been  waived,  the  en- 
tire property  passes  to  the  trustee  in  bankruptcy 
for  the  benefit  of  the  creditors  of  the  banln*upt.^^ 

property  made  by  a  debtor  at  any  time  within  four 
months  prior  to  the  filing  of  the  petition  against 
him,  and  while  insolvent,  which  are  held  null  and 
void  as  against  the  creditors  of  such  debtor  by  the 
laws  of  any  state,  territory,  or  district  in  which  the 
property  is  situate,  shall  be  held  null  and  void  under 
this  act  against  the  creditors  of  such  debtor  if  he  be 
adjudged  a  bankrupt,  and  such  property  shall  pass 
to  the  assignee,  and  be  by  him  reclaimed  and  recov- 
ered for  the  benefit  of  the  creditors  of  the  bank- 
rupt/' 

23  In  re  Schuller,  108  Fed.  (D.  C.)  591.  Tn  this 
case  the  court  said  that  the  decision  was  simpli- 
fied by  the  fact  that  the  property  mortgaged  was  an 
entire  stock  of  trade  none  of  the  goods  composing 
which  were  exempt  until  the  articles  had  been 
specifically  selected  by  the  bankrupt.  What  the 
rule  was  where  certain  items  of  property  were 
specifically  exempted  by  the  statute  the  court  said 
was   not   free   from   difficulty. 

The  decision  was  placed  on  either  of  two  grounds, 
the  bankrupt   having  waived   his   exemptions: 


§    49  OF    BANKRUPTCY.  109 

49.     Undisclosed  Encumbrance  Lost  by  Indistin- 
guishable Mingling  of  Property. 

Where  a  trustee  in  bankruptcy^  without  notice 
that  an  encumbrance  is  asserted  against  certain 
property  of  the  bankrupt^  sells  the  property  to  a 
bona  fide  purchaser  for  value,  and  the  proceeds 
of  the  sale  are  indistinguishably  mingled  with 
other  funds  coming  into  his  possession,  the  en- 
cumbrance is  extinguished  and  cannot  be  en- 
forced as  against  the  estate  of  the  bankrupt,  but 
the  secured  demand,  when  provable,  may  be 
proved  as  an  unsecured  claim.^^ 

(1)  that  the  exemption  was  a  personal  privilege 
which  not  having  been  set  up  by  the  bankrupt 
could  not  be  set  up  by  his  mortgagee;  or 

(2)  the  mortgage  could  not  be  considered  to  be 
valid  merely  against  the  exempt  property,  as  in 
such  a  case,  the  exempt  property  being  undeter- 
mined, the  mortgage  would  be  void  for  uncertainty. 
The  court  seems  to  have  relied  upon  either  ground 

as  conclusive  of  the  matter — hence,  the  proposition 
stated  in  the  text. 

2^4  Undisclosed  Encumbrance  Under  Certain  Cir- 
cumstances Lost. — Where  certain  encumbered  mov- 
able property  belonging  to  the  estate  of  a  bankrupt 
was  sold  by  the  receiver  in  bankruptcy  under  order 
of  court,  together  with  other  property  of  the  bank- 
rupt for  an  aggregate  sum,  without  notice  of  the 
encumbrance,  and  the  encumbrancer,  although  hav- 
ing notice  of  the  sale,  did  not  ask  for  a  separate 
sale,   the   encumbrance   is   lost. 

''The  court  had  no  kjiowledge  that  he  was  assert- 
ing a  lien  for  the  manufacture  of  these  goods,  and, 
as  they  had  passed  out  of  his  possession  into  the 
custody     of   the   receiver,   it    was   his   duty   to   make 


110  EFFECT    ON    ENCUMBRANCES.  §    50 

SvMivision  2.     Possession  of  .Encumbered  Prop- 
erty. 

50.     Encumbrancer  in  Possession  at  Time  of  Fil- 
ing Petition  may  Retain  Possession. 

An  encumbrancer,^^  or  an  officer  of  court  for 
him,^^  who  has  lawfully  come  into  the  actual 
possession  of  the  property  affected  by  his  encum- 
brance before  the  filing  of  a  petition  consequent 
upon  which  the  owner  of  the  property  is  adjudged 
a    bankrupt,   may   retain   possession   thereof   as 

seasonable  claim  to  priority  of  payment.  Otherwise 
he  must  be  held  to  have  taken  the  risk  that  the 
goods  might  be  sold  in  such  a  manner  that  the 
pioceeds  might  be  indistinguishably  mingled  with 
the  proceeds  of  the  other  property  of  the  bank- 
rupt'^: In  re  Klapholz,   113  Fed.    (D.   C.)    1002. 

25  Possession  by  Encumbrancer  Valid  Against  Ttvls- 
tee —Rationale.— "  A  mortgagor,  who  puts  his  mort- 
gagee into  actual  and  unqualified  possession  of  the 
chattel  mortgaged,  instead  of  compelling  him  to  take 
the  formal  steps  for  a  foreclosure,  is  acting  in  further- 
ance of  the  original  contract,  not  making  a  new  one, 
in  the  sense  that  w^ould,  in  this  case,  transgress  the  in- 
hibition of  the  bankrupt  law  as  to  preferential  con- 
veyances'^: Duplan  Silk  Co.  v.  Spencer  (C.  C.  A.),  115 
Fed.  689,  694. 

26  Possession  by  Officer  of  Court  Valid  Against 
Trustee. — So  a  receiver  or  trustee  in  bankruptcy  pro- 
ceedings is  not  entitled  to  receive  the  possession  of 
mortgaged  property  which  is  in  the  possession  of  a  re- 
ceiver appointed  by  the  state  court  in  an  action  to 
foreclose  the  mortgage,  but  is  entitled  to  any  surplus 
of  proceeds  which  may  arise  upon  the  sale  of  the 
mortgaged  premises  pursuant  to  the  order  of  the  state 
court:  Carling  v.  Seymour  Lumber  Co.  (C.  C.  A.),  113 
Fed.  483,  491. 


§    50  OF   BANKRUPTCY.  Ill 

against  the  receiver  or  trustee  in  bankniptey  of 
the  owner,  although  possession  was  obtained  with- 
out a  new  consideration  within  four  months  be- 
fore the  filing;  and  his  right  thereto  may  be  at- 
tacked by  such  trustee  or  receiver  in  case  the  en- 
cumbrance is  void  against  the  receiver  or  trustee 
solely  in  a  plenary  action^''  in  the  proper  state  or 
federal  court. 

27  Right  of  Encumbrancer  in  Possession  cannot  be 
Attacked  Summarily.— So  where  a  larm  mortgaged  a 
stock  of  goods  which  formed  part  of  its  estate,  and  with- 
in four  months  thereafter  was  adjudged  a  bankrupt,  but 
before  the  adjudication  the  goods  had  passed  into  the 
possession  of  the  mortgagee,  if  the  trustee  in  bank- 
ruptcy questions  the  validity  of  the  mortgage,  * '  he  can 
attack  the  same  by  proper  proceedings  to  that  end,  or 
he  may  redeem  the  property  by  payment  of  the  mort- 
gage liens,  or  in  other  ways  may  perhaps  protect  the 
interests  of  creditors,  but  he  cannot,  by  summary  pro- 
ceedings, compel  the  delivery  of  possession  of  property 
by  third  persons,  who  hold  the  same  as  mortgagees, 
and  whose  possession  antedates  the  filing  of  the  pro- 
ceedings in  bankruptcy^':  In  re  Buntrock  Clothing 
Co.,  92  Fed.  (D.  C.)  886. 

In  Ee  Cobb,  96  Fed.  (D.  C.)  821,  823,  where  certain 
securities  had  been  pledged  and  transferred  to  the  pos- 
session of  the  pledgee,  the  contrary  conclusion  was 
reached.  The  court  said:  **He  [the  pledgee]  could 
not  legally  collect,  realize  on,  or  cancel  the  same  [i.  e,, 
the  pledged  property],  but,  whatever  their  nature, 
they  must  be  surrendered  to  the  trustee,  who  alone  is 
authorized  to  reduce  the  same  to  money,  and  the  rights 
of  claimant  to  a  priority  to  the  proceeds  thereof  will 
be  duly  adjudged  and  administered  in  this  court.  This 
court  alone  has  jurisdiction.''  And  the  court  held 
this  rule  to  apply,  although  the  pledge  was  valid. 


112  EFFECT    ON     ENCUMBRANCES.  §    51 

51.     When  Bankrupt  in  Possession  at  Time  of  Fil- 
ing Petition  Trustee  Entitled  to  Possession.^^ 

The  receiver  or  trustee  in  bankruptcy  is  entitled 
as  of  right  to  the  possession  of  all  property, 
encumbered  or  otherwise,  in  the  possession  of  the 
bankrupt  at  the  time  of  the  filing^^  of  the  peti- 
tion consequent  upon  which  he  is  adjudged  a 
bankrupt,  and  may  by  summary  proceeding  ob- 
tain possession  of  such  property  when  possession 
is  withheld  from  him. 

38  When  Bankrupt  in  Possession  at  Time  of  Filing 
Petition,  Trustee  Entitled  to  Possession.— So  where  the 
trustee  obtains  possession  of  such  property,  an  en- 
cumbrancer cannot  maintain  an  action  in  tort  to  re- 
cover possession  of  the  property  or  the  proceeds 
thereof  from  the  trustee:  In  re  Gutnam,  114  Fed.  (D. 
C.)   1009. 

29  At  Time  of  Filing.— The  trustee  is  entitled  to 
the  possession  of  all  property  in  the  bankrupt 's  pos- 
session at  that  time.  For  ^Hhe  filing  of  the  petition  is 
a  caveat  to  all  the  world,  and  in  effect  an  attachment 
and  injunction;  ....  and  on  adjudication,  title  to  the 
bankrupt's  property  became  vested  in  the  trustee 
(sees.  70,  21e  [of  the  Bankrupt  Act]),  with  actual  or 
constructive  possession,  and  placed  in  the  custody  of 
the  bankruptcv  courf :  Mueller  v.  Nugent,  184  IT.  8. 
1,  14,  22  Sup.  Ct.  Eep.  269,  46  Law  ed.,  411. 

^^The  district  court  has  power  to  ascertain  whether, 
in  the  particular  instance,  the  claim  asserted  is  an  ad- 
verse claim  existing  at  the  time  the  petition  was  filed. 
And  according  to  the  conclusion  reached,  the  court 
will  retain  jurisdiction  or  decline  to  adjust  the  mer- 
its'':  Louisville  Trust  Co.  v.  Comingor,  184  U.  8.  18, 
25,  22  Sup.  Ct.  Eep.  293,  46  Law  ed.  416. 


I  52  OF  BANKRUPTCY.  113 

Subdivision  3.     Proof  of  Secured  Demand. 

52.     Proof  of  Secured  Obligation  not  Necessary. 

An  encumbrancer  is  not  required  to  prove  the 
obligation  secured  by  his  encumbrance^  or  the 
unsecured  excess  thereof^  if  any  there  be^  as  a 
claim  against  the  estate  of  the  bankrupt^  but 
without  proving  the  same  may  keep  his  encum- 
brance against  the  encumbered  property  in  full 
force  and  effect  and,  subject  to  the  control  of  the 
bankruptcy  court,  in  a  proper  case  enforce  it.^^ 

30  Proof  of  Secured  Demand  not  Necessary. 

In  re  Goldsmith,  118  Fed.  (D.  C.)  763,  766. 

Where  a  sale  of  encumbered  property  was  made  by 
the  trustee  free  from  encumbrances,  the  sums  realized 
from  the  sale  and  paid  to  the  secured  creditor  are  not 
dividends  so  as  to  compel  such  secured  creditor  to 
make  proof  of  claims  in  order  to  be  entitled  to  have 
his  claims  satisfied  out  of  the  proceeds  of  the  sale. 

^^Jf  secured  creditors  elect  to  rely  upon  their  secu- 
rity, they  are  not  parties  to  the  bankruptcy  proceed- 
ings at  all.  There  is  nothing  compelling  them  to  make 
proof,  and  they  may  enforce  their  liens,  if  otherwise 
valid,  subject  to  the  power  to  stay  set  forth  in  section 

II  of  the  acf :  In  re  Goldsmith,  118  Fed.  (D.  C.)  7b3, 
766. 

Similarly,  where  a  majority  in  number  and  amount 
of  the  unsecured  creditors  of  a  person  adjudged  bank- 
rupt desire  to  enter  into  a  composition  agreement  with 
the  bankrupt  (as  provided  by  law),  the  secured  credi- 
tors of  the  bankrupt  are  not,  before  the  value  of  their 
securities  have  been  determined  and  where  they  refuse 
to  voluntarily  become  parties,  necessary  or  proper 
parties  to  the  composition  agreement:  In  re  Kahn,  121 
Fed.  (D.  C.)  412. 
Liens— 8 


114  EFFECT     ON     ENCUMBKAXCES.       .  §    53 

53.     Where  Claim  by  Mistake  Proved  as  Unse- 
cured, Mistake  may  be  Corrected. 

A  creditor  of  a  bankrupt  holding  an  encnrn- 
brancG  upon  property  of  the  bankrupt  who,  in- 
advertently^^ or  by  mistake  of  law^^  or  of  fact,^^ 

31  Claim  Inadvertently  Presented  as  Unsecured  may 
be  Amended. — The  court  may  permit  a  creditor  who 
inadvertently  proves  his  claim  as  unsecured  to  amend 
it  by  adding  thereto  a  statement  of  the  security,  in  a 
proper  case:  Tn  re  Falls  City  Shirt  Mfg.  Co.,  98  Fed. 
(D.  C.)  592,  594;  Tn  re  Wilder,  101  Fed.  (D.  C.)  104. 

33  Mistake  of  Law  may  be  Avoided.— In  Ee  Swift, 
111  Fed.  (D.  C.)  503,  where  a  creditor  waived  his 
lien,  thinking  that  he  had  been  paid,  when  he  had 
not  been,  the  district  court  treated  it  as  a  mistake  of 
law,  and  said:  ''That  ignorance  of  the  law  excuses  no 
one  is  not  a  maxim  of  universal  application.  Against 
some  mistakes  of  law  a  court  of  bankruptcy  will  re- 
lieve. Actual  knowledge  that  bankruptcy  proceedings 
were  pending,  and  constructive  notice  of  their  date, 
of  all  the  language  of  the  act,  and  of  the  correct  in- 
terpretation thereof,  will  not  turn  an  otherwise  in- 
nocent mistake  of  law  into  a  guilty  one 'That 

the  mistake  was  unreasonable,  that  he  ought  to  have 
known  better,  even  if  true,  does  not  seem  to  me  to  be 
material,  so  long  as  he  acted  in  good  faith.''  On  ap- 
peal from  the  judgment  of  the  district  court,  the  cir- 
cuit court  of  appeals  in  this  same  case  treated  the 
mistake  as  a  mistake  of  fact,  but  said  in  passing:  "  !t 
is  settled  beyond  question  that  parties  acting  under 
a  mistake  of  law  will  not  necessarily  be  held  to  that 
mistake  by  a  court  of  bankruptcy  when  the  result 
would  be  to  do  substantial  injustice'':  Hutchinson  v. 
Otis  (C.  C.  A.),  115  Fed.  937,  940. 

33  Relief  from  Mistake  of  Fact  may  be  Granted.— 
Where  a  creditor  of  a  bankrupt  files  a  claim  against 
the  estate  of  a  bankrupt  within  the  year  allowed  for 
the  presentation  of  claims,  he  may,  after  the  expira- 
tion of  the  year,  be  allowed  to  amend  his  claim  by  as- 


§    53  .  OF   BANKRUPTCY.  115 

waives  the  encumbrance  or  without  setting  up 
the  same  proves  his  claim  against  the  estate  of 
the  bankrupt,  may,  upon  discovering  his  inad- 
vertence or  mistake,  except  as  against  the  inter- 
vening rights  of  third  parties,  reassert  his  encum- 
brance against  the  encumbered  property. 

54.  When  Obligation  Exceeds  Property  in 
Value,  Creditor  may  Prove  Claim  for  Ex- 
cess. 

Whenever  a  secured  obligation  owing  by  a  bank- 
rupt exceeds  the  encumbered  property  in  value, 
the  secured  creditor  may,  unless  he  holds  a  prefer- 
ence in  the  estate  of  the  bankrupt,  prove  his  claim 
for  the  unsecured  excesis  of  his  demand  beyond 
the  value  of  his  security  and  receive  his  divi- 
dends thereon.^^ 

serting  a  lien  on  the  proceeds  of  the  sale  of  certain 
property  in  the  hands  of  the  trustee,  where  the  first 
claim  was  presented  under  mistake  of  fact  and  no  in- 
tervening rights  have  accrued  which  would  be  preju- 
diced by  the  correction:  Hutchinson  v.  Otis  (C.  C.  A.), 
115  Fed.  937,  941,  942. 

34  Creditor  may  Prove  Claim  for  Excess. 

Bankrupt  Act,  section  57h,  in  part:  ''The  value  of  se- 
curities held  by  secured  creditors  shall  be  determined, 
....  and  the  amount  of  such  value  shall  be  credited 
upon  such  claims,  and  a  dividend  shall  be  paid  only 
on  the  unpaid  balance.  ^^ 

Secured  creditors  ''are  treated  as  creditors  only  for 
the  unsecured  excess  ^^  of  their  claims  beyond  the 
value  of  their  securities:  In  re  Utt,  105  Fed.  754,  758, 
45  C.  C.  A.  32. 


116  EFFECT     ON     ENCUMBRAXCES.  §    55 

Subdivision     1.     Control    of    Bankruptcy    Court 
Over  Encumbrances. 

55.     Determination    of    Value    of    Encumbered 
Property. 

The  value  of  property  hypothecated  to  secure 
an  obligation  of  a  bankrupt  must  be  determined 
at  the  discretion  of  the  court,  either 
(1)  in  any  case,  by  agreement,  arbitration,  com- 
promise,  or  litigation,  between  the  owner  of 
the  secured  obligation  and  the  trustee  in  bank- 
ruptc}%   or 

A  creditor  of  a  bankrupt  holding  a  valid  vendor's 
lien  upon  exempt  property  of  the  bankrupt  is  only 
entitled  to  a  dividend  upon  the  amount  of  his  claim 
after  deducting  the  value  of  his  security.  The  fact 
that  the  bankrupt  and  the  creditor  agreed  that  the 
creditor  should  share  in  the  general  dividend,  and  only 
the  balance  left  unpaid  should  be  enforced  as  a  special 
lien  on  the  exempt  property  cannot  defeat  the  right 
of  other  creditors  to  insist  that  his  claim,  being  se- 
cured, should  be  allowed  only  for  the  amount  thereof 
in  excess  of  the  value  of  the  security:  In  re  Little,  110 
Fed.  (D.  C.)  621,  627. 

^^If  the  security  is  inadequate,  he  [the  secured 
creditor]  may,  without  enforcing  it,  have  the  value 
ascertained  in  one  of  the  other  ways  indicated  in  the 
act,  and,  such  value  being  treated  as  a  credit,  have 
the  balance  of  his  claim  allowed,  and  receive  his  divi- 
dends thereon'^:  In  re  Barber,  97  Fed,  (D.  C.)  547,  552. 

Illustration.— WheTBy  in  August,  1899,  certain  collat- 
erals were  assigned  as  security  for  an  obligation  then 
created,  and  the  pledgee  collected  certain  amounts  on 
the  collaterals  within  four  months  before  the  pledgor 
was  adjudged  insolvent  in  February,  1901,  such 
amounts  do  not  constitute  preferences,  but  after  de- 
ducting the  value  of  the  collaterals  still  remaining  in 
the  pledgee  ^s  possession  from  the  amount  remaining 


§    55  OF   BANKRUPTCY.  117 

(2)  in  case  of  an  encumbrance  created  by  con- 
tract^ by  converting  the  property  into  money 
according  to  the  termts  of  the  contract  of  hy- 
pothecation.^^ 

unsatisfied,  the  pledgee  may  prove  up  the  remainder 
of  the  unsatisfied  obligation  against  the  estate  of  the 
bankrupt  pledgor:  In  re  Little,  110  Fed.  (D.  C.)  621, 
629,    630. 

35  Determination  of  Value  of  Encumbered  Prop- 
erty. 

Bankrupt  Act,  section  57h,  except  last  clause:  **The 
value  of  securities  held  by  secured  creditors  shall  be  de- 
termined by  converting  the  same  into  money  according 
to  the  terms  of  the  agreement  pursuant  to  which  such 
securities  were  delivered  to  such  creditors  or  by  such 
creditors  and  the  trustee,  by  agreement,  arbitration, 
compromise,   or  litigation,   as  the  court  may  direct.  ^ ' 

In  Ee  Barber,  97  Fed.  (D.  C.)  547,  552,  the  court 
says:  ^*If  the  security  is  inadequate,  he  [the  secured 
creditor]  may,  without  enforcing  it,  have  its  value 
ascertained  in  one  of  the  other  ways  indicated  in 
the  act,  and  such  value  being  treated  as  a  credit, 
have  the  balance  of  his  claim  allowed,  and  receive 
his  dividends  thereon.''  In  this  case  the  security 
was  an  immovable  property  mortgage,  and  thus  the 
proposition  is  directly  afSrmed  that  the  second  alter- 
native given  in  the  section  of  the  text  is  not  ex- 
clusive although  it  was  a  contractual  encumbrance. 

In  Ee  Browne,  104  Fed.  (D.  C.)  762,  763,  the  court, 
however,  distinctly  affirms  that  the  second  alternative 
is  an  exclusive  method  of  determining  the  value 
of  the  security  when  it  is  a  contractual  encumbrance, 
saying:  ^^The  court  is  only  permitted  to  intervene 
when  the  agreement  between  the  bankrupt  and  the 
creditor  fails  to  provide  a  method  by  which  the  value 
of  the  securities  may  be  ascertained — again  reserv- 
ing the  question  of  the  court's  power  in  the  case  of 
a  fraudulent  or  oppressive  conversion The  su- 
pervision of  the  court  is  thus  confined  to  the  ascer- 
tainment of  value  where  the  bankrupt  and  his  creditor 


118  EFFECT     ON     ENCUMBRANCES.  §    56 

56.     Court    will  not    Administer   Property   En- 
cumbered Beyond  Its  Value. 

If  encumbered  property  does  not  exceed  in 
value  the  obligation  of  a  bankrupt  secured  there- 
by^ and  nothing  can  be  realized  for  the  unsecured 
creditors^  the  bankruptcy  court  will  not  assume 
the  administration  thereof,  although  the  property 
belongs  to  the  bankrupt.^^ 

have  themselves  failed  to  deal  with  this  subject. 
In  such  an  event  the  court  may  direct  how  the  value 
is  to  be  ascertained,  and  may  choose  among  the  meth- 
ods of  ^agreement,  arbitration,  compromise,  or  liti- 
gation,' supervising  and  controlling  either  form  of 
proceeding. ' ' 

There  seems  to  be  no  warrant,  however,  in  the  stat- 
utory language  for  the  construction  put  upon  it  by 
the  Browne  case,  and  therefore  the  interpretation 
given  in  the  BarlDer   case  is  adhered  to  in  the  text. 

36  Will  not  Administer  Property  Encumbered  Be- 
yond Value  When  Nothing  can  be  Realized.— '^  The 
trustee  is  not  required  to  take  charge  of  or  sell  any 
portion  of  the  estate  that  is  so  heavily  encumbered 
with  valid  liens  that  nothing  can  be  realized  for  the 
unsecured   creditors''    (p.   74). 

^'When,  as  in  this  case,  there  is  no  probability  that 
any  sum  can  be  realized  for  the  benefit  of  the  un- 
secured creditors,  then  the  trustee  should  not  incur 
costs  from  which  no  good  result  will  flow''   (p.  75). 

^^It  sometimes  happens  that  the  lienholders  desire 
to  obtain  a  title  from  the  trustee,  either  through 
a  public  sale  made  by  him,  or  by  a  direct  convey- 
ance; and  in  such  cases  the  trustee  can  generally 
obtain  some  small  sum  for  conveying  the  title,  which 
will  inure  to  the  benefit  of  the  general  creditors.  In 
all  such  cases,  he  should,  however,  exact  payment 
of  the  costs  from  the  lienholders  to  whom  he  conveys 
the  title  as  a  condition  of  such  transfer"  (p.  75): 
In  re  Cogley,  107  Fed.  (D.  C.)  73,  citing  cases  under 
Bankrupt    Act    of    1867. 


I 


§    57  OF   BANKRUPTCY.  119 

57.     Court   cannot   Control    Property    of    Third 
Person. 

If  property  hypotliecated  to  secure  the  obliga- 
tion of  a  bankrupt  does  not  belong  to  the  bank- 
rupt's estate^  the  bankruptcy  court  can  exercise 
no  control  whatever  over  it.^'' 

The  Bankruptcy  Act  '^is  not  framed  with  any- 
special  view  to  the  enforcement  of  the  securities 
for  the  benefit  alone  of  the  secured  creditors,  nor 
does  it  seem  to  contemplate  the  interference  with  or 
any  enforcement  of  such  securities  by  the  trustee, 
or  upon  his  motion  alone,  except  for  the  purpose  of 
realizing  from  the  property  pledged  or  mortgaged 
some  moneys,  which,  after  discharging  the  encum- 
brance, will  go  into  the  fund  arising  from  the  gen- 
eral assets,  and  benefit  the  unsecured  creditors, 
whether  entitled  to  priority  or  not'^:  In  re  Barber, 
97  Fed.   (D.  C.)    547,  552. 

A  court  of  bankruptcy  will  not  order  the  sale  of  a 
bankrupt's  immovable  property  free  from  liens  to 
which  it  is  subject,  unless  satisfied  of  the  probability 
that  a  sum  for  the  general  creditors  would  be  ob- 
tained by  the  sale:  In  re  Shaeffer,  105  Fed.  (D.  C.) 
352. 

Where  certain  property  of  a  bankrupt  was  encum- 
bered and  the  trustee  appeared  to  have  no  prospect 
of  any  interest  in  the  property  for  the  creditors,  the 
court  of  bankruptcy  will  not  interfere  with  the  prop- 
erty: In  re  Gibbs,  109  Fed.  (D.  C.)  627;  In  re  HoUo- 
way,   93   Fed.    (D.    C.)    638. 

37  Court  cannot  Control  Property  of  Third  Per- 
sons.—In  Ee  Horton,  102  Fed.  986,  43  C.  C.  A.  87,  cer- 
tain debts  for  which  a  bankrupt  was  primarily  liable 
were  secured  by  mechanics'  liens  on  the  property  of  a 
third  person  who  held  certain  moneys  of  the  bankrupt 
to  indemnify  himself  against  the  liens.  The  lienors 
commenced  actions  to  enforce  their  liens,  and  the 
trustee  in  bankruptcy  sought  to  have  such  actions 
stayed.     The    court    held   that    the   bankruptcy    court 


120  EFFECT     ON     ENCUMBRANCES.  §    58 

58.  In  Proper  Case  Encumbered  Property  of 
Bankrupt  may  be  Sold  Free  of  Encumbran- 
ces. 

If  a  trustee  in  bankruptcy  comes  into  the  pos- 
session^* of  encumbered  property  of  the  bankrupt^ 
the  value  of  which  exceeds  the  obligation  secured 
thereby, ^^   and  a   foreclosure  proceeding  is  not 

had  no  power  to  stay  the  foreclosure  actions, 'although 
the  trustee  in  bankruptcy  was  incidentally  interested 
in  the  amount  of  the  liens  which  might  te  established, 
and  said:  ^^The  fact  that  a  trustee  in  bankruptcy 
may  be  interested  in  the  result  of  a  litigation  which 
is  pending  between  third  parties  in  a  state  court  does 
not  entitle  him  to  have  the  proceeding  in  such  ac- 
tion stayed,  as  between  such  third  parties,  and  to 
have  the  controversy  transferred  for  adjudication 
to  the  bankruptcy  court.'' 

38  Possession  of  Property  to  be  Sold.— It  would 
seem  from  section  50  above  that  the  power  to  sell 
free  of  encumbrances  could  only  be  exercised  when 
the  receiver  or  trustee  was  in  the  possession  of  the 
property. 

The  case  of  In  re  Waterloo  Organ  Co.,  118  Fed.  (D. 
C.)  904,  905,  906,  seems  to  be  somewhat  at  variance 
with  this  conclusion.  There  the  property  was  in  the 
possession  of  a  mortgagee,  but  the  court  held  that 
such  possession  did  not  constitute  the  mortgagee  an 
adverse  claimant  so  as  to  bar  the  jurisdiction  of 
the  bankruptcy  court  to  determine  the  validity  of 
the  claim  of  the  mortgagee,  and  thereupon  ordered 
the  property  to  be  sold  free  of  encumbrances.  In 
this  case,  however,  the  property  came  into  the  pos- 
session of  the  mortgagee  after  the  filing  although  be- 
fore adjudication,  and  the  authority  of  the  court  to 
sell  free  from  encumbrances  does  not  seem  to  have 
been  questioned. 

39  Value  of  Encumbered  Property  Should  Exceed 
Secured  Obligation. — A  court  of  bankruptcy  will  not 
order  the  sale  of  a  bankrupt's    immovable    property 


§    58  OF   BANKRUPTCY.  121 

necessary  to  extinguish  rights  not  cognizable  in 
the  bankruptcy  court  which  may  be  claimed  by 
third  parties  in  the  encumbered  property,'*^  such 
court^^  may^,'*^  after  the  adjudication  of  bank- 
free  from  liens  to  which  it  is  subject,  unless  satisfied 
of  the  probability  that  a  sum  for  the  general  credi- 
tors would  be  obtained  by  the  sale:  In  re  Shaeffer,  105 
Fed.    (D.   C.)    352. 

Where  there  is  at  least  a  probable  interest  for  the 
creditors,  the  court  may  adjust  and  determine  liens: 
In  re  Gibbs,  109  Fed.  (D.  G.)  627. 

See,  note  36,  above;  also,  In  re  Pittelkow  as  cited  in 
next  note. 

40  Sale  Free  of  Encumbrances  to  be  Made  Only 
When  Foreclosure  Unnecessary  to  Bar  Rights  of  Third 
Parties. — ''Unless   it   is   apparent 

(1)  that  the  mortgaged  premises  in  the  given  cas6 
will  probably  realize  upon  a  sale  an  amount  sub 
stantially  in  excess  of   the   mortgage,   and 

(2)  that  there  are  no  complications,  by  dower  rights, 
conveyances,  or  other  conditions,  which  require 
foreclosure  under  the  mortgage, 

the  power  to  proceed  summarily  by  sale,  including 
the  interest  of  the  mortgagee,  should  not  be  exercised. 
Certainly,  if  foreclosure  is  necessary  to  bar  rights 
which  cannot  be  brought  before  the  court  in  the  bank- 
ruptcy proceeding,  the  mortgagee  should  have  leave  to 
that  end,  on  proper  showing  of  cause;  otherwise,  he 
would  be  compelled  to  bid  for  the  protection  of  his 
mortgage  interest,  without  the  benefits- of  a  complete 
foreclosure '^  In  re  Pittelkow,  92  Fed.  (D.  C.)  901, 
903. 

41  Referee  Exercises  the  Powers  of  the  Court  of 
Bankruptcy  for  Many  Purposes. — ''Thus,  the  referee 
in  bankruptcy  has  power  to  make  a  sale  of  property 
of  a  bankrupt  free  from  all  liens,  where  the  parties 
had  submitted  themselves  to  his  jurisdiction,  and  also 
to  declare  the  priorities'^:  In  re  Matthews,  109  Fed. 
(D.  C.)   603,  608. 

43  Bankruptcy  Court  Has  Power  to   Sell  Free  of 


122  EFFECT     OX     ENCUMBRANCES.  §    58 

ruptc}^,^^  in  case  the  interests  of  the  general 
creditors  would  be  advanced  and  those  of  the 
secured  creditors  not  injuriously  affected  there- 
by/^ due  notice  having  first  been  given  to  the 
secured  creditors  to  be  affected;,'*^  sell  the  property 
free  and.  clear  of  any  or  all  encumbrances,  taking 
care  that  the  rights  and  priorities  of  the  encum- 

Encumbrances  in  Proper  Case:  In  re  Piitelkow,  92 
Fed.  (D.  C.)  901,  902,  as  cited  under  note  47  below; 
In  re  Barber,  97  Fed.  (D.  C.)  547,  552,  as  cited  under 
note  46  below;  In  re  Gerdes,  102  Fed.  (D.  C.)  318,  319, 
as  cited  under  section  59,  note  52  below;  In  re  Gibbs, 
109  Fed.  (D.  C.)  627,  as  cited  under  note  39  above; 
In  re  Kellogg,  113  Fed.  (D.  C.)  120,  123,  as  cited 
under  note  43  below;  Southern  Loan  etc.  Co.  v.  Ben- 
bow,  96  Fed.   (D.  C.)   514,  527,  528. 

Form  in  Bankruptcy,  43,  as  established  by  the 
United  States  supreme  court,  November  28,  1898  (172 
U.  S.  709,  89  Fed.  xlix-1,  32  C.  C.  A.  Ixxiii-lxxiv), 
contemplates  that  an  encumbrance  against  property 
of  a  bankrupt  may  be  liquidated  when  it  would  be 
for  the  advantage  of  the  estate  of  the  bankrupt. 

43  Power  may  be  Exercised  After  Adjudication  of 
Bankruptcy.— The  court  of  bankruptcy  has  undoubted 
authority,  after  an  adjudication  in  bankruptcy,  to 
direct  a  sale  of  encumbered  property  by  the  trustee 
in  bankruptcy  free  and  clear  of  all  liens  and  encum- 
brances, and  transfer  the  lien  to  the  proceeds:  In  re 
Kellogg,  113  Fed.  (D.  C.)  120,  123. 

44  Interests  of  General  Creditors  Must  be  Ad- 
vanced, of  Secured  Creditors  not  Injured,  to  Warrant 
Sale. — ^^  Without  deciding  the  question  whether  this 
court  has  power  to  sell  a  bankrupt's  real  estate  dis- 
charged of  liens,  and  assuming,  for  present  purposes, 
that  such  power  exists,  it  is  clear  that  the  sale  should 
not  be  ordered  unless  the  court  is  satisfied  that  the 
interest  of  the  general  creditors  would  thus  be  ad- 
vanced,   and   that    the   interest    of   the   lien   creditors 


§    58  OF   BANKRUPTCY.  123 

would  not  be  injuriously  affected^ ^:  In  re  Styer,  98 
Fed.  (D.  C.)  290. 

45  Encumbrancers  Must  Have  Hearing  Before  Sale 
Free  from  Encumbrances.— ''If  the  trustee  desires  to 
sell  the  real  estate  free  of  liens,  without  redemp- 
tion, he  must  give  the  lienholders  their  day  in  court, 
because  they  are  entitled  to  be  heard  before  the  prop- 
erty is  discharged  from  their  liens  and  their  liens 
transferred  to  the  fund  arising  from  the  sale  thereof. 
The  lienholders,  unless  they  surrender  their  securities 
and  prove  their  claims,  are  strangers  to  the  bank- 
ruptcy proceedings,  and  are  entitled  to  have  their 
property  rights  adjudicated  by  the  courts  of  the  state 
in  the  county  in  which  the  real  estate  is  situated^': 
In   re    Gerdes,    102    Fed.    (D.    C.)    318,    319. 

' '  No  sale-  can  be  made,  which  affects  the  rights  of 
mortgagees  or  other  lienholders,  without  notice  to 
them,  and  'due  opportunity  to  defend  their  inter- 
ests.^ '' 

"The  power  to  order  a  sale  free  of  encumbrances 
ought  not  to  be  exercised  in  any  instance  unless  the 
court  is  'accurately  informed  as  to  the  facts,'  and 
all  parties  in  interest  have  opportunity  to  be  heard, 
and  the  respective  interests  are  ascertained' ':  In  re 
Pittelkow,  92  Fed.  (D.  C.)  901,  904. 

"If  secured  creditors  elect  to  rely  upon  their 
security,  they  are  not  parties  to  the  bankruptcy  pro- 
ceedings at  alP':  In  re  Goldsmith,  118  Fed.  (D.  C.) 
763,  767. 

Compare  General  Orders  in  Bankruptcy,  28,  172  U.  S. 
662,  663,  32  C.  0.  A.  xxviii,  89  Fed.  xi,  xii:  "When- 
ever it  may  be  deemed  for  the  benefit  of  the  estate  of 
a  bankrupt  to  redeem  and  discharge  any  mortgage  or 
other  pledge,  or  deposit  or  lien,  upon  any  property, 
real  or  personal,  ....  the  trustee  of  the  bankrupt, 
or  any  creditor  who  has  proved  his  debt,  may  file 
his  petition  therefor;  and  thereupon  the  court  shall 
appoint  a  suitable  time  and  place  for  the  hearing 
thereof,  notice  of  which  shall  be  given  as  the  court 
shall  direct,  so  that  all  creditors  and  other  persons 
interested  may  appear  and  show  cause,  if  any  they 
have,  why  an  order  should  not  be  passed  by  the 
court  upon  the  petition  authorizing  such  act  on  the 
part  of  the  trustee.'' 


124  EFFECT    OX    EXCUMBRANCES.  §    58 

brancers  affected  are  conserved.^^  The  amount 
secured  by  the  encumbrances  liquidated  by  the 
sale  constitutes  a  preferred  charge  against  the 
proceeds  thereof,^''  subject,  however  [unless  the 

46  Rights  and  Priorities  or  Encumbrances  to  be 
Conserved. — ''If  the  conservation  of  equitable  rights 
require  such  action,  the  ....  [bankruptcy]  court  has 
doubtless  the  power  to  order  the  absolute  sale  of  the 
property  free  from  and  discharged  of  the  encum- 
brance, taking  care  of  the  rights  and  equities  of  the 
secured  creditors  in  the  disposition  of  the  moneys  real- 
ized by  such  sale'':  In  re  Barber,  97  Fed.  (D.  C.) 
547,   552. 

Where  the  holders  of  valid  mec^^anics'  liens  against 
various  portions  of  the  manufacturing  plant  of  a 
bankrupt  objected  to  the  sale  of  the  property  in  its 
entirety  devested  of  liens,  because  all  the  lienors 
did  not  hold  liens  against  the  same  interest,  and  it 
would  be  impossible  to  apportion  the  fund  among 
the  lienors,  but  the  court  ordered  a  sale  of  the  prop- 
erty devested  of  all  liens  without  prejudice  to  the 
rights  of  lienors,  the  lienors  have  a  right  to  rely 
upon  the  conditions  of  the  order  of  sale,  and  after 
the  sale  were  entitled  to  preferred  payments  of  their 
claims  from  the  proceeds,  and  the  referee  should  take 
additional  proof,  if  necessary,  as  to  the  respective 
portions  of  the  proceeds  affected  by  the  liens:  George 
Carroll  &  Bro.  Co.  v.  Young  (C.  C.  A.),  119  Fed.  576, 
578,   579. 

47  Encumbrance  to  be  Charged  Against  Proceeds 
of  Sale. 

''Sales  may  be  authorized,  under  proper  circum- 
stances, free  and  clear  from  the  mortgages,  or  other 
liens,  by  preserving  and  transferring  the  claims  to  the 
fund  thus  provided'':  In  re  Pittelkow,  92  Fed.  (D. 
C.)   901,  902. 

The  court  of  bankruptcy  has  undoubted  authority, 
after  an  adjudication  in  bankruptcy,  to  direct  a  sale 
of  the  encumbered  property  by  the  trustee  in  bank- 
ruptcy free  and  clear  of  all  liens  and  encumbrances, 


§    58  OF   BANKRUPTCY.  125 

sale  was  made  against  the  protest  of  the  enciim- 
braneer],^^  to  the  prior  payment  of  the  costs  of 
court  and  of  compensation  to  the  person  makiP'^ 
the  sale  not  exceeding  the  compensation  whicili 
would  be  received  for  making  a  like  sale  in  a  fore- 
closure action,^^  [and  also  in  case  the  sale  was  in-. 

and  transfer  the  lien  to  the  proceeds:  In  re  Kellogg, 
113  Fed.   (D.  C.)   120,  123. 

Thus,  where  property  subject  to  a  valid  tax  lien  was 
ordered  sold  free  and  clear  of  all  liens,  the  tax  lien 
must  be  discharged  from  the  proceeds  of  the  sale:  In 
re  Keller,  109  Fed.  (D.  C.)   131. 

48  When  Sale  Against  Protest  of  Encumbrancer, 
Costs  not  Allowable. — Where  an  encumbrancer  seeks 
to  obtain  the  proceeds  of  the  sale  of  the  encumbered 
property  which  was  sold  by  the  trustee  without  pro- 
test from  him,  the  costs  of  the  proceeding  resulting 
m  the  sale  of  the  property  will  be  taxed  against  the 
encumbrancer,  ^^  because  they  seek  to  take  advantage 
of  the  acts  of  the  bankruptcy  court  in  reducing  their 
securitv,  and  did  not  protest  against  such  acts^^:  In 
re  Goldsmith,   118  Fed.   (D.  C.)    763,   768. 

49  Costs  Of  Court  and  Expenses  of  Sale  First 
Charge. 

In  In  re  Utt  (C.  C.  A.),  105  Fed.  754,  757,  the  court 
said!  ^'The  mortgaged  property  having  been  sold  by 
the  trustee  in  bankruptcy  under  the  order  of  the  dis- 
trict court,  it  is  equitable  and  right  that  the  expenses 
of  the  sale,  including  advertisement,  appraisement, 
if  appraisement  was  required  by  law,  revenue  stamps, 
and  compensation  to  the  trustee,  not  exceeding  that 
of  the  master  in  chancery  if  the  sale  had  been  made 
by  him  under  decree  of  the  state  court,  should  be 
paid  out  of  the  proceeds  of  the  sale.'' 

Compare  the  following  remark  in  In  re  Pittelkow, 
92  Fed.  (D.  C.)  901,  903,  904,  which  presupposes  that 
such  costs  are  a  first  charge:  *^In  a  simple  case  in 
which  the  mortgagee  and  the  owner  of  the  equity  are 
before   the   court,   or  may  be   brought   in,    a   sale   by 


126  EFFECT    ON    ENCUMBRANCES.  §    58 

yoked  by  the  encumbrancer  of  the  nsnal  commis- 
sions to  the  trustee  and  referee  on  the  sum  real- 
ized by  the  sale]  .^^     In  case  of  such  a  sale  the 

order  of  the  bankruptcy  court,  with  provision  saving 
the  rights  of  the  mortgagee  to  bid  up  to  the  ascer- 
tained amount  of  his  mortgage  without  advancing  the 
*  money,  except  for  expenses,  would  be  beneficial  to 
all  parties  and  effective/' 

See  In  re  Goldsmith,  cited  under  note  48. 

50  When  Sale  Invoked  by  Encumbrancer,  Com- 
missions to  be  Allowed.— This  proposition  is  open  to 
great  doubt.  The  decision  in  In  re  Barber,  97  Fed.  (D. 
C.)  547,  is,  however,  based  upon  an  affirmance  of  it. 
In  that  case  the  court  says:  "If  a  secured  creditor 
refrains  from  asking  or  invoking  the  aid  of  the  court 
of  bankruptcy  to  enable  him,  through  its  officers  and 
its  exercise  of  jurisdiction,  to  tvirn  his  securities  into 
cash,  then,  although  the  court,  for  the  benefit  of  the 
unsecured  creditors,  should  use  its  equitable  powers 
to  the  extent  of  selling  the  encumbered  property  free 
and  discharged  of  the  encumbrance,  assuming  to  care 
for  the  equitable  rights  of  the  secured  creditor  in  the 
disposition  of  the  moneys  arising  from  the  sale,  there 
would  seem  to  be  reason  for  holding  that  the  moneys 
going  to  the  secured  creditor  under  such  circum- 
stances only  came  into  the  case  incidentally,  as  thb 
result  of  the  effort  to  realize  and  obtain  other  money 
for  the  unsecured  creditors,  and  that  it  should  not 
be  regarded  as  a  dividend,  or  charged  with  any  com- 
missions^' (p.  552). 

But  "in  this  case  the  secured  creditors  ....  in 
their  own  interest  sought  and  invoked  the  aid  of  the 
court  of  bankruptcy  in  making  this  sale,  whereby 
they  realized  upon  their  security  more  than  they  could 
have  expected  through  foreclosure  [as  the  right  of 
redemption  was  sold  with  the  property],  and  without 
the  expense  and  delay  of  that  remedy The  spe- 
cial fund  arising  from  the  security  was  obtained,  not 
by  the  action  of  the  creditors  converting  the  security 
into  money  according  to  the  terms  of  the  mortgage, 
and  the  law  in  respect  to  foreclosure,  but  through  the 
jurisdiction  of  the  court  of  bankruptcy,  invoked  for 


§    58  OF   BANKRUPTCY.  127 

encumbrancers  whose  encumbrances  were  liqui- 
dated may  intervene  as  of  right  and  claim  the 
proceeds  of  the  sale^  although  not  theretofore  hav- 
ing been  parties  to  the  bankruptcy  proceedings.^^ 

that  purpose  by  the  secured  creditors,  and  under  the 
orders  and  procedure  of  that  court  carried  into  eifect 
by  its  officers The  payments  to  the  bondhold- 
ers were  their  dividends  or  allotments  of  the  fund 
produced  in  the  court  of  bankruptcy  through  the  exe- 
cution of  its  orders  by  its  officers  upon  the  motion 
or  request  of  the  secured  creditors  and  the  referee 
and  trustee  are  entitled  to  commissions  on  such  divi- 
dends^^  (pp.  553,  554). 

In  Ee  Utt,  105  Fed.  754,  759,  45  C.  C.  A.  32,  where 
however,  the  point  is  not  necessary  to  the  decision 
of  the  court,  the  court  thinks  this  distinction  unten- 
able, and  says:  ^^We  find  no  warrant  for  this  dis- 
tinction in  the  terms  of  the  statute.  It  rests  on  con- 
siderations of  reasonableness  and  justice,  which,  if 
brought  to  the  attention  of  Congress,  might  perhaps 
have  led  to  its  express  adoption.'^ 

The  question  turns  on  whether  or  not  a  payment 
made  by  a  trustee  to  a  secured  creditor  from  a  fund 
realized  from  the  sale  of  the  encumbered  property 
at  the  instance  of  the  encumbrancer  constitutes  a 
dividend.  If  it  can  be  held  to  constitute  a  dividend, 
the  conclusion  in  In  re  Barber  is  correct;  otherwise  the 
opposite  statement  expresses  the  law.  In  Ee  Utt  the 
statement  found  in  Ee  Ft.  Wayne  Electric  Corp.,  94 
Fed.  (D.  C.)  109,  and  Ee  Fielding,  96  Fed.  (D.  C.) 
800,  is  approved  that  *^a  dividend,  within  the  mean- 
ing of  the  law,  is  declared  and  paid  on  unsecured 
claims  onlv^';  while  in  the  late  case  of  In  re  Gold- 
smith, lis"  Fed.  (D.  C.)  763,  766,  it  is  also  said  that 
a  sum  realized  from  the  sale  of  securities  and  paid 
to  secured  creditors  cannot  be  held  to  be  a  dividend 
within  Bankrupt  Act,  sec.  65a,  and  referees  and  trustees 
are  not  entitled  to  commissions  on  such  sum.  Thus, 
while  the  one  decided  case  supports  the  text,  the 
weight  of  judicial  opinion  is  against  it. 

51  Encumbrancer   may   Intervene    and    Claim   Pro- 


128  EFFECT    ON    ENCUMBRANCES.  §    58 

59.     Encumbered  Property  of  Bankrupt  may  be 
Sold  Subject  to  Encumbrances. 

Although  encumbered  property  of  a  bankrupt 
is  not  in  the  possession  of  the  referee  or  trustee 
in  bankruptcy^,  the  court  may  sell  the  same  sub- 
ject to  any  encumbrances  existing  thereagainst.^^ 

ceeds  of  Sale. — Where  pledged  property  has  been  sold 
free  from  the  pledge  pursuant  to  the  order  of  the 
bankruptcy  court,  and  the  proceeds  of  the  sale  have 
been  deposited  in  the  registry  of  the  bankruptcy 
court,  the  pledgee  is  entitled  to  intervene  and  set  up 
his  claim:  Fisher  v.  Cushman,  103  Fed.  860,  867,  43 
C.  C.  A.  381. 

Where  encumbered  property  is  sold  free  from  en- 
cumbrances, the  encumbrancers  have  a  right  to  come 
into  the  bankruptcy  court  as  interveners  seeking  to 
subject  the  fund  arising  from  the  sale  of  the  encum- 
bered property  in  which  they  claim  a  lien  to  the  pay- 
ment of  their  indebtedness  (without  having  first  come 
into  the  action  as  a  creditor  to  prove  up  the  excess 
of  their  claim  over  their  security) :  In  re  Goldsmith, 
118  Fed.  (D.  C.)  763,  768. 

52  Sale  may  be  Made  Subject  to  Encumbrances. 

Where  it  is  for  the  interests  of  the  creditors  at 
large  of  a  bankrupt  that  certain  mortgaged  immov- 
able property  of  a  bankrupt  be  administered  by  the 
trustee  in  bankruptcy,  subject  to  the  mortgage,  al- 
though the  mortgage  has  been  foreclosed  and  the 
property  levied  upon  by  the  sheriff,  the  court  may 
order  the  trustee  to  retain  possession  of  the  property, 
and  may  enjoin  the  sheriff,  mortgagee  and  others 
from  selling  the  propertv  in  satisfaction  of  the  mort- 
gage:  In  re  Booth,  96  Fed.   (D.  C.)   943. 

'^The  trustee  may,  by  order  of  the  court  of  bank- 
ruptcy, pay  off  the  encumbrance,  or  sell  the  property 
subject  to  the  encumbrance '':  In  re  liarber,  97  Fed. 
(D.  C.)  547,  552. 

^  ^  Courts  of  bankruptcy  have  jurisdiction  to  sell  all 
real    ana   personal    property    belonging   to    the    bank- 


§    60  OF   BANKRUPTCY.  129 

Stibdivision    5.     Enforcement    of    Encumbrances 
Against  Property  of  BanJcrupt. 

60.     Effect  of   Bankruptcy  upon   Pending  Fore- 
closure Action. 
An  adjudication  of  bankruptcy  does  not  of  it- 
self   abate    a    foreclosure    action^^    commenced 

rupt's  estate If  the  real  estate  be  encumbered 

by  liens,  the  liens  may  be  redeemed,  or  the  property 
sold  subject  thereto'^:  In  re  Gerdes,  102  Fed.  (D.  C.) 
318,   319. 

The  trustee  in  bankruptcy  acquires  an  equity  of 
redemption  in  encumbered  property,  and  has  a  right 
to  apply  for  its  sale,  without  reference  to  who  has 
possession  of  the  property:  In  re  Matthews,  109  Fed. 
(D.   C.)    603,  607. 

Form  in  Bankruptcy  44,  172  U.  S.  709,  710,  89  Fed.  1, 
32  C.  C.  A.  Ixxiv,  contemplates  that  encumbered  prop- 
erty may  be  sold  under  order  of  court  subject  to  en- 
cumbrances, when  it  would  be  for  the  benefit  of  the  es- 
tate. 

53  Bankruptcy  Does  not  of  Itself  Abate  Fore- 
closure Action. — Where  a  judgment  foreclosing  a 
mortgage  against  property  of  the  bankrupt  has  been 
made,  and  the  property  advertised  for  sale  before 
the  filing  of  the  petition  in  bankruptcy,  the  state 
court,  after  the  filing,  has  power  to  proceed  with  the 
sale  and  the  distribution  of  the  proceeds  thereof, 
notwithstanding  the  commencement  ^  pending  the  sale 
of  the  proceedings  in  bankruptcy:  In  re  Gerdes,  102 
Fed.  (D.  C.)  318. 

Ordinarily,  a  secured  creditor  may,  at  his  option., 
refrain  from  invoking  the  assistance  of  the  court 
of-  bankruptcy,  and  proceed  to  collect  his  debt  from 
the  securities  by  sale,  foreclosure,  or  other  procedure 
conformable  to  law  and  to  the  contract,  as  if  no  bank- 
ruptcy was  pending^':  In  re  Barber,  97  Fed.  (D.  C.) 
547,  552. 

Liens— 9 


130  EFFECT    ON    ENCUMBRANCES.  §    60 

against  property  of  the  person  adjudged  bankrupt 
before  the  filing  of  the  petition  in  bankniptcy, 
but  the  trustee  in  bankruptcy  becomes  a  proper 
party  in  such  action.^^  Yet  the  bankruptcy  court 
may,  in  a  proper  case,  where  it  is  for  the  best 
interests  of  the  creditors  at  large  of  the  bankrupt, 
enjoin^^  the  prosecution  of  a  foreclosure  action 
commenced  against  the  property  of  the  bankrupt 
before  the  filing,  unless  the  encumbered  property 
is  in  the  possessions^  of  the  encumbrancer  or  of 
an  officer  of  court  for  him. 

54  The  trustee  in  bankruptcy  becomes  a  proper 
party  to  the  action,  as  the  title  to  the  mortgaged 
property  vests  in  him  as  of  the  daj'  of  the  adjudica- 
tion of  bankruptcy:  In  re  Gerdes,  102  Fed.  (D.  C.) 
318,  320. 

55  In  Proper  Case  Foreclosure  Proceeding  may  be 
Enjoined. — Where  a  judgment  foreclosing  a  mortgage 
had  been  rendered,  the  mortgaged  property  ordered 
sold,  and  the  date  of  the  sale  fixed  before  the  petition 
in  bankruptcy  was  filed,  the  court  may  nevertheless, 
in  a  proper  case,  enjoin  further  proceedings  in  the 
state  court:  In  re  Utt,  105  Fed.  754,  757,  758,  45  C.  C. 
A.  32. 

Where  a  foreclosure  judgment  had  been  rendered 
against  property  of  a  bankrupt  and  the  property 
levied  upon  before  the  appointment  of  the  trustee,  but 
it  seems  that  the  trustee  came  into  the  actual  pos- 
session of  the  property  (as  the  court  says  that  it 
^^has  power  to  continue  the  trustee  in  possession  in 
a  case  like  this'^),  the  court  may,  where  it  is  for  the 
best  interests  of  the  creditors  at  large  of  the  bank- 
rupt that  the  mortgaged  immovable  property  be  ad- 
ministered by  the  trustee  in  bankruptcy,  enjoin  the 
sheriff,  mortgagee  and  others  from  selling  the  prop-- 
erty  in  satisfaction  of  the  mortgage  obligation:  In 
re  Booth,  96  Fed.   (D.  C.)   943. 

56  Unless  Encumbrancer  in  Possession.— In  Ee  San  ' 


§    61  OF   BANKRUPTCY.  131 

61.  Encumbrancer  in  Possession  may  Sell  if  En- 
cumbrance Valid. 

An  encumbrancer  in  possession  of  property  af- 
fected by  an  encumbrance  in  his  favor  which  is 
valid  as  against  the  trustee  in  bankruptcy  of  the 
owner  of  the  property,  in  case  the  owner  is  ad- 
judged a  bankrupt,  cannot  (barring  the  question 
of  fraudulent  or  oppressive  enforcement)  be 
enjoined  from  selling  the  same  in  satisfaction  of 
his  encumbrance  thereagainst  ;^'''  but  if  the  en- 
Gabriel  Sanatorium  Co.,  Ill  Fed.  892,  50  C.  C.  A.  56,  at 
the  time  of  filing  the  petition  in  bankruptcy  the  mort- 
gagee was  out  of  possession,  the  possession  being  held 
by  a  fraudulent  transferee,  but  before  the  trustee 
was  appointed  the  mortgagee  commenced  an  action 
in  a  state  court  to  foreclose  his  mortgage  and  caused 
a  receiver  to  be  appointed  who  took  actual  posses- 
sion of  the  property.  The  court  held  that  it  should 
not  oust  the  state  court  from  jurisdiction,  but  allow 
the  trustee  in  bankruptcy  to  be  made  a  party  to  the 
foreclosure  action,  thereby  affirming  the  decision  of 
the  district  court  in  95  Fed.  271,  and  reversing  the 
former  decision  of  the  circuit  court  of  appeals  in  102 
Fed.  310,  313,  42  C.  C.  A.  369. 

57  Encumbrancer  in  Possession  not  to  be  Restrained 
from  Enforcing  Encumbrance.— Where  a  pledgee  of 
property  of  a  bankrupt  is  about  to  sell  the  pledged 
property,  and  the  pledgee  intends  to  deal  fairly  with 
the  pledged  property  and  to  make  an  honest  effort  to 
sell  for  the  best  obtainable  prices,  the  bankruptcy 
court  has  no  authority  to  intervene  between  such 
creditor  and  the  exercise  of  his  power  of  sale. 
Whether  or  not  the  court  might  interfere  in  the  case 
of  a  fraudulent  or  oppressive  enforcement  is  reserved 
from  decision:  In  re  Browne,  104  Fed.  (D.  C.)  762. 

Compare  the  statement  in  In  re  Little,  110  Fed.  (D. 
C.)  621,  627,  that  ^^when  property  claimed  to  be  ex- 


132  EFFECT    ON    ENCUMBRANCES.  §    61 

cumbrance  is  void  as  against  such  trustee,  the 
encumbrancer  may  be  enjoined  from  selling  the 
property.^^ 

empt  under  the  provisions  of  the  law  of  the  state 
is  set  apart  by  the  trustee  and  referee,  and  delivered 
to  the  bankrupt,  it  passes  without  the  control  of  the 
court  in  bankruptcy,  and  parties  who  claim  liens  there- 
on by  way  of  contract,  mortgage,  or  as  vendors  must 
assert  their  rights  in  a  court  other  than  the  court  of 
bankruptcy. ' ' 

Where  the  stock  of  goods  in  trade  of  a  person  were 
mortgaged,  and  the  mortgaged  property  had  passed 
into  the  possession  of  the  mortgagee,  but  greatly 
exceeded  the  secured  obligation  in  value,  and  while 
the  validity  of  the  mortgage  was  unquestioned  yet 
its  effect  and  extent  as  covering  old  and  new  goods 
might  come  in  question,  the  court  may  enjoin  a  sale 
of  the  property  by  the  mortgagee  under  Bankrupt 
Act,  sec.  2,  clause  7,  which  provides  that  the  bankruptcy 
court  may  *  ^  cause  the  estates  of  bankrupts  to  be  col- 
lected, reduced  to  money  and  distributed,  and  deter- 
mine controversies  in  relation  thereto,  except  as^  here- 
in otherwise  provided. '^  The  court  said  that  a  sale 
by  the  mortgagee  as  threatened,  would  defeat  tne 
right  of  the  trustee  to  administer  the  property,  and 
confessedly  waste  the  estate  and  wrong  the  general 
creditors,  while  in  an  administration  by  the  trustee 
the  mortgagee's  claim  will  be  saved  by  being  left 
to  rest  upon  the  proceeds:  In  re  Ball,  118  Fed.  (D. 
C.)  672. 

58  When  Encumbrance  Void,  Sale  may  be  Enjoined. 
A  pledge  of  all  the  movable  property  of  a  mer- 
chant when  the  pledge  is  deemed  an  act  of  bankruptcy 
constituting  a  fraudulent  preference,  the  pledgee  may 
be  enjoined  from  disposing  of  the  property  under  the 
power  of  sale  vested  in  him:  In  re  Nathan,  92  Fed. 
(D.  C.)  590,  594.  | 


§    62  OF   BANKRUPTCY.  133 

62.     When    Trustee    in    Possession    Bankruptcy 
Court  has  Exclusive  Control  of  Property. 

Where  encumbered  property  has  pasised  into  the 
possession  of  a  receiver  or  trustee  in  bankruptcy, 
the  bankruptcy  court  has  exclusive  jurisdiction 
to  determine  the  validity  of  all  encumbrances 
claimed    thereagainst,^^    and    may    enjoin    the 

59  When  Trustee  in  Possession,  Bankruptcy  Court 
Has  Exclusive  Jurisdiction  of  Property. 

Where  a  receiver  in  bankruptcy  took  possession  of 
mortgaged  property  of  the  bankrupt,  the  bankruptcy 
court  has  jurisdiction  exclusive  of  the  state  courts  to 
determine  the  validity  of  the  mortgage  and  of  the  se- 
cured obligation  in  summary  proceedings  before  the 
referee  in  bankruptcy,  where  an  action  in  the  state 
court  to  foreclose  the  mortgage  was  not  commenced 
until  after  the  receiver  had  taken  possession,  although 
before  the  trustee  had  been  appointed:  In  re  Kellogg, 
113  Fed.  (D.  C.)  120,  126,  127;  121  Fed.  (C.  C.  A.,  2d 
Cir.)   333,  335-337. 

As  ^Ho  mortgages  of  real  estate,  where  possession 
of  the  res  is  vested  in  the  bankruptcy  court,  and  is 
held  in  fact  by  the  trustee,  ....  there  can  be  no 
interference  with  the  possession,  and  no  foreclosure 
proceeaings,  where  the  trustee  is  an  indispensable 
party,  except  upon  leave  of  the  bankruptcy  courf : 
In  re  Pittelkow,  92  Fed.  (D.  C.)  901,  903. 

The  holder  of  a  movable  property  mortgage  against 
movable  property  on  the  premises  of  the  mortgagor 
with  notice  of  proceedings  in  bankruptcy  against  the 
mortgagor  cannot,  after  the  adjudication  of  bank- 
ruptcy and  before  the  appointment  of  a  trustee,  and 
without  leave  of  the  bankruptcy  court,  sell  the  prop- 
erty at  public  auction  as  prescribed  by  law  in  satis- 
faction of  the  mortgage,  and  an  attempted  sale  is 
void:  In  re  Brooks,  91  Fed.  (D.  C.)  508. 

In  Carter  v.  Hobbs,  92  Fed.  (D.  C.)  594,  598,  where 
the  encumbered  property  was  in  the  possession  of  the 


134  EFFECT    ON    ENCUMBRANCES.  §    62 

prosecution  in  a  state  court  of  a  foreclosure  ac- 
tion against  such  property.^^  Where,  however, 
the  propert}^  does  not  substantially  exceed  in 
value  the  obligation  secured  thereby,^^  the  bank- 
trustee,  the  court  thought  that  it  might  restrain  a  se- 
cured creditor  from  enforcing  his  claim  in  any  other 
court,  or  might  authorize  him  to  litigate  his  claim  se- 
cured by  lien  in  the  state  court,  but  in  view  of  the 
aoove  cases  the  latter  alternative  is  of  doubtful  valid- 
ity. 

60  Sale  in  State  Court  will  be  Enjoined.— The 
bankruptcy  court  has  undoubted  authority,  after  an 
adjudication  in  bankruptcy,  to  stay  a  foreclosure  suit 
brought  against  projjerty  of  the  bankrupt  in  a  state 
court  intermediate  the  time  of  the  filing  of  the  peti- 
tion in  bankruptcy  and  the  adjudication  of  bank- 
ruptcy, but  after  the  appointment  of  a  receiver  by  the 
bankruptcy  court,  and  after  he  had  qualified  and  taken 
possession  of  the  property:  In  re  Kellogg,  113  Fed.  (D.  . 
C.)  120,  123;  affirmed  121  Fed.  (C.  C.  A.,  2d  Cir.)  333, 
335-337. 

Sales  of  encumbered  property  may  be  authorized  by 
the  bankruptcy  court,  under  proper  circumstance,  free 
and  clear  of  the  encumbrances,  by  preserving  and 
transferring  the  claims  of  the  encumbrancers  to  the 
fund  thus  provided,  and  the  commencement  of  fore- 
closure proceedings  may  be  restrained  to  that  end:  in 
re  Pittelkow,  92  Fed.  (D.  C.)  901,  902. 

Gi  Where  Obligation  Exceeds  Property  in  Value, 
Court  will  not  Interfere. — Where  a  mortgagee  has  ob- 
tained a  judgment  of  foreclosure  and  sale  in  a  state 
court  before  the  institution  of  bankruptcy  proceedings 
against  the  mortgagor,  and  the  court' is  satisfied  that 
the  property  will  not  sell  for  enough  to  pay  the  mort- 
gage obligation,  whether  sold  by  authority  of  the  state 
court  or  by  the  trustee  in  bankruptcy,  and  that  the 
mortgagee  has  no  intention  to  delay  the  sale  unrea- 
sonably or  to  prevent  the  property  bringing  a  fair 
price,  proceedings  in  the  state  court  will  not  be  stayed: 
In  re  Holloway,  93  Fed.  (D.  C.)  638. 


§    62  OF  BANKRUPTCY.  135 

ruptcy  court  should  not  enjoin  a  sale  of  the  prop- 
erty in  a  state  court  unless  the  bankruptcy  court 
has  assumed  the  administration  of  the  property 
for  the  benefit  of  the  estate  of  the  bankrupt,  but 
the  court  will  order  the  trustee  in  bankruptcy  to 
intervene  in  the  state  court  to  protect  the  inter- 
ests of  the  estate.^^ 

63.     Proceedings  in  Excess  of  Jurisdiction  Cured 
by  Acquiescence. 

Where  a  bankruptcy  court  in  excess  of  its  juris- 
diction enjoins  a  sale  of  encumbered  property  of 
the  bankrupt  in  a  state  courts  but  the  encum- 
brancer acquiesces  in  such  action^  the  bankruptcy 
court  may^  with  his  consent,  adjust  the  various 
interests  claimed  in  the  encumbered  property.®^ 

A  court  of  bankruptcy  will  not  enjoin  the  prosecu- 
tion of  an  action  commenced  in  a  state  court  against 
the  bankrupt  after  the  adjudication  of  bankruptcy  to 
foreclose  a  mortgage  which  appears  to  be  valid  and 
for  a  greater  amount  than  the  value  of  the  mortgaged 
property,  although  the  claim  of  the  mortgagee  is  sub- 
ject to  offsets  which  will  reduce  the  secured  obliga- 
tion to  less  than  the  value  of  the  property:  In  re  Por- 
ter, 109  Fed.  (D.  C.)  111.  See  In  re  Utt,  as  cited  un- 
der section  63,  note  63,  below. 

GiJ  In  re  Porter,  109  Fed.  (D.  C.)  111. 

63  Where  a  judgment  foreclosing  a  mortgage  had 
been  rendered,  the  sale  of  the  mortgaged  property 
ordered,  and  the  date  of  the  sale  fixed  before  the  fil- 
ing of  the  petition  in  bankruptcy,  and  the  district 
court  had  enjoined  the  sale,  although  there  appeared 
to  be  nothing  for  the  unsecured  creditors,  the  circuit 
court  of  appeals,  in  Ee  JJtt,  105  Fed.  754,  757,  758,  45 
C.  C.  A.  32,  said:  ^^  Without  a  clear  showing  of  a  sub- 


136  EFFECT    ON    ENCUMBRANCES.  §    63 

stantial  value  in  excess  of  the  mortgage  liens,  the  ap- 
plication for  an  injunction  [to  prevent  a  sale  in  the 
state  courts]  ought  not  to  have  been  entertained,  and 
it  is  difficult  now  to  understand  how  such  a  showing 
could  have  been  possible.  It  was,  however,  a  matter 
within  the  jurisdiction  of  the  court,  and,  the  writ  hav- 
ing issued,  it  was  at  least  the  privilege  of  the  mort- 
gagees, instead  of  appealing  from  the  order,  to  apply 
for  relief  to  the  bankrupt  court." 


OF  BANKEUPTCY.  137 


AETICLE  3. 

INSOLVENCY  UNDEE  STATE  LAW. 

SuMivision  1,    YaUdity  of  Encumbrance  in  Case  of  In- 
solvency, 

64.  Bona  fide  encumbrance  for  value  not  affected  by 

insolvency. 

65.  Encumbrance  cannot  accrue  after  commencement 

of  insolvency  proceedings. 

66.  Encumbrance  created  to  confer  preference  when 

intent  known  void. 

SuMivision  2.    Pf^oof  of  Secured  Demand. 

67.  Secured  obligation  generally  not  provable. 

68.  Although  secured  claim  proved  as  unsecured,  se- 

curity may,  in  proper  case,  be  asserted. 

69.  When  obligation  exceeds  property  in  value,  credi- 

tor may  prove  claim  for  excess. 

Subdivision  3.     Control  of  Court  Over  Encumbered  Prop- 
erty. 

70.  Determination  of  value  of  encumbered  property. 

71.  When  property  exceeds   obligation  in  value,   ex- 

cess inures  to  assignee. 

72.  Assignee  may  dispose  of  encumbered  property. 

Subdivision   J/.    Enforcement   of   Encumbrance  Against 
Property  of  Insolvent. 

73.  Foreclosure  action  not  affected  by  insolvency. 


138  EFFECT    ON    ENCUMBRANCES.  §    64 

Subdivision     1,     Validity    of    Encumbrance    in< 
Case  of  Insolvency, 

64.     Bona  Fide  Encumbrancer  for  Value  not  Af- 
fected by  Insolvency. 

An  encumbrance  for  security  only,  created  by 
contract^  against  any  property  in  good  faith  for 

1  Contract  Encumbrance  Otherwise  Valid,  Valid 
Against  Assignee. 

Where  property  was  pledged  within  one  month  be^ 
fore  the  filing  of  a  petition  in  insolvency  against  the 
pledgor  as  indemnity  for  a  liability,  which  was  after- 
ward liquidated  by  the  pledgee,  the  pledgee  having 
no  reason  to  believe  that  the  pledgor  was  insolvent, 
the  pleage  is  valid  as  against  the  assignee  in  insol- 
vency of  the  pledgor:  Haskins  v.  James,  96  Cal.  258, 
31  Pac.  36. 

A  mortgage  given  to  secure  present  advances,  a 
portion  of  which  were  used  to  discharge  a  prior 
mortgage  against  the  same  property,  the  residue 
being  used  in  the  business  of  the  mortgagor,  there 
being*  no  fraud,  is  valid  as  against  an  assignee 
in  insolvency  representing  general  creditors.  The 
estate  of  the  insolvent  constitutes  a  fund  for  the 
payment  of  the  mortgagee,  and  that  estate  must  be 
supposed  to  be  enriched  just  so  much  by  the  seven- 
teen thousand  dollars  furnished  by  the  mortgagee, 
and  being  secured  by  a  specific  lien,  the  mortgagee, 
like  any  other  lienholder,  is  entitled  to  precedence 
to  the  extent  of  his  lien  over  general  creditors: 
Cribble  v.  Columbus  Brewing  Co.,  100  Cal.  67,  74,  34 
Pac.   527. 

An  unrecorded  immovable  property  mortgage 
being  valid  against  everyone  except  a  bona  fide  pur- 
chaser or  encumbrancer  for  value,  is  valid  against 
an  assignee  in  insolvency  who  represents  general 
creditors  of  the  insolvent:  Farmers'  Exchange  Bank 
V.  Purdy,  130  Cal.  455,  62  Pac.  738. 


§    64  OF   BANKRUPTCY.  l39 

a  valuable  consideration  before  the  filing  of  a 
petition  consequent  nj)on.  which  the  owner  of 
the  property  is  adjudged  an  insolvent^  or  created 
by  operation  of  law^  and  accruing  against  any 
property  before  such  filings  has  the  same  validity 
against  the  assignee  in  insolvency  of  such  owner 
that  it  had  against  each  creditor  of  the  owner, 
respectively,  and  the  owner  himself  at  the  time 
of  such  filing,  and .  is  not  discharged  by  a  dis- 

Subjeet  to  the  right  to  defeat  an  encumbrance 
given  by  section  66  below,  an  encumbrance  made  by 
an  insolvent  is  unassailable  under  the  state  law: 
Priest  V.  Brown,  100  Cal.  626,  631,  35  Pac.  323. 

In  general,  th©  rule  is  that  a  duly  executed  mov- 
able property  mortgage  made  by  an  insolvent  debtor 
to  secure  an  antecedent  debt  is  valid.  ^'The 
statute  was  not  intended  to  prevent  a  debtor,  ad- 
mittedly insolvent,  from  transferring  his  property 
directly  to  his  creditor,  either  absolutely  in  pay- 
ment of  his  debts,  or  as  security  by  way  of  mort- 
gage'':  Wood  V.  Franks,  67  Cal,  32,  34,  7  Pac.  50  (a 
case,  however,  where  insolvency  proceedings  were 
not  commenced) ;  Dana  v.  Stanford,   10  Cal.   269. 

The  above  must  be  distinguished  from  cases  where 
the  property  is  assigned  in  trust  for  the  benefit  of 
creditors,  preferences  under  such  circumstances 
being  prohibited,  but  in  the  above  cases  there  was 
no  trust,  the  property  being  transferred  directly  to 
the  person   to  be  benefited. 

3  '^Section  17  of  the  Insolvent  Act  [of  1880] 
provides  that  the  effect  of  the  adjudication  is  to 
dissolve  any  attachment  made  within  one  month 
next  preceding  the  commencement  of  the  insolvency 
proceedings,  and  this  designation  is  equivalent  to 
an  express  declaration  that  it  does  not  affect  liens 
of  anv  other  nature' ':  Vermont  Marble  Co.  v. 
Superior   Court,   99  Cal.   579,  581,   34  Pac.   326. 


140  EFFECT    ON    ENCUMBRANCES.  §    64 

charge  in  insolvency;^  but  may  be  avoided  by 
the  assignee  to  the  amount  of  the  claims  of  all 
creditors'*    of    the    bankrupt    who    could    have 

A  mechanic's  lien  is  not  discharged  by  an  adjudi- 
cation that  the  person  against  whose  property  the 
liien  has  accrued  and  who  is  personally  liable  for 
the  obligation  secured  thereby  is  insolvent:  Brad- 
ford V.  Dorsey,  63  Cal.  122. 

a  Encumbrance  not  Discharged  by  Discharge  in 
Insolvency. — A  movable  property  mortgage  against  a 
crop  on  the  homestead  of  the  mortgagor  which 
attaches  thereto  before  the  filing  of  a  petition  in 
insolvency  by  the  mortgagor  is  valid  against  the 
mortgagor  after  his  discharge  in  insolvency:  Hall  v. 
Glass,  123  Cal.  500,  505-507,  69  Am.  St.  Eep.  77,  56 
Pac.   336. 

4  May  be  Avoided  by  Assignee  so  Far  as  Avoid- 
able by  Creditors.— The  transfers  denounced  by  the 
Civil  Code,  section  3440,  because  not  accompanied 
by  an  immediate  delivery  and  followed  by  an 
actual  and  continued  change  of  possession  of  the 
thing  transferred,  are  declared  to  be  void  ''against 
those  who  are  his  creditors  while  he  remains  in 
possession,  and  the  successors  in  interest  of  such 
creditors,  and  against  any  persons  on  whom  his 
estate  devolves  in  trust,  for  the  benefit  of  others 
than  himself,  and  against  purchasers  or  encum- 
brancers in  good  faith  subsequent   to  the  transfer." 

An  assignee  in  insolvency  is  a  person  on  whom 
the  estate  of  an  insolvent  devolves  in  trust  for  the 
benefit  of  others  within  the  meaning  of  the  above 
section.  For  the  estate  devolves  upon  the  assignee 
by  operation"  of  law  under  the  statutes  in  relation 
to  insolvents  for  the  benefit  of  others,  viz.,  the 
creditors  of  the  insolvent:  Brown  v.  Bank  of  Napa, 
77  Cal.  544,  546,  20  Pac.  71;  Merrill  v.  Hurlburt,  63 
Cal.  494. 

The  assignee  is  likewise  the  successor  in  interest 
of  the  creditors.  The  creditors  cannot  sue  to  recover 
their   debts.     The   assignee   has  the  right   to   sue  for 


§    64  OF   BANKRUPTCY.  141 

avoided  it  at  the  time  of  the  filing,  and  when 
avoidable  by  the  bankrupt  at  such  time  may  bo 
wholly  avoided. 

and  recover  everything  clue  to  the  estate  for  the 
benefit  of  creditors:  Brown  v.  Bank  of  Napa,  77  Cal. 
544,  546,  20  Pac.  71;  Merrill  v.  Hurlburt,  63  Cal, 
494.  (Tn  Lloyd  v.  Foley,  11  Fed.  410,  the  United 
States  district  court  held  that  an  assignee  in  bank- 
ruptcy was  not  embraced  in  the  Civil  Code,  section 
S440  above,  following  the  construction  given  a  New 
York   statute  by   the   United    States    supreme   court.) 

A  movable  property  mortgage  being  void  as 
against  all  creditors  who  become  such  during  any 
of  the  time  that  it  is  withheld  from  due  recordation 
is  void  as  against  an  assignee  in  insolvency  who 
represents  such  creditors,  although  the  mortgage 
was  recorded  before  the  filing  of  the  petition  iu 
insolvency:  Ruggles  v.  Cannedy,  127  Cal.  290,  303- 
305,  59  Pac.  827,  per  Henshaw,  J.,  Beatty,  C.  J.,  Mc- 
Farland  and  Teinple,  JJ.;  Garoutte,  Harrison,  and 
Van   Dyke,  JJ.,   dissenting. 

For  an  assignee  in  insolvency  has  power  to  main- 
tain an  action  to  set  aside  a  transaction  vitiated  by 
legal  fraud.  Moreover,  while  as  between  the  as- 
signor and  his  mortgagee  the  transaction  is  valid, 
as  between  him  and  his  creditors  it  is  void,  and  the 
title  remains  in  him.  This  title  passes  to  the  as- 
signee in  insolvency  for  the  benefit  of  the  creditors, 
and  justifies  him  in  maintaining  an  action  in  their 
behalf  to  reduce  the  property  to  possession:  Ruggles 
V.  Cannedy,  127  Cal.  305,  59*^  Pac.  827. 

An  executory  contract  to  pledge  being  similarly 
void  as  against  creditors  is  void  as  against  the  as- 
signee in  insolvency:  Hitchcock  v.  Hassett,  71  Cal. 
331,  334,  12  Pac.  228. 

Where  a  movable  property  mortgage  is  not  re- 
corded until  the  property  has  been  subjected  to  a 
valid  attachment,  but  the  attachment  was  subse- 
quently to  the  recordation  dissolved  by  the  filing  of 
a  petition    in   insolvency     (the   rule    being    that   an 


142  EFFECT    OX    ENCUMBRANCES.  §    64 

attachment  on  mesne  process  is  dissolved  by  the 
filing  of  a  petition  within  one  month  thereafter), 
the  mortgage  is  not  thereby  validated  against  any- 
one, but  the  hold  on  the  property  obtained  by  the 
attachment  inures  to  the  benefit  of  the  general 
creditors  of  the  insolvent:  Beamer  v.  Freeman,  84 
Cal.  554,  558,  559,  24  Pac.  169.  This  conclusion  the 
court  reached  irrespective  of  the  validity  of  the 
mortgage  in  case   of  insolvency  as  against   creditors. 

Where  an  encumbrance  is.  void  as  against  certain 
Creditors,  and  the  property  has  passed  into  the  pos- 
session of  the  encumbrancer,  the  assignee  may 
maintain  an  action  against  such  transferee  for  the 
conversion  of  the  property  in  case  it  is  withheld 
from  him:  Brown  v.  Bank  of  Napa,  77  Cal.  544,  546, 
20  Pac.   71. 

In  Perkins  v.  Maier  &  Zobelein  Brewer}^,  133  Cal. 
496,  65  Pac.  1030,  the  conclusion  reached  seems  to 
bo  in  conflict  with  Euggles  v.  Cannedy,  and  Brown  v. 
Bank  of  Napa,  above,  unless  the  creditors  repre- 
sented by  the  assignee  in  insolvency  were  not  credi- 
tors whose  claims  arose  within  a  period  which  per- 
mitted them  to  attack  the  mortgage  in  question.  In 
this  case  it  was  held  that  where  nonmortgageable 
property  of  an  insolvent  is  covered  by  a  movable 
property  mortgage,  the  mortgage  having  been  made 
more  than  one  month  before  the  filing  of  the  peti- 
tion in  insolvency,  but  the  property  having  been 
taken  possession  of  *  within  that  time  by  the  mort- 
gagee, the  mortgage  is  not  invalid  as  against  the 
assignee  in  insolvency.  This  case,  however,  over- 
looks the  fact  that  a  mortgage  on  nonmortgageable 
property  has  no  greater  validity  against  third 
parties  than  a  pledge  without  a  change  of  posses- 
sion, or  than  an  unrecorded  mortgage  of  mortgage- 
able movable  property,  and  that  either  of  these  is 
A'oid  as  against  an  assignee  representing  any  credi- 
tor who  becomes  such  during  the  time  that  the 
property  is  not  transferred  or  the  mortgage  re- 
corded, as  the  case  may  be.  It  is  noticeable  that 
this  decision  was  given  by  the  three  dissenting 
judges    in    Euggles    v.    Cannedy,    which    further    ren- 


§    65  OF   BANKRUPTCY.  143 

65.  Encumbrance    cannot    Accrue    After    Com- 

mencement of  Insolvency  ProceedingSc 

A  purported  encumbrance  arising  against  any 
property  after  the  filing  of  the  petition  conse- 
quent upon  which  the  owner  of  the  property  is 
adjudged  an  insolvent  is  void.^ 

66.  Encumbrance  Created  to  Confer  Preference 
When  Intent  Known  Void.^ 

An  encumbrance  created  by  a  person  who  is 
insolvent^    or    in    contemplation    of    insolvency, 

ders  the  decision  of  doubtful  authority.  In  support 
of  the  decision  the  court  says  that  the  mortgagee 
had  the  right  to  take  possession,  and  that  his  pos- 
session when  taken  relates  back  to  the  date  of  the 
mortgage,  but  this  proposition  is  clearly  erroneous, 
especially  in  view  of  Brown  v.  Bank  of  Napa  as 
cited   in   the   preceding   paragraph. 

In  respect  to  the  power  to  set  aside  transactions 
which  creditors  of  the  insolvent  could  have  avoided, 
there  is  a  well-defined  distinction  between  the 
powers  of  an  assignee  in  insolvency  and  an  assignee 
for  the  benefit  of  creditors.  The  assignee  in  insol- 
vency represents  all  the  creditors  of  the  insolvent, 
while  the  assignee  for  the  benefit  of  creditors  is  the 
representative  merely  of  the  assignor,  and  thus  can- 
not avoid  transactions  which  his  assignor  could  not 
have  avoided:  Euggles  v.  Cannedy,  127  Cal.  290, 
304,  59  Pac.  827. 

5  State  Investment  and  Ins.  Co.  v.  Superior  Court 
of  San  Francisco,  101  Cal.  135,  142,  35  Pac.  549.  For 
an  adjudicationr  of  insolvency  has  relation  to  the 
time  when  the  petition  in  insolvency  was  filed. 

6  Stats.  1395,  p.  131,  c.  143  (Insolvent  Act  of  1895, 
sec.  59),  in  part:  ^*If  any  debtor  being  insolvent, 
or  in  contemplation  of  insolvency,  within  one  month 
before    the   filing   of   a   petition    by   or   against   him, 


144  EFFECT    ON     ENCUMBRANCES.  §    66 

with  intent''  to  give  a  preference  to  any  person, 
when  made  or  filed  for  record®  within  one  month 
of  the  filing  of  a  petition  consequent  upon  which 

with  a  view  to  give  a  preference  to  any  creditor,  or 
person  having  a  claim  against  him,  or  who  is  under 
any  liability  for  him,  procures  any  part  of  his  prop- 
erty to  be  attached,  sequestered,  or  seized  on  execu- 
tion, or  makes  any  payment,  pledge,  mortgage,  as- 
signment, transfer,  sale,  or  conveyance  of  any  part 
of  his  property,  either  directly  or  indirectly,  abso- 
lutely or  conditionally,  to  anyone,  the  person  receiv- 
ing such  payment,  pledge,  mortgage,  assignment, 
transfer,  sale,  or  conveyance,  or  to  be  benefited 
thereby,  or  by  such  attachment,  or  seizure,  having 
reasonable  cause  to  believe  that  such  debtor  is  in- 
solvent, and  that  such  attachment,  seizure,  payment, 
pledge,  mortgage,  conveyance,  transfer,  sale,  or  as- 
signment is  made  with  a  view  to  prevent  his  prop- 
erty from  coming  to  his  assignee  in  insolvency,  or 
t(8  prevent  the  same  from  being  distributed  ratably 
among  his  creditors,  or  to  defeat  the  object  of,  or  in 
finy  way  hinder,  impede,  delay  the  operation  of,  or 
to  evade  any  of  the  provisions  of  this  act,  such 
attachment,  sequestration,  seizure,  payment,  pledge, 
mortgage,  transfer,  sale,  assignment,  or  conveyance, 
is  void^  and  the  assignee,  or  the  receiver,  may  recover 
the  property,  or  the  value  thereof,  as  assets  of  such 
insolvent  debtor;  and  if  such  payment,  pledge,  mort- 
gage, conveyance,  sale,  assignment,  or  transfer  is 
not  made  in  the  usual  and  ordinary  course  of  busi- 
ness of  the  debtor,  or  if  such  sequestration  is  made 
under  judgment  which  the  debtor  has  confessed  or 
offered  to  allow,  that  fact  shall  be  prima  facie  evi- 
dence of  fraud.  ^' 

7  Insolvent  Must  Transfer  With  Specific  Intent. - 
"Unless  the  insolvent  transferred  the  property  with 
the  view  or  intention  to  give  a  preference  to  some 
creditor  or  person  having  a  claim  against  him,  it 
makes  no  difference  what  were  the  views  or  motives 
of  the  defendants  in  receiving  the  property,  or  what 
they   suspected    or  believed   about   the    solvency   of 


§    66  OF  BANKRUPTCY.  145 

the  maker  thereof  is  adjudged  an  insolvent,  the 
encumbrancer  having  reasonable  cause  to  be- 
lieve that  the  owner  of  the  encumbered  property 
is  insolvent  and  that  the  encumbrance  is  created 
with  intent  to  prevent  the  property  from  being 
ratably  distributed  by  the  assignee  in  insolvency 
or  to  hinder,  delay,  evade,  or  defeat  the  opera- 
tion of  the  insolvent  act,  is  void,^  and  the  as- 

the  transferor:  Hass  v.  Whittier,  Fuller  &  Co.,  87 
Cal.  613,  2-5  Pae.  917. 

*  But  granted  the  intent  of  the  insolvent  to  prefer, 
and  knovv^ledge  on  the  part  of  the  transferee  of  the 
intent  and  of  the  insolvency  of  the  insolvent,  the 
transfer  is  void  as  against  the  operation  of  the  In- 
solvent Act:  Tapscott  v.  Lyon,  103  Cal.  297,  312,  313, 
37  Pac.   225. 

8  When  Filed  for  Record  Within  One  Month  of 
riling  Petition  is  Void.— Insolvent  Act  of  1895,  sec- 
tion 59,  last  sentence:  *'A11  assignments,  transfers, 
conveyances,  mortgages,  or  encumbrances  of  real 
estate  shall  be  deemed,  under  this  section,  to  have 
been  made  at  the  time  the  instrument  conveying  or 
affecting  such  realty  was  filed  for  record  in  the 
county  recorder's  office  of  the  county,  or  city  and 
county,  where  the   same  is  situated. '^ 

This  sentence  of  section  59  refers  merely  to  en- 
cumbrances, etc.,  which  come  within  the  provisions 
of  the  preceding  parts  of  section  59  where  the  in- 
tent to  give  a  preference,  etc.,  is  present:  Farmers' 
Exchange  Bank  v.  Purdy,  130  Cal.  455,  458,  62  Pac. 
738. 

9  A  Transfer  of  Property  in  Contravention  of  the 
Provisions  of  This  Section  is  Absolutely  Void.— The 
transferee  is  prohibited  by  law  from  making  the 
purchase,  the  insolvent  could  have  no  right  to  sell, 
and  the  assignee  in  insolvency  is,  as  against  them, 
the  lawful  owner  of  the  property,  and  derives  his 
right  to  it  from  the  act  participated  in  by  the  trans- 
Liens— 10 


146  EFFECT    ON    ENCUMBRANCES.  §    66 

signee  in  insolvency  may  recover  the  encumbered 
property  or  the  valne  thereof  for  the  benefit  of 
the  estate;  and  in  case  such  encumbrance  is  nofc 
made  in  the  usual  or  ordinary  course  of  busi- 
ness/^ that  fact  is  prima  facie  evidence  of 
fraud/^ 

Subdivision  2,     Proof  of  Secured.  Demand. 

67.     Secured  Obligation  Generally  not  Provable. 

The  holder  of  a  claim  against  the  estate  of 
an  insolvent  which  is  secured  by  a  valid  encum- 
brance must  exhaust  his  securities  before  resort 

feree  and  the  insolvent,  whereby  they  violated  the 
law. 

Thus  the  transferee,  having  purchased  the  property 
from  those  who  had  no  right  to  sell  it  in  view  of  the 
relative  situation  of  the  parties  to  the  transaction, 
in  taking  possession  of  it  under  the  void  transfer 
converted  the  property  unlawfully,  and  thus  his  pos- 
session was  wrongful,  and  no  demand  for  pos- 
session of  the  property  need  be  made  by  the  assignee 
in  insolvency  as  a  prerequisite  to  maintaining  an 
action  for  the  recovery  of  the  property  or  the  value 
thereof:   Cerf  v.  Phillips,  75  Cal.  185,   16  Pac.   778. 

10  Usual  or  Ordinary  Course  of  Business  —lUustra- 
tioit.— Where  a  retail  merchant,  while  he  is  engaged 
in  business  as  such,  and  has  a  large  stock  of  goods 
exposed  for  sale  in  that  mode,  transfers  the  entire 
stock  in  one  trade,  such  transfer  is  not,  and  cannot 
be,  in  the  usual  and  ordinary  course  of  his  business: 
Tapscott  V.  Lyon,  103  Cal.  297,  313,  37  Pac.  225. 

31  Is  Prima  Facie  Evidence  of  Fraud.— *^  The  fact 
that  a  transfer  is  not  made  in  the  usual  and  ordi- 
nary course  of  business  is  only  prima  facie  evidence 
or  fraud.''  It  is  not  fraud  in  law:  Bernheim  v. 
Christal,  76  Cal.  567,  18  Pac.  683. 


§    67  OF   BANKRUPTCY.  147 

is  permissible  to  the  general  estate  of  the  insol- 
vent, so  far  as  this  can  be  done  without  impair- 
ing his  right  to  complete  satisfaction  and  with- 
out doing  injustice  to  third  persons.^^  Thus 
such  a  claim  cannot  be  proved  against  the  estate 
except  for  the  excess  thereof  over  the  value  of 
the  security  to  be  ascertained  as  provided  in  sec- 
tion 70  below,  unless  the  holder  thereof  trans- 
fers his  security  to  the  receiver  or  assignee  in 
insolvency  (or,  where  a  receiver  has  not  been  ap- 
pointed nor  assignee  elected,  to  the  sheriff)  for 
the   benefit  of   the  estate.^^     The  assignee  may 

3  2  Secured  Creditor  Must  First  Resort  to  Se- 
curity. 

Compare  Civil  Code,  section  3433:  "Where  a  cred- 
itor is  entitled  to  resort  to  each  of  several  funds  for 
the  satisfaction  of  his  claim,  and  another  person  has 
an  interest  in,  or  is  entitled  as  a  creditor  to  resort 
to  some,  but  not  all,  of  them,  the  latter  may  require 
the  former  to  seek  satisfaction  from  those  funds  to 
which  the  latter  has  no  such  claim,  so  far  as  it  can 
be  done  without  impairing  the  right  of  the  former 
to  complete  satisfaction,  and  without  doing  injustice 
to    third    persons. '^ 

Under  Civil  Code,  section  3433,  the  general  cred- 
itors of  an  insolvent  can  compel  a  secured  creditor 
to  first  exhaust  its  securities  before  it  can  share  the 
other  assets  of  the  insolvent:  Welch  v.  Sargent,  127 
Cal.   72,   84,   59  Pac.   319. 

13  Secured  Claim  Provable  Merely  for  Excess.— 
Insolvent  Act  of  1895,  section  48,  in  part:  "When 
a  creditor  has  a  mortgage,  or  pledge  of  real  or  per- 
sonal property  of  the  debtor,  or  a  lien  thereon,  for 
securing  the  payment  of  a  debt  owing  to  him  from 
the  debtor,  he  shall  be  admitted  as  a  creditor  only 
for  the  balance  of  the  debt,  after  deducting  the 
value  of  such  property  .  .  .  .  ;     or   the   creditor   may 


148  EFFECT    ON    ENCUMBRANCES.  f   67 

properly  reject  any  such  claim  when  attempted 
to  be  proved  against  the  estate  without  first  so 
transferring  the  security.^'* 

68.  Although  Secured  Claim  Proved  as  Unse- 
cured, Security  may,  in  Proper  Case,  be 
Asserted. 

Where  a  demand  against  an  insolvent  which 
is  in  fact  secured  by  an  encumbrance  is  proved 
as  an  unsecured  demand,  but  is  rejected  by  the 
assignee  in  insolvency,  the  holder  thereof  may, 
no  third  party  having  been  injured  by  reason  of 
the  filing  of  the  rejected  claim,  thereafter  assert 
his  encumbrance  ;*^  but  such  creditor  is  deemed 

release  or  convey  his  claim  to  the  receiver,  if  any, 
or  if  no  receiver  then  to  the  sheriff,  before  the  elec- 
tion of  an  assignee,  or  to  the  assignee  if  an  assignee 
lias  been  elected,  npon  such  property,  and  be  ad- 
mitted  to    prove   his   whole    debt.'' 

Where  the  person  personally  liable  for  an  obliga- 
tion secured  by  a  mechanic's  lien  against  his  prop- 
erty becomes  insolvent,  unless  the  lienor  releases 
his  lien  the  obligation  secured  thereby  is  provable 
merely  for  the  excess  thereof  over  the  value  of  the 
encumbered  property:  Bradford  v.  Dorsey,  63  Cal. 
122. 

Where  a  mortgagee  has  waived  all  recourse  against 
the  parties  personally  liable,  he  has  no   claim  which 
is  provable  against  the  estate  of  the  insolvent  mort-  , 
gagor:  Montgomery  v.  Merrill,  62  Cal.  385,  393. 

34  Assignee  may  Beject  Secured  Claim  When  At- 
tempted to  be  Proved.— An  assignee,  knowing  of  the 
existence  of  security,  is  justified  in  rejecting  a  claim: 
Perry  v.  Parrott,   135  Cal.  238,  244,   67  Pac.  144. 

15  Where  No  One  Injured,  Security  may  Afterward 
"be   Asserted. — Where   the   owner   of   a   claim   against 


§    68  OF   BANKRUPTCY.  149 

to  have  waived  his  security  if  his  demand  is  al- 
lowed and  he  takes  part  in  the  insolvency  pro- 
ceedings.^^ 

69.     When      Obligation     Exceeds    Property     in 
Value,  Creditor  may  Prove  Claim  for  Ex- 
cess. 

Whenever  a  secured  obligation  owing  by  an 
insolvent  exceeds  the  encumbered  property  in 
value,  the  secured  creditor  may, 

the  estate  of  an  insolvent  secured  by  pledge  against 
his  property  presented  to  the  assignee  in  insolvency 
a  verified  claim,  stating  that  the  debt  due  him  from 
the  insolvent  and  evidenced  by  its  note  was  wholly 
unsecured,  but  the  claim  was  rejected  and  the  claim- 
ant never  took  any  part  in  the  insolvency  proceed- 
ings, and  the  position  of  no  person  was  affected 
or  changed  to  his  injury  or  detriment  by  reason  of 
the  filing  of  the  rejected  claim,  the  owner  may  there- 
after assert  his  security.  The  court  said  in  respect 
to  the  pledgee:  '*Il.is  claim  having  been  rejected, 
no  person  having  suffered  loss  or  detriment  by  its 
filing,  we  experience  difiiculty  in  seeing  how  it  can 
be  said  that  he  has  abandoned  his  right  to  enforce 
the  security  for  his  debt,  which  at  the  time  he  pre- 
sented his  claim,  for  aught  that  appear,  he  may 
not  have  known  of,  and  may  afterward  have  dis- 
covered'^  Perry  v.  Parrott,  135  Cal.  238,  244,  67 
Pac.    144. 

16  Creditor  Taking  Part  in  Proceedings  Deemed 
to  Have  Waived  Security.— ^^ If  Pitman's  [the  se- 
cured creditor's]  mistaken  or  false  claim  had  been 
allowed,  and  he  had  taken  part  in  the  proceedings 
in  insolvency,  doubtless  he  woulcl  have  been  held 
to  have  waived  his  security'':  Perry  v.  Parrott,  135 
Cal.  238,   244,   67  Pac.   144; 


150  EFFECT    ON    ENCUMBRANCES.  §    69 

(1)  unless  such  eneumbrance  or  the  obligation 
secured  thereby  constitutes  a  preference,  prove 
his  claim  for  the  unsecured  excess  of  his  de- 
mand beyond  the  value  of  his  security  to  be  de- 
termined as  set  forth  in  section  67  above,  and 
receive  a  dividend  thereon/''  or 

(2)  release  his  encumbrance  and  prove  his 
whole  claim  as  an  unsecured  creditor.^® 

But  an  encumbrancer  receiving  a  preference, 
having  reasonable  cause  to  believe  that  the  same 
was  given  contrary  to  the  insolvent  act,  shall  not 
be  permitted  to  prove  any  part  of  the  obligation 
secured  by  his  encumbrance  until  he  surrenders 
his  preference.^^ 

17  See  Insolvent  Act  of  1895,  section  48,  in  part,  as 
quoted  in  note  20,  below;  and  as  quoted  in  note  18, 
second  paragraph,  below. 

18  Insolvent  act  of  1895,  section  48,  in  part:  *'0r 
the  creditor  may  release  or  convey  his  claim  to  the 
receiver,  if  any,  or  if  no  receiver  then  to  the  sheriff, 
before  the  election  of  an  assignee,  or  to  the  assignee 
if  an  assignee  has  been  elected,  upon  such  property, 
and  be  admitted  to  prove  his  whole  debt 

"If  the  property  is  not  sold  or  released,  and  deliv- 
ered up,  or  its  value  fixed,  the  creditor  shall  not  be  al- 
lowed to   prove   any  part   of   his   debt." 

19  Encumbrancer  Receiving  Preference  Must  Sur- 
render Same.— Insolvent  Act  of  1895,  section  50: 
''Any  person  who  shall  have  reasonable  cauSe  to 
believe  that  the  same  was  made  or  given  by  the 
debtor  contrary  t«  any  provision  of  this  act,  shall 
not  prove  the  debt  or  claim  on  account  of  which  the 
preference  was  made  or  given;  nor  shall  he  receive 
any   dividend   thereon   until   he   shall   first   have   sur- 


§    70  OF  BANKRUPTCY.  151 

Subdivision  3,     Control  of   Court   Over  Encum- 
hered  Property, 

70.  Determination  of  Value  of  Encumbered  Prop- 

erty. 

The  value  of  property  hypothecated  to  secure 
an  obligation  of  an  insolvent  must  be  determined 
either 

(1)  by  agreement  between  the  encumbrancer 
and  receiver  in  insolvency,  or 

(2)  by  the  decision  of  the  court,  or  judge  there- 
of, as  to  the  fair  and  reasonable  value  of  the 
property,  or 

(3)  by  the  sale  thereof .^o 

71.  When  Property  Exceeds  Obligation  in  Value, 

Excess  Inures  to  Assignee. 

Whenever  encumbered  property  belonging  to 
the  estate  of  an  insolvent  exceeds  in  value  the 

rendered  to  the  assignee  all  property,  money,  benefit, 
or  advantage  received  by  him  under  such  preference. '  * 
.,  20  Insolvent  Act  of  1895,  section  48,  in  part: 
I* When  a  creditor. has  a  mortgage,  or  pledge  of  real 
or  personal  property  of  the  debtor,  or  a  lien  thereon, 
for  securing  the  payment  of  a  debt  owing  to  him 
from  the  debtor,  he  shall  be  admitted  as  a  creditor 
only  for  the  balance  of  the  debt,  after  deducting 
the  value  of  such  property,  to  be  ascertained 
[1]  by  agreement  between  him  and  the  receiver,  if 

any,    and 
[2]  if  no  receiver,  then  upon  such  sum  as  the  court 
or  a  judge  thereof,  may  decide  to  be  fair  and  rea- 
sonable,  before   the    election    of    an    assignee,    or 


152  EFFECT    ON    ENCUMBRANCES.  §    7T 

obligation  of  the  bankrupt  seenred  thereby,  the 
assignee  in  insolvency  may 

(1)  release  to  the  secured  creditor  the  full 
ownership  of  the  encumbered  property  upon 
receiving  the  excess  of  value  thereof  over  the 
secured  obligation,  or 

(2)  sell  the  property  subject  to  the  encumbrance; 
and  in  either  case  the  assignee  and  creditor  must 
execute  all  instruments  and  writings  necessary 
or  proper  to  consummate  the  transaction.^^ 

72.     Assignee  may  Dispose  of  Encumbered  Prop- 
erty. 

The  assignee  has  power  to  redeem  all  mort- 
gages and  conditional  contracts,  and  all  valid 
pledges,  and  to  sattsfy  any  judgment  which  may 
be  an  encumbrance  on  any  property  sold  by  him, 
or  to  sell  such  property  subject  to  such  mort- 
gage, contract,  pledge,  or  judgment.^^ 

[3]  by  a  sale  thereof,  to  be  made  in  such  manner  as 
the   court,   or   judge   thereof,    shall   direct.'' 

21  Insolvent  Act  of  1895,  section  48,  second  sen- 
tence: ''If  the  value  of  the  property  exceeds  the 
sum  for  which  it  is  so  held  as  security,  the  assignee 
may  release  to  the  creditor  the  debtor's  right  of 
redemption  thereon  on  receiving-  such  excess;  or  he 
may  sell  the  property  subject  to  the  claim  of  the 
creditor  thereon,  and  in  either  case  the  assignee  and 
creditor,  respectively,  shall  execute  all  deeds  and 
writings  necessary  or  proper  to  consummate  the 
transaction." 

22  Insolvent  Act  of  1895,  sec.  d5,  subd.  6. 


§    73  OF   BANKRUPTCY.  153 

Subdivision    ^.     Enforcement     of    Encumbrance 
Against  Property  of  Insolvent. 

73.     Foreclosure    Action  not    Affected  by  Insol- 
vency. 

An  action  to  foreclose  an  encumbrance  against 
property  of  an  insolvent  is  not  stayed  (where 
.personal  recourse  against  the  insolvent  is 
waived)  by  the  filing  of  a  petition  in  insolvency 
by  or  against  him  nor  by  an  adjudication  of  his 
insolvency ^^^  and  may  be  maintained  without 
first  proving  the  secured  obligations^  against  the 

23  Where  an  encumbrancer  waives  aU  recourse 
against  other  property  of  the  estate  of  an  insol- 
vent in  his  complaint,  an  action  to  foreclose  his 
encumbrance  is  not  stayed  by  an  order  of  the  in- 
solvency court  staying  all  proceedings  against  the 
estate:  Montgomery  v.  MerriU,  62  Cal.  385,  393; 
Bradford  v.  Dorsey,   63   Cal.   122. 

Historical.— VndiQv  the  California  Insolvent  Act  of 
.1852,  an  action  to  foreclose  an  encumbrance  for  se- 
curity only  was  not  abated  by  the  subsequent  com- 
mencement of  a  proceeding  in  insolvency' against  the 
mortgagor:  Kix  v.  Mc Henry,  7  Cal.  89;  Sharp  v.  Lum- 
ley,  34  Cal.  611,  615.  Nor  was  the  right  to  enforce  . 
a  judgment  lien  abated:  Isaac  v.  Swift,  10  Cal.  71, 
83,  70  Am.  Dec.  698. 

Under  the  United  States  Bankrupt  Act  of  1867,  an 
action  to  foreclose  a  mortgage  is  not  abated  by  the 
subsequent  commencement  of  proceeding  in  bank- 
ruptcy: Amador  Canal  etc.  Co.  v.  Mitchell,  59  Cal. 
168,    176,    177. 

24  May  be  Enforced  Without  Proving  Secured  Ob- 
ligation.—Where  husband  and  wife  duly  mortgaged 
the  homestead,  and  the  husband  is  thereafter  ad- 
judged   an    insolvent,    the    mortgage    may    thereafter 


154  EFFECT    ON    ENCUMBRANCES.  §    73 

estate  of  the  insolvent;  nor  is  the  time  within 
which  a  foreclosure  action  might  otherwise  be 
brought  prolonged  thereby .^^ 

be  foreclosed,  although  a  claim  was  not  presented 
against  the  insolvent's  estate.  The  provisions  re- 
quiring a  mortgage  against  a  homestead  of  a  deceased 
mortgagor  to  be  presented  have  no  application: 
Montgomery  v.  Eobinson,  76  Cal.  229,  18  Pac.  261. 
i25  Time  of  Commencing  Action  not  Prolonged.— 
l^he  insolvency  of  the  owner  of  property  affected  by 
$t  mechanic's  lien  and  the  rendition  of  an  order  stay- 
ing all  proceedings  against  him  does  not  prolong  the 
time  within  which  an  action  for  the  foreclosure  of 
the  lien  may  be  commenced:  Bradford  v.  Dorsey,  63 
Cal.  122. 


CHAPTER    3. 

PAETITION"    OF    ENCUMBERED    IMMOV- 
ABLE PEOPEETY. 

Subdivision  1.    Encumbrancer  as  a  Party  in  an  Action 
in  Partition. 

74.  Encumbrancer    in    certain    cases    only    necessary 

party  in  action  in  partition. 

75.  Procedure    when    encumbrancer    necessary    party 

but  not  joined. 

Subdivision  2.    Effect  of  Partition  on  Subsisting  En- 
cumbrances. 

76.  Upon  partition  encumbrance  on  undivided  inter- 

est   becomes    charge  exclusively    on  share    of 
owner  of  interest. 

77.  Property  ordered  sold  in  action  in  partition  to  be 

sold  free  of  encumbrances. 
78      Application  of  proceeds  of  sale. 

79.  Deduction  to  be  made  from  amount  paid  on  such 

obligation  when  also  otherwise  secured. 

80.  Encumbrancer  who  purchases  may  give  receipt  in 

payment  of  part  of  purchase  money. 

SuMivision  1.     Encumbrancer  as  a  Party  m  an 
Action  in  Partition, 

74.     Encumbrancer  in  Certain  Cases  Only  Neces- 
sary Party  in  Action  in  Partition. 

In  an  action  for  the  partition  of  immovablo 
property    between    the    cotenants    thereof,    tha 

(155) 


156  EFFECT    ON    ENCUMBRANCES.  §    71 

holder  of  an  encumbrance  against  any  part  there- 
of is  a  necessary  party  in  case  his  encumbrance 
is  recorded  at  the  time  of  the  filing  for  record 
of  the  notice  of  pendency  of  the  action  in  parti- 
tion. But  all  other  encumbrancers  are  deemed 
to  have  been  notified  of  the  pendency  of  the  ac- 
tion by  the  filing  of  such  notice,  and  are  not 
necessary  parties  in  the  action.^ 

75.     Procedure   When   Encumbrancer  Necessary 
Party  but  not  Joined. 

Whenever^  it  appears  to  the  court  in  which 
an  action  in  partition  is  pending  by  the  certifi- 
cate of  the  county  recorder  or  county  clerk,  or  by 
the  affidavit  or  verified  statement  of  any  person 
who  has  examined  the  records,  that  any  encum- 
brancer who  is  a  necessary  party  in  the  action 

1  See  Code  of  Civ.  Proc,  sees.  754,  755. 

Section  754:  ''No  person  having  a  conveyance  of 
or  claiming  a  lien  on  the  property,  or  some  part  of 
it,  need  be  made  a  party  to  the  action,  unless  such 
conveyance  or  lien  appears  of  record.'' 

Section  755:  ''Immediately  after  filing  the  com- 
plaint in  the  superior  court,  the  plaintiff  must  record 
in  the  office  of  the  recorder  of  the  county  or  of  the 
several  counties  in  which  the  property  is  situated,  a 
notice  of  the  pendency  of  the  action,  containing  the 
name  of  the  parties  so  far  as  known,  the  object  of 
the  action,  and  a  description  of  the  property  to  be 
affected  thereby.  From  the  time  of  filing  such  no- 
tice for  record,  all  persons  shall  be  deemed  to  have 
notice  of  the  pendency  of  the  action.'' 

2  See  Code  Civ.  Proc,  sec.  761. 


§    7b  OF  PARTITION.  157 

has  not  been  duly  joined  as  such,  the  court  must 
either 

(1)  order  each  such  encumbrancer  to  be  made 
a  party  to  the  action  by  an  amended  or  sup- 
plemental complaint,  or 

(2)  appoint  a  referee  to  ascertain, 

(a)  whether  or  not  his  encumbrance  is  a  sub- 
sisting charge  against  the  property,  and  if 
subsisting  the  amount  unpaid  thereon, 

(b)  the  relative  priority  of  such  encum- 
brance to  any  other  encumbrances  against 
the  property  affected  thereby,  and 

(c)  whether  or  not  the  obligation  secured 
thereby  is  otherwise  secured,  and  if  so  se- 
cured, the  nature  and  extent  of  the  security. 

In^  case  a  referee  is  appointed,  the  plaintiff  in 
the  action  in  partition  must,  a  reasonable  time 
previous  to  a  day  to  be  set  for  a  hearing,  cause 
such  encumbrancer  to  be  notified  to  appear  be- 
fore the  referee  at  a  specified  place  and  time  on 
such  day  to  make  proof,  by  his  own  affidavit  or 
otherwise,  of  the  amount  due  or  to  become  due 
contingently  or  absolutely  on  the  obligation  se- 
cured by  his  encumbrance. 

3  See  Code  Civ.  Proc,  sec.  762,  first  portion. 


158  EFFECT    ON    ENCUMBRANCES.  §    76 

SuMiviswn  2.     Effect  of  Partition  on  Subsisting 
Encumbrances. 

76.  Upon  Partition  Encumbrance  on  Undivided 
Interest  Becomes  Charge  Exclusively  on 
Share  of  Owner  of  Interest. 

When^  in  an  action  in  partition,  property  af- 
fected by  an  encumbrance  against  the  undivided 
interest  of  any  party  to  such  action  is  parti- 
tioned, the  share  assigned  to  such  party  is  pri- 
marily chargeable  with  its  just  proportion  of  the 
costs  of  partition,  and  subject  to  such  charge, 
such  encumbrance  becomes  thenceforth  a  charge 
exclusively  against  such  share. ^ 

77.  Property  Ordered  Sold  in  Action  in  Partition 
to  be  Sold  Free  of  Encumbrances. 

The  court  in  which  an  action  in  partition  is 
pending  must,  in  case  a  sale  of  any  of  the  prop- 
erty affected  by  such  action  becomes  proper,  or- 
der the  property  to  be  sold  free  and  clear  of  any 
encumbrances     for     security^     existing     there- 

4  See  Code  Civ.  Proc,  sec.  769. 

5  Property   to    be    Sold   Free    of   Encumbrances.^ 

Code  Civ.  Proc,  sec.  771:  '  ^  The  .  proceeds  of  the 
sale  of  encumbered  property  must  be  applied  .... 
3.  to  satisfy  and  cancel  of  record  the  several  liens 
in  the  order  of  their  priority." 

Code  Civ.  Proc,  sec.  787:  ''The  conveyances  [by 
which  ttie  property  is  partitioned]  must  be  recorded 
in  the  county  where  the  premises  are  situated,  and 
shall  be   a  bar  against   all  persons  interested  in  the 


§    77  OF  PARTITION.  150 

against;  and  upon  due  disposition  being  made 
of  the  proceeds  of  the  sale,  such  encumbrances 
are  discharged,  and,  if  recorded,  must  be  can- 
celed of  record.^ 

78.     Application  of  Proceeds  of    Sale.'' 

The  proceeds  of  such  sale  must  be  applied  un- 
der the  direction  of  the  court  to  the  payment  of 

(1)  the  proportion  of  the  general  costs  of  the 
action  in    partition    Justly  chargeable  to    the 

'  property  sold, 

(2)  the    proportion  of    the  costs  of  reference 
so  chargeable,^  and 

property  in  any  way  who  shall  have  been  named  as 
parties  in  the  action,  and  against  all  such  parties 
and  persons  as  were  unknown,  if  the  summons  was 
served  by  publication,  and  against  all  persons  claim- 
ing under  them,  or  either  of  them,  and  against  all 
persons  having  unrecorded  deeds  or  liens  at  the  com- 
mencement  of   the   action.'' 

By  the  former  code  section  quoted  provision  is 
made  for  the  payment  of  the  amount  secured  by  the 
encumbrance  out  of  the  proceeds  of  the  sale  of  the 
property;  by  the  latter  the  sale  is  declared  to  bar 
the  rights  of  all  encumbrancers  in  the  property,  both 
those  who  were  duly  joined  in  the  action  in  partition 
and  those  who  were  not  necessary  parties  therein.  It 
is  clear,  therefore,  that  the  code  contemplates  a  sale 
of  the  property  free  and  clear  of  encumbrances,  the 
encumbrances  to  become  charges  against  the  proceeds 
of  the  sale. 

o  See  Code  Civ.  Proc,  sec.  771,  in  part,  as  quoted  in 
note  2. 

7  See  Code  Civ.  Proc,  sec.  771. 

8  The  Code  language  is:  ''The  costs  of  the 
reference.''     But  in  view  of  the  Code  of  Civil  Pro- 


160  EFFECT    ON    ENCUMBRANCES.  §    78 

(3)  the  amounts  actually  secured  by  encum- 
brances against  the  property  sold  or  any  in- 
terest therein,  in  the  order  of  priority,  sub- 
ject in  each  case  to  the  deductions  provided 
for  in  the  succeeding  section,  and 

(4)  any  residue  must  be  distributed  among 
the  owners  of  the  property  sold  according  to 
their  respective  shares  therein. 

The  amount  remaining  unpaid  upon  any  obliga- 
tion secured  by  an  encumbrance  must  be  verified 
by  affidavit  as  a  prerequisite  to  the  payment 
thereof. 

79.  Deduction  to  be  Made  from  Amount  Paid  on 
Such  Obligation  When  also  Otherwise  Se- 
cured. 

Whenever  an  obligation  secured  by  an  encum- 
brance against  the  property  sold  is  also  otherwise 
secured,  the  court  may,  in  its  discretion,  order 
such  other  securities  to  be  exhausted  by  the  se- 
cured creditor  before  a  distribution  of  the  pro- 
ceeds of  the  sale  is  made,  or  may  order  a  just 
deduction  to  be  made  from  the  amount  remaining 
unpaid  upon  the  obligation  secured  by  the  prop- 
erty sold  on  account  thereof.^ 

cedure,  sectionj  768,  which  provides  for  the  apportion- 
ment of  the  expenses  of  reference  among  the  various 
parties  to  the  action,  by  analogy  with  the  first  sub- 
division of  the  section,  and  on  general  equitable  prin- 
ciples, it  seems  that  only  the  just  proportion  of  the 
costs  of  reference  are  intended  to  be  charged. 
9  See  Code  Civ.  Proc,  sec.  772. 


§    80  OP  PARTITION.  Ivil 

80.     Encumbrancer  Who    Purchases    may    Give 
Receipt  in    Payment  of   Part  of  Purchase 
Money. 
When  an  encumbrancer  entitled  to  receive  a 
portion  of  the  proceeds  of  the  sale  in  liquidation 
of  his  encumbrance  upon  the  property  sold  be- 
comes a  purchaser  at  the  sale  thereof,  the  referee 
may  take  his  receipt  in  payment  of  so  much  of 
the  purchase  money  as  he  will  be  entitled  to  re- 
ceive upon  its  distribution.^^ 

10  See  Code  Civ.  Proc,  sec.  786. 
Liens— 11 


TITLE    5. 

EXTINCTION    OF    ENCUMBRANCES    FOll 
SECUEITY.i 

8.1.     Encumbrance    extinguished    like    any    other    ac- 
cessory   obligation. 

82.  Extinction   by   destruction   of    encumbered   prop- 

erty. 

83.  Extinction  by  performance  or   offer  to  perform. 

84.  Extinction  by  lapse  of  time. 

85.  Extinction  by  sale. 

8(5.     ExtTaction  by  wrongful  dealing  with  property. 

87.  Surrender  of  property  extinguishes  encumbrance. 

88.  Extinction    as    to    third    parties    by    voluntary 

restoration  of  property. 

89.  Partial   performance    of   secured   obligation   does 

not   release    security. 

81.     Encumbrance  Extinguished  Like  Any  Other 
Accessory  Obligation.^ 

An  encumbrance  for  security  is  extinguishable 
in  like  manner  with  any  other  accessory  obliga- 
tion. 

1  In  Southern  Pacific  Co.  v.  Prosser,  122  Cal.  413, 
416,  55  Pac.  145,  it  is  said  that  ''sections  2909-2913 
of  the  Civil  Code  contain  an  exclusive  enumeration 
of  the  means  by  which  liens  are  extinguished. ' '  This 
title  is  founded  on  these  sections. 

2  See  Civ.  Code,  sec.   2909,  latter  portion. 

(162) 


§    82  EXTINCTION  THEREOF.  163 

82.  Extinction   by   Destruction  of   Encumbered 
Property. 

An  encumbrance  is  extinguished  by  the  de- 
struction of  the  encumbered  property,  or  by  the 
extinction  by  title  paramount,  without  the  collu- 
sion of  the  owner  of  the  encumbered  interest,  of 
the  interest  subject  to  the  encumbrance.^ 

83.  Extinction  by  Performance  or  Oifer  to  Per- 

form.'* 

An  encumbrance  for  security  (except  perhaps 

3  Extinction  by  Destruction  of  Encumbered  Prop- 
erty.—Where  a  contract  for  the  sale  and  purchase 
of  land  is  made,  the  vendor  retaining  the  title  as 
security,  and  the  vendee  mortgages  his  interest,  the 
vendor 'may,  upon  default  of  the  vendee  and  his  re- 
fusal upon  demand  to  complete  the  purchase,  declare 
the  contract  of  sale  and  purchase  at  an  end  and 
thereby  terminate  the  mortgaged  interest  and  the 
mortgage;  but  the  vendee  cannot  before  the  vendor 
thus  terminates  the  sale,  although  in  default,  by  any 
arrangement  avoid  the  mortgage,  nor  can  his  suc- 
cessor in  interest:  Houghton  v.  Allen  (Cal.),  14  Pac, 
G41,    642. 

'4  Extinction  by  Performance  or  Offer  to  Perform. 
Civil  Code,  section  2905,  provides:  ^^Eedemption  from 
a  lien  is  made  by  performing,  or  offering  to  perform, 
the  act  for  the  performance  of  which  it  is  a  security, 
and  paying,  or  offering  to  pay,  the  damages,  if  any, 
to  which  the  holder  of  the  lien  is  entitled  for  delay.'' 

Cross  V.  Eureka  Lake  and  Yuba  Canal  Co.,  73  Cal. 
302,  306,  2  Am.  St  Eep.  808,  14  Pac.  885. 

A  sufficient  tender  has  the  same  effect  upon  all  the 
incidents  of  an  obligation  as  the  performance  thereof, 
So  it  discharges  a  pledge  and  stops  the  running  of 
interest  thereon:  Loughborough  v.  McNevin,  74  Cal. 
250,  254,  5  Am.  St.  Eep.  435,  14  Pac.  369,  15  Pac.  773, 


164  ENCUMBRANCES.  §    83 

in  certain  cases  a  mortgage)^  is  extinguished  by 
performing  or  offering  to  perform  the  obligation 
the  performance  of  which  is  secured  thereby,  the 
offer  being  made  with  intent  to  extinguish  the 
obligation/*  and  paying  or  offering  to  pay  any 
damages  to  which  the  encumbrancer  may  be  en- 
titled for  delay. 

Compare  Bamhart  v.  Tulkerth,  73  Cal.  526,  529, 
530,   15  Pac.   89. 

See    note    6    below. 

But  where  certain  property  in  which  several  per- 
sons owned  undivided  interests  was  mortgaged  by  the 
several  owners  to  secure  an  obligation  of  which  each 
was  personally  liable  for  a  certain  portion,  the  pay^ 
ment  by  a  part  of  such  persons  of  the  entire  mort- 
gage obligation  and  the  assignment  to  them-  of  the 
evidence  of  the  obligation  does  not  amount  to  pay- 
ment of  the  mortgage  between  them  and  the  persons 
who  did  not  pay  their  portion  of  the  secured  obli- 
gation, but  the  mortgage  is  not  extinguished  and 
may  be  foreclosed  against  them:  Ingham  v.  Weed, 
(Cal.),  48  Pac.  318,  320A. 

5  Except  a  Mortgage.— It  may  be  that  a  tender 
dofes  not  extinguish  a  mortgage.  See  section  376  be- 
low. 

But  payment  after  default  operates  to  discharge  a 
mortgage  equally  with  payment  at  maturity:  John- 
son V.  Sherman,  15  Cal.  287,  293,  76  Am.  Dec.  481. 

6  Intent  to  Extinguish  Obligation.— '  ^  The  mode 
of  offering  prescribed  in  the  chapter  of  the  Civil 
Code,  headed  *  Offer  of  Performance'  (section  1485 
(it  seq.),  applies  as  well  to  offers  of  performance 
whicir  operate  a  redemption  (Civ.  Code,  sec.  2905), 
as  to  offers  to  perform.  Such  offers  must  be  made 
with  'intent  to  extinguish  the  obligation,'  since  the 
lien  can  be  extinguished  only  by  extinguishing  the 
obligation'':  Chielovich  v.  Krauss  (Cal.),  11  Pac. 
781,  in  bank,  Myrick,  J.,  dissenting.  See,  also,  San- 
ford  V.  Savings  etc.  Soc,  80  Fed.  (C.  C.)  54,  62,  63. 


§    84  EXTINCTION   THEREOF.  165 

84.  Extinction  by  Lapse  of  Time. 

An  encumbrance  for  security  is  extinguished 
by  the  lapse  of  time  within  which  an  action  can 
be  commenced  upon  the  principal  obligation/  ex- 
cept when,  in  the  case  of  a  mortgage^  the  prin- 
cipal obligation  is  not  in  writing  ;^  but  where  the 
encumbrancer  is  in  lawful  possession  of  the  en- 
cumbered property,  he  cannot  be  dispossessed 
thereof  without  first  performing,  or  offering  to 
perform,  the  secured  obligation,  although  such 
obligation  has  been  barred  by  lapse  of  time.^ 

85.  Extinction  by  Sale. 

The  sale  of  encumbered  property  in  satisfac- 
tion of  an  obligation  secured  thereby  extinguishes 

T  When  Principal  Obligation  Barred,  Encumbrance 

Extinguished.— Civil  Code,  section  2911:  ^'A  lien  is 
extinguished  by  the  lapse  of  the  time  within  which, 
under  the  provisions  of  the  Code  of  Civil  Procedure, 
an  action  can  be  brought  upon  the  principal  obliga- 
tion.'' 

Vendor's  lien  so  extinguished:  California  Sav. 
Bank  of  San  Diego  v.  Parrish,  116  Cal.  254,  259,  48 
Pac.    73. 

Pledge, — Where  a  transfer  of  a  benefit  certificate 
in  a  beneficial  order  was  made  for  security  only^ 
and  the  secured  obligation  is  barred  by  lapse  of  time, 
the  lien  is  extinguished,  and  the  pledgee  is  not  en- 
titled to  a  recovery  upon  the  certificate:  Conway  v. 
Supreme  Council  Catholic  Knights,  131  Cal.  437,  439, 
440,    63   Pac.    727. 

8  Mortgage,  when  extinguished  by  lapse  of  time: 
See  section  375,  below. 

9  Encumbrancer  in  possession  cannot  be  dispos- 
sessed until  secured  obligation  satisfied:  See  section? 
216,  338,  and  353,  below. 


166  ENCUMBRANCES.  §    85 

the    encumbrance    thereagainst    by   which    such 
obligation  was  secured. ^^ 

86.     Extinction  by  Wrongful  Dealing  with  Prop- 
erty. 

An  encumbrance  dependent  on  possession  is 
not  lost  by  a  failure  to  comply  with  a  reasonable 
demand  for  specification  of  the  amount  claimed 
to  be  due/^  nor  by  an  honest,  though  mistaken, 
claim  of  ownership  of  the  encumbered  property 
made  by  the  encumbrancer  thereof,  the  claim, 
however,    being    afterward    abandoned;*^    but, 

10  Civil  Code,  section  2910,  provides:  ''The  sale 
of  any  property  on  which  there  is  a  lien,  in  satis- 
faction of  the  claim  secured  thereby,  or  in  case  of 
personal  property,  its  wrongful  conversion  by  the 
person  holding  the  lien,  extinguishes  the  lien 
thereon.'' 

Thus  a  judgment  lien  is  extinguished  by  the  sale 
of  the  liened  property  in  satisfaction  thereof:  Pol- 
lard V.  Harlow,  138  Cal.  390,  71  Pac.  454. 

11  Failure  to  Specify  Amount  Due.— The  remedy 
of  claim  and  delivery  is  therefore  improper,  but  an 
action  to  compel  an  accounting,  and  the  discharge  of 
the  lien  upon  its  satisfaction  might  be  maintained. 
''While  it  would  be  eminently  proper  to  amend  our 
code  so  as  to  require  parties  claiming  specific  liens 
upon  personal  property  dependent  on  possession  to 
give,  upon  reasonable  demand,  a  specification  of  the 
amount  or  sum  claimed  to  be  due,  and  for  which 
the  lien  is  claimed,  under  penalty  of  a  waiver  of  the 
lien  for  refusal,  it  cannot  be  said  that  such  is 
the  law  in  this  state'':  Sutton  v.  Stephan,  101  Cal. 
545,   548,   549,   36   Pac.   106. 

13  Honest  Claim  of  Ownership.— There  is  this  limi- 
tation however,   that  if   one  who   claims   as  owner  is 


§    86  EXTINCTION  THEKEOF.  167 

otherwise,  the  retention  of  the  property  on  any 
ground  inconsistent  with  the  existence  of  the 
lien,  or  other  wrongful  conversions^  thereof,  ex- 
tinguishes the  encumbrance.^^ 

afterward  proved  to  have  but  a  lien,  lie  shall  not 
thereafter  be  deprived  absolutely  of  his  lien  if  his 
claim  was  honestly,  though  mistakenly,  entertained 
and  pressed;  but  before  he  can  be  allowed  his  lien 
he  must  abandon  the  false  claim  of  ownership:  Will- 
iams V.  x\she,  111  Cal.  180,  185,  43  Pac.  595;  Brittau 
V.  Oakland  Bank  of  Savings,  124  Cal.  282,  288,  71 
Am.    St.    Eep.    58,    57    Pac.    84. 

13  Wrongful  Conversion.— Compare  Civ.  Code,  sec. 
2910,  cited  note  10  above. 

Any  exercise  of  dominion  over  the  property  of  an- 
other in  defiance  of  the  other  ^s  rights  is  a  conversion 
thereof:  Loughborough  v.  McNevin,  74  Cal.  250,  255, 
5  Am.  St.  Eep.  435,  14  Pac.  369. 

A  pledge  is  thereby  extinguished:  Loughborough  v. 
McNevin,  above. 

14  Retention.— A  lienor  who  refuses,  upon  proper 
demand,  to  deliver  property  without  setting  up  his 
lien  thereon,  or  who  bases  his  refusal  upon  a  claim 
other  than  that  of  lien,  is  estopped  from  setting  up  his 
lien  as  a  defense  in  an  action  to  recover  possession  of 
the  property:  Lehmann  v.  Schmidt,  87  Cal.  15,  20,  21, 
25  Pac.  161;  Kullman  v.  Greenebaum,  92  Cal.  403,  407, 
27  Am.  St.  Eep.  150,  28  Pac.  674;  Sutton  v.  Stephan, 
101  Cal.  545,  36  Pac.  106;  Williams  v.  Ashe,  111  Cal. 
180,  184,  185,  43  Pac.  595;  Brittan  v.  Oakland  Bank  of 
Savings,  124  Cal.  282,  287,  288,  71  Am.  St.  Eep.  58,  57 
Pac.  84. 

'^When  a  tender  is  made  to  a  pledgee,  and  he  makes 
no  objection  to  the  amount,  but  does  not  surrender  the 
pledge  nor  accept  the  tender,  the  result  is  to  extin- 
guish the  lien  and  amounts  to  a  wrongful  conversion, 
even  though  the  tender  in  fact  is  less  than  the  amount 
that  may  be  due  the  pledgee.  It  is  his  duty  to  make 
known  his  objections,  and,  failing  to  do  so,  the  tender 
must  be  deemed  to  have  been  the  full  amount  due,  and 


l6iB  ENCUMBRANCES.  §    87 

87.  Surrender  of  Property  Extinguishes  Encum- 
brance. 

An  encumbrance  dependent  on  possession  is 
extinguished  by  the  surrender  of  the  property 
subject  thereto.^^ 

88.  Extinction  as  to  Third  Parties  by  Voluntary 
Restoration  of  Property. 

The  voluntary  restoration  of  property  to  its 
owner  by  the  holder  of  an  encumbrance  for  se- 
curity thereagainst,  dependent  on  possession,  ex- 
tinguishes the  encumbrance  as  to  such  property, 
unless  otherwise  agreed  by  the  parties;  and  ex- 
tinguishes it,  notwithstanding  any  such  agree- 

his  refusal  to  surrender  the  property  is  a  wrongful 
conversion'':  Latta  v.  Tutton,  122  Cal.  279,  283,  68 
Am.  St.  Rep.  30,  54  Pac.  844. 

A  warehouseman  waives  his  lien  for  charges  by  a 
statement  in  reply  to  an  offer  to  pay  such  charges  that 
such  warehouseman  has  no  charges:  Blackman  v. 
Pierce,  23  Cal.  508. 

13  Surrender  of  Property  Extinguishes  Encum- 
brance.— The  lien  of  a  carrier  is  lost  by  the  surrender 
of  the  article  subject  thereto  to  a  sheriff  on  attach- 
ment. And  a  subsequent  resumption  of  possession  of 
the  property  under  a  void  judicial  sale  does  not  put 
the  lienor  in  a  position  to  resume  his  lien:  Wingard 
v.  Banning,  39  Cal.  543,  549. 

A  pledgee  who  surrenders  the  pledged  property  to 
be  sold  at  a  void  judicial  sale  and  buys  it  thereat  loses 
the  security;  and  the  sale  being  void,  no  right  to  the 
possession  was  gained  by  the  purchase  thereunder: 
Latta  V.  Tutton,  122  Cal.  279,  283,  68  Am.  St.  Eep.  30, 
54  Pac.  844. 


§  89  EXTINCTION  THEREOF.  169 

ment,  as  to  creditors  of  the  owner  and  as  to  bona 
fide  purchasers  or  encumbrancers  for  value.^^ 

89.     Partial  Performance  of  Secured  Obligation 
does  not  Release  Security. 

The  partial  performance  of  an  obligation  se- 
cured by  an  encumbrance  does  not  extinguish  the 
encumbrance  upon  any  part  of  the  property  sub- 
ject thereto,  even  if  it  is  divisible.*'' 

16  See  Civ.  Code,  sec.  2913;  Hewlett  v.  Flint,  7  Cal. 
264;  Waldie  v.  Doll,  29  Cal.  555;  Treadwell  v.  Davis, 
34  Cal.  601,  94  Am.  Dec.  770;  Palmtag  v.  Doutrick,  59 
Cal.  154,  43  Am.  Eep.  245. 

17  See  Civ.  Code,  sec.  2912. 


TITLE  6. 

ENFOECEMENT  OF  ENCUMBEAN^OES  FOE 
SECUEITY. 

CHAPTER   1. 
MODES  OF  ENFOECEMENT. 
90.     Modes  of  enforcement  of  encumbrances. 

90.     Modes  of  Enforcement  of  Encumbrances. 

An  encnmbrance  for  security  only  may,  when 
performance  of  the  secured  obligation  is  due,  be 
enforced: 

(1)  in  every  case  by  judicial  sale  obtained  in  a 
foreclosure  action,  except,  perhaps,  in  case  of 
liens  imposed  by  operation  of  law  where  there 
is  another  plain  and  adequate  remedy,^ 

1  Except  Where  There  is  Another  Adectuate  Remedy. 

Where  an  action  was  brought  to  foreclose  a  mortgage, 
and  a  subsequent  judgment  lienor  .who  was  made  a 
party  defendant  filed  a  cross-complaint  praying  for 
the  foreclosure  of  his  judgment  lien,  and  the  objection 
was  raised  that  the  judgment  lien  was  not  foreclos- 
able,  the  court  said:  ''The  enforcement  of  liens, 
whether  equitable  or  statutory,  is  a  well-recognized 
function  of  courts  of  equity;  and  the  only  distinction 
in  this  respect,  between  the  different  kinds  of  liens  is, 

(170) 


§    90  MODES    OF   ENFORCEMENT.  171 

(2)  in  cases  of  pledge  and  movable  property 
mortgage  (and  other  movable  property  encum- 
brances not  otherwise  provided  for  by  law) ,  by 
sale  at  public  auction  after  actual  notice, 

(3)  in  each  case  by  any  particular  mode  of  sale 
prescribed  by  law,  and 

(4)  where  not  otherwise  exclusively  prescribed 
by  law,  by  a  sale  in  a  mode  agreed  upon  by  the 
parties. 

that  in  case  of  the  latter,  equity  will  interpose  only 

where   there   is   no   other   adequate   remedy In 

this  case  ....  the  respondent  [judgment  lienor]  was 
....  wholly  without  remedy  otherwise  than  by  re- 
sort to  a  court  of  equity The  respondent  has  a 

specific  lien  on  the  property  in  question,  which— so 
long  as  the  debt  is  not  satisfied— he  is  entitled  to  en- 
force. But  were  there  any  doubt  of  the  right  of  the 
judgment  creditor,  in  the  absence  of  other  remedy,  to 
maintain  an  independent  action  to  foreclose  his  lien, 
there  can  be  none  of  his  right  to  relief  in  a  suit 
brought  against  him  to  foreclose  a  prior  lien'':  Hi- 
bernia  Sav.  etc.  Soc.  v.  London  etc.  Pire  Ins.  Co.,  138 
Cal.  257,  71  Pac.  334. 


CHAPTER  2. 

EKFOECEMENT  BY  JUDICIAL  SALE. 

AETICLE  1. 

NATURE  OF  FORECLOSURE  ACTION. 

91.  Nature  of  foreclosure  action. 

92.  Is  proceeding  in  equity. 

93.  Valid  against  all  persons  duly  warned. 

91.    Nature  of  Foreclosure  Action. 

A  foreclosure  action  is  only  a  proceeding  for 
the  legal  determination  of  the  existence  of  an 
encumbrance,  the  ascertainment  of  its  extent,  the 
subjection  to  sale  of  the  property  hypothecated, 
and  the  application  of  the  proceeds  of  the  sale 
to  the  satisfaction  of  the  secured  demand.^ 

1  Nature  of  Foreclosure  Action  Stated:  Boggs  v. 
Hargrave,  16  Cal.  559,  563,  76  Am.  Dec.  561;  San  Fran- 
cisco V.  Lawton,  18  Cal.  465,  473,  474,  79  Am.  Dec. 
187;  Savings  etc.  Soc.  v.  McKoon,  120  Cal.  177,  180,  52 
Pac.  305.  See,  also,  Bostwick  v.  McJ]voy,  62  Cal.  496, 
501,  502. 

The  foreclosure  of  a  mortgage  embraces  the  sale  of 
the  property  and  the  execution  of  the  sheriff's  deed, 
as  well  as  the  judgment  of  the  court,  and  is  not  com- 
plete until  after  the  expiration  of  the  period  of  re- 
demption: Goldtree  v.  McAllister,  86  Cal.  93,  105,  24 
Pac.  801. 

(172) 


§    92  NATURE  THEREOF.  173 

92.     Is  Proceeding  in  Equity. 

An  action  to  foreclose  an  encumbrance  for  se- 
curity is  a  proceeding  in  equity.^  Thus  a  fore- 
closure action  must  be  commenced  in  the  su- 
perior court  irrespective  of  the  amount  of  the  se- 
cured demand^  and  no  party  to  the  proceeding 
is  entitled  as  of  right  to  a  trial  by  jury.^  When 
the  secured  demand  amounts  to  less  than  three 
hundred  dollars^  such  court  cannot,  in  case  the 
encumbrance  fails,  render  a  personal  judgment 

But  an  action  to  foreclose  a  mortgage  is  not  the  oc- 
casion for  determining  the  extent  of  the  mortgagor 's 
interest  in  the  mortgaged  property:  Eamsbottom  v. 
Bailey,  124  Cal.  259,  262,  56  Pac.  1036.  See,  also,  sec- 
tion 99,  below. 

By  Code  of  Civil  Procedure,  sections  1198  and  1199, 
the  usual  rules  of  practice  and  concerning  new  trials 
and  appeals  are  made  applicable  in  actions  for  the 
foreclosure  of  immovable  property  improvement  (me- 
chanics') liens.  For  the  procedure  before  the  enact- 
ment of  the  code,  see  Stats.  1855,  c.  130,  sec.  8;  Stats. 
1856,  c.  134,  sec.  7,  amended  1858,  c.  270,  sec.  4;  Stats. 
1861,  c.  431;  and  Stats.  1867-68,  c.  448,  sec.  10,  lirst 
and  fourth  subdivisions. 

2  Is  Proceeding  in  Eauity.— When  the  amount  of 
the  encumbrance  is  less  than  three  hundred  dollars, 
the  superior  court  has  jurisdiction  on  the  ground  that 
a  foreclosure  action  is  a  proceeding  in  equity:  Miller 
V.  Carlisle,  127  Cal.  327,  329,  59  Pac.  785.  See,  also, 
Brock  V.  Bruce,  5  Cal.  279. 

3  Not  Entitled  as  of  Right  to  a  Jury  Trial:  Curnow 
V.  Blue  Gravel  Co.,  68  Cal.  262,  264,  9  Pac.  149  (case  of 
mechanic's  lien). 


174  THE    FORECLOSURE    ACTION.  §    92 

against  the  parties  personally  liable;^  but  other- 
wise may  do  so.^ 

93.     Valid  Against  All  Persons  Duly  Warned.^ 
A  foreclosure  action,  being  a  proceeding  quasi 

4  When  Demand  for  Less  Than  Three  Hundred  Dol- 
lars, No  Personal  Judgment  can  be  Rendered  by  the 
Superior  Court. — The  substantive  ground  upon  which 
the  jurisdiction  of  the  court  rests  is  not  the  sum  of 
money  involved,  but  the  lien  and  the  equitable  remedy 
of  foreclosure,  and  when  the  lien  fails,  the  court  can 
render  no  equitable  relief  whatever,  and  the  dispute 
concerning  money  less  than  three  hundred  dollars  in 
amount  cannot,  under  the  constitution,  engage  the  at- 
tention of  the  superior  court:  Miller  v.  Carlisle,  127 
Cal.  327,  330,  331,  59  Pac.  785  (case  of  mechanic's 
lien) ;  Miller  v.  Carlisle,  127  Cal.  331,  59  Pac.  785. 

^^If  the  court  has  no  jurisdiction  to  render  personal 
judgment  ....  on  one  demand  less  than  three  hun- 
dred dollars  in  amount,  then  the  aggregation  of  any 
number  of  similar,  but  independent,  demands  of  differ- 
ent plaintiffs  cannot  confer  jurisdiction;  for,  of 
course,  the  judgment,  if  rendered,  must  be  several  in 
favor  of  each  plaintiff'':  MiRer  v.  Carlisle,  127  Cal. 
327,  329,  59  Pac.  785. 

5  Where  the  demand  is  for  not  less  than  three  hun- 
dred dollars,  although  the  lien  fails,  a  money 
judgment  may  be  rendered  against  a  party  personally 
liable  by  the  superior  court:  Miller  v.  Carlisle,  127- 
Cal.  327,  330,  59  Pac.  785. 

6  *' While  the  courts  of  a  state  cannot  acquire 
jurisdiction  to  render  a  judgment  in  personam  against 
a  nonresident  without  personal  service  of  summons 
within  the  state,  still  they  may,  without  such  service, 
subject  property  of  the  nonresident  found  within  the 
state  to  the  satisfaction  of  the  claims  of  her  citizens, 
and  may  enforce  liens  thereon  in  a  direct  proceeding 

instituted  for  that  purpose In  such  a  case,  the 

procedure  is  against  the  property,  and  is  in  its  nature 
in  rem.     In  a  proceeding  strictly  in  rem,  personal  ser- 


§    93  NATURE  THEREOF.  175 

in  rem/  personal  service  of  summons,  though 
essential  to  a  personal  deficiency  judgment,®  is 
not  essential  to  the  determination  of  the  rights 
of  the  various  persons  in  the  encumbered 'prop- 
erty; but  every  person  duly  warned  of  the  pro- 
ceeding in  the  method  prescribed  by  law,  and 
duly  made  a  party  therein,  is  concluded  by  tho 
judgmient  rendered  therein,  and  estopped  to  con- 
test its  validity,  although  not  personally  served 
with  summons  within  the  jurisdiction  of  the 
state.^ 

vice  is  not  necessary,  but  a  state  may  require  that,  in 
such  a  proceeding",  notice  or  warning  must  be  given 
in  a  prescribed  method  to  persons  claiming  interests  in 
the  property;  and  in  such  event  the  method  prescribed 
must  be  followed^':  LaFetra  v.  Gleason,  101  Cal.  246, 
248,  35  Pac.  765.  See  Fallon  v.  Butler,  21  Cal.  24,  32, 
81   Am.   Dec.   140. 

7  Proceeding  Quasi  in  Rem.— For  a  further  discus- 
sion of  this  subject  see  section  511,  notes,  below. 

8  Deficiency  Judgment  Against  Persons  not  Person- 
ally Served  with  Summons  is  Void:  Anderson  v.  Goff, 
72  Cal.  65,  1  Am.  St.  Rep.  34,  13  Pac.  73;  Blumberg  v. 
Birch,  99  Cal.  416,  37  Am.  St.  Rep.  67,  34  Pac.  102; 
Latta  V.  Tutton,  122  Cal.  279,  282,  68  Am.  St.  Rep.  30, 
54  Pac.  844. 

9  Persons  Duly  Joined  Estopped  by  Judgment: 
Hutchins  v.  Ebeler,  46  Cal.  557,  559;  Spaulding  v.  How- 
ard, 121  Cal.  194,  198,  53  Pac.  563. 

Thus,  as  against  the  heirs  of  a  deceased  vendee  of 
certain  property  upon  whose  estate  there  had  been  no 
administration,  a  judgment  foreclosing  a  vendor  ^s  lien 
against  such  property  is  valid,  such  heirs  having  been 
duly  joined  as  parties  in  the  foreclosure  action:  Mer- 
oux  V.  Weber,  53  Cal.  129. 


176  THE    FORECLOSURE    ACTION.  §    94 


AKTICLE  2, 

SCOPE  OF  JUDICIAL  AUTHORITY  IN  FORECLOS- 
URE ACTION. 

94.  Extent  in  general. 

95.  Perishable  property  may  be  sold  pendente  lite. 

96.  Where  secured  obligation  not  all  due,  whole  may 

nevertheless  be  liquidated  in  proper  case. 

97.  In  absence  of  intervening  equities  court  may  di- 

rect order  of  sale. 

98.  Ambiguity  in  description  of  encumbered  property 

may  be  determined. 

99.  Paramount  title  should  not  be  litigated. 

100.  Homestead  claimed  by  party  to  action  must   be 

litigated. 

101.  Litigation   of   subordinate   encumbrance  in  fore- 

closure action. 

94.  Extent  in  General. 

In  a  foreclosure  action,  the  jurisdiction  of  the 
court  over  the  parties  and  the  subject  matter  con- 
tinues until  the  expiration  of  the  time  of  re- 
demption, and  extends  to  a  purchaser  of  the 
property  at  the  judicial  sale  thereof.^ 

95.  Periahable  Property  may  be  Sold  Pendente 
lite. 

A  court  in  which  a  foreclosure  action  against 

1  Van  Loben  Sels  v.  Bunnell,  131  Cal.  489,  492,  63 
Pac.   773. 


§    95  SCOPE    OF    JUDICIAL    AUTHORITY.  177 

encumbered  perishable  property  is  pending  may 
order  the  sale  of  the  property  pendente  lite,  and 
the  deposit  of  the  proceeds  of  sale  in  court  to 
await  the  determination  of  the  litigation.^ 

96.  Where  Secured  Obligation  not  All  Due, 
Whole  may  Nevertheless  be  Liquidated  in 
Proper  Case. 

Where  an  action  to  foreclose  an  encumbrance 
which  secures  an  obligation  a  portion  only  of 
which  is  due  at  the  time  of  the  commencement 
of  action  and  of  the  rendition  of  judgment  there- 
in,^ or  to  foreclose  two  or  more  separate  encum- 
brances against  the  same  property  certain  of 
which  are  not  due  at  such  times,^  is  prosecuted 

3  Perishable  Property  may  be  Sold  Pendente  Lite.— 
So  where  a  mortgaged  steamer  was  in  danger  of  great 
deterioration  in  value  during  tlie  pendency  of  an  ac- 
tion to  foreclose  a  mortgage  therea gainst,  the  court 
properly  ordered  the  sale  thereof:  Toby  v.  Oregon  Pa- 
cific E.*^  E.  Co.,  98  Cal.  490,  492,  493,  495,  496,  33  Pac. 
550. 

3  Code  of  Civil  Procedure,  section  728  (Practice 
Act,  section  248),  provider:  ''If  the  debt  for  which 
the  mortgage,  lien,  or  encumbrance  is  held,  is  not  all 
due,  so  soon  as  sufficient  of  the  property  has  been  sold 
to  pay  the  amount  due,  with  costs,  the  sale  must 
cease;  and  afterward,  as  often  as  more  becomes  due, 
for  principal  or  interest,  the  court  may,  on  motion, 
order  more  to  be  sold.  But  if  the  property  cannot  be 
sold  in  portions,  without  injury  to  the  parties,  the 
whole  may  be  ordered  to  be  sold  in  the  first  instance, 
and  the  entire  debt  and  costs  paid,  there  being  a  re- 
bate of  interest  where  such  rebate  is  proper.^' 

4  Likewise,  where  an  action  was  brought  for  the 
foreclosure  of  two  m^ortgages,  one  due  and  the  other 

Liens— 12 


178  THE    FORECLOSURE    ACTION.  §    96 

to  judgment,  while  generally  only  enough  of  the 
property  can  be  sold  to  pay  the  amount  due  at 
the  time  of  the  rendition  of  judgment,^  yet  where 
the  encumbered  property  cannot  be  sold  in  por- 
tions without  injury  to  the  parties,®  the  whole 
may  be  ordered  to  be  sold  in  the  first  instance, 
and  the  various  obligations  ordered  to  be  satis- 
fied from  the  proceeds  thereof,  there  being  a  re- 
bate of  interest  where  such  rebate  is  proper. 

97.     In  Absence  of  Intervening  Equities  Court 
may  Direct  Order  of  Sale. 

Where  there  are  no  equities  of  third  parties  to 
be  considered  in  determining  the  order  in  which 

not,  both  against  the  same  property,  and  the  averment 
and  finding  was  that  the  property  was  indivisible,  the 
court  may  order  the  sale  of  the  property  for  the 
amount  of  both  mortgages:  Hawkins  v.  Hill,  15  Cal. 
499,  76  Am.  Dec.  499. 

3  Where  a  mortgage  secured  the  payment  of  a  liqui- 
dated sum  of  money  and  the  interest  thereon,  and  at 
the  time  of  rendition  of  judgment  in  a  foreclosure  ac- 
tion brought  thereon  certain  interest  was  due  and  un- 
paid,  but  the  principal  was  not  due,  judgment  and  sale 
merely  for  the  interest  due*  and  unpaid  can  properly 
be  rendered:  Hunt  v.  Dohrs,  39  Cal.  304. 

Where  an  action  was  brought  to  foreclose  a  mort- 
gage which  secured  two  obligations,  one  of  which  was 
not  due  at  the  time  of  the  commencement  of  the  ac- 
tion, but  which  became  due  before  the  rendition  of 
judgment,  the  judgment  can  direct  the  sale  of  sufficient 
property  to  liquidate  both  obligations:  Bostwick  v. 
McEvoy,  62  Cal.  496,  502,  503. 

6  Whether  or  not  the  property  can  be  sold  in  parts 
without  injury  to  the  parties  is  a  fact  to  be  found  by 
the  trial  court:  Yoakum  v.  White,  97  Cal.  286,  289,  32 
Pac.  238. 


§    97  SCOPE    OF    JUDICIAL    AUTHORITY.  179 

the  sale  should  be  made,  the  court  may  direct  the 
encumbered  property  to  be  sold  in  such  order  as 
it  deems  to  be  for  the  best  interests  of  the  parties 
to  the  action.''  Such  direction  must  be  founded 
upon  facts  shown  at  the  hearing  of  the  fore- 
closure action,  or  upon  consent  of  the  parties.® 
In  the  absence  of  the  finding  of  such  facts  and 
of  an  agreement  of  the  parties,  no  direction  as 
to  the  order  of  sale  can  be  made  by  the  court.® 

7  Court  may  Make  Direction.— *^  It  is  within  the 
jurisdiction  of  the  court  to  direct  by  its  judgment  that 
the  property  be  sold  in  one  or  several  parcels,  and  the 
officer  making  the  sale  is  bound  to  follow  the  direc- 
tions contained  in  the  judgment":  Hopkins  v.  Wiard, 
72  Cal.  259,   14  Pac.  687. 

8  To  be  Founded  upon  Facts  Shown  or  Consent.— 
The  court  may  make  its  order  upon  facts  shown  at  the 
hearing,  or  by  consent  of  the  parties.  But  no  founda- 
tion in  the  pleadings  need  be  laid  for  the  order  of 
court  directing  the  manner  of  selling  the  encumbered 
property:  Hopkins  v.  Wiard,  72  Cal.  259,  14  Pac.  687; 
Bank  of  Ukiah  v.  Eeed,  131  Cal.  597,  601,  63  Pac.  921. 

So  where  two  separate  parcels  of  land  and  two  dis- 
tinct species  of  movable  property  were  hypothecated 
as  security  for  the  same  mortgage  obligation,  the  court 
took  testimony  for  that  purpose,  and  properly  found 
therefrom  that  a  certain  order  of  sale  was  for  the  best 
interests  of  the  parties,  and  directed  the  sale  to  be 
made  in  such  order:  Bank  of  Ukiah  v.  Eeed,  131  Cal. 
597,  601,  63  Pac.  921. 

9  In  Absence  of  Finding  or  of  Agreement.— Where, 
however,  neither  the  complaint  in  an  action  to  fore- 
close a  mortgage  nor  the  answer  made  any  averment 
as  to  the  order  in  which  the  parcels  should  be  sold, 
nor  was  there  any  finding  as  to  the  order,  and  the 
plaintiff  asked  for  the  *' usual  decree, '^  and  the  con- 
clusion of  law  was  *^that  the  plaintiff  have  judgment 
as  prayed  for  in  the  complaint, ' '  a  judgment  directing 


180  THE    FORECLOSURE    ACTION.  §    98 

98.     Ambiguity    in   Description   of  Encumbered 
Property  may  be  Determined. 

When  the  description  of  encumbered  prop- 
erty contained  in  the  instrument  which  evidences 
the  encumbrance  is  ambiguous  or  uncertain,  the 
court  may,  in  the  foreclosure  action,  determine 
what  property  is  in  ia.et  intended  by  the  parties 
to  be  affected  by  such  encumbrance.^^     If  the 

the  sale  of  the  property  in  a  certain  prescribed  order 
was  a  departure  from  the  usual  form  and  not  war- 
ranted by  'Hhe  finding  of  the  court,''  and  as  it  ap- 
peared inequitable  was  set  aside:  Carmichael  v.  Mc- 
Gillivray,  57  Cal.  8;  as  interpreted  in  Bank  of  Ukiah 
V.  Eeed,  131  Cal.  597,  601,  63  Pac.  921. 

In  Jones  v.  Gardner,  57  Cal.  641,  643,  however,  it 
was  said  that  the  court  is  not  bound  to  ascertain  at  the 
trial  whether  it  would  be  *Ho  the  advantage''  of  the 
mortgagor  to  have  the  lots  sold  separately.  It  may 
be  the  duty  of  the  sheriff  to  make  sale  of  the  lots 
separately,  and  it  would  seem  to  be  the  right  of  the 
mortgagor  to  direct  the  order  of  the  sale;  but  the 
mortgagor  is  not  called  upon  to  plead  that  it  would 
be  to  his  disadvantage  to  have  the  land  sold  in  gross, 
and  such  a  plea  creates  no  material  issue. 

lo  Court  may  Determine  Ambiguity  in  Description, 
The  court  may  determine  what  land  is  in  fact  covered 
by  a  mortgage  in  the  action  to  foreclose  the  mortgage. 
For  this  is  not  a  question  of  adverse  tit'.o,  but  merely 
of  applying  the  description  in  the  instrument  to  the 
property.  While  there  does  not  app»^ar  to  be  any 
good  reason  for  not  settling  the  matter  in  the  foreclos- 
ure action,  there  are  weighty  reasons  why  the  question 
should  be  determined  before  a  sale.  If  the  property 
should  be  put  up  for  a  sale  under  a  judgment  following 
the  exact  terms  of  the  mortgage,  without  first  solving 
the  doubt,  no  person  would  be  able  to  bid  intelligently. 
The  interests  of  all  parties  manifestly  require  that  the 
land  called  for  should,  if  possible,  be  ascertained  be- 


§    98  SCOPE  OF  JUDICIAL  AUTHORITY.  181 

property  affected  by  the  encumbrance  is  noi  so 
determined^  the  purchaser  at  the  foreclosure  sale 
must  rely  upon  the  description  contained  in  such 
instrument,  and  whether  or  not  he  obtains  any- 
thing by  his  purchase  will  depend  upon  the  suf- 
ficiency of  the  description  when  tested  by  the 
ordinary  rules  of  evidence. ^^ 

99.     Paramount  Title  should  not  be  Liquidated. 

A  title*^  to  encumbered  property  claimed  to 
be  paramount  both  to  the  encumbrance  and  to 

fore  the  sale  takes  place:  Doe  v.  Vallejo,  29  Cal.  385, 
388,  389. 

11  Where  Property  not  Determined,  Purchaser  Must 
Rely  Upon  Description  in  Instrument;;  De  Sepulveda 
V.  Baugh,  74  Cal.  468,  474,  5  Am.  St.  Eep.  455,  note, 
16  Pac.  223. 

But  the  sale  is  not  rendered  void  by  a  failure  to  de- 
termine this  matter.  Thus,  where  a  mortgage,  com- 
plaint, foreclosure  judgment,  certificate  of  sale,  and 
sheriff's  deed  alike  described  a  large  tract  of  land  by- 
metes  and  bounds,  excepting  therefrom  certain  por- 
tions by  reference  to  the  books  in  which  the  convey- 
ances thereof  were  recorded,  although  the  judgment 
record  is  incomplete  and  defective,  it  is  not  void,  and 
is  not  open  to  collateral  attack:  De  Sepulveda  v. 
Baugh,  74  Cal.  468,  5  Am.  St.  Eep.  455,  note,  16  Pac. 
223. 

In  Crosby  v.  Dowd,  61  Cal.  557,  it  was  held  that 
where  the  property  covered  by  the  encumbrance  was 
not  determined  by  the  foreclosure  judgment  the  sale 
was  void,  and  the  judgment  could  be  collaterally  at- 
tacked, but  this  case  was  expressly  overruled  in  De 
Sepulveda  v.  Baugh. 

12  Paramount  Title  cannot  be  Litigated:  San  Fran- 
cisco V.  Lawton,  18  Cal.  465,  473,  474,  79  Am.  Dec.  187; 
San  Francisco  v.  Lawton,  21  Cal.  589;  Elias  v.  Ver- 


182  THE    FORECLOSURE    ACTION.  §    99 

dugo,  27  Cal.  418,  425;  Croghan  v.  Spence,  53  Cal.  18; 
Marlow  v.  Barlew,  53  Cal.  456,  461 ;  McComb  v.  Spang- 
ler,  71  Cal.  418,  423,  12  Pac.  347;  Houghton  v.  Allen, 
75  Cal.  102,  105,  16  Pac.  532;  Ord  v.  Bartlett,  83  Cal. 
428,  430,  23  Pac.  705;  Cody  v.  Bean,  93  Cal.  578,  579, 
29  Pac.  223;  Eamsbottom  v.  Bailey,  124  Cal.  259,  261- 
263,  56  Pac.  1036;  Williams  v.  Cooper,  124  Cal.  66Q, 
669,  57  Pac.  577;  Campbell  v.  Drais,  125  Cal.  253,  260, 
57  Pac.  994;  Beronio  v.  Ventura  Co.  Lumber  Co.,  129 
Cal.  232,  237,  79  Am.  St.  Eep.  118,  61  Pac.  958;  Mur- 
ray V.  Etchepare,  129  Cal.  318,  61  Pac.  930;  Peachy 
V.  Witter,  131  Cal.  316,  320,  63  Pac.  468;  Cady  v.  Pur- 
ser, 131  Cal.  552,  559,  82  Am.  St.  Eep.  391,  63  Pac.  844. 

In  Hefner  v.  Urton,  71  Cal.  479,  12  Pac.  486,  how- 
ever, the  court  said  that  in  an  action  to  foreclose  a 
mortgage,  '  ^  any  person  who  claimed  an  interest  in  the 
controversy  adverse  to  the  plaintiff,  or  who  was  a  nec- 
essary party  to  a  complete  settlement  of  the  question 
involved,  should  have  been  made  a  party. ' ' 

Hence  an  adverse  claim.vnt  CRunot  interveiie  in  a 
foreclosure  action:  Peachy  v.  Witter,  131  Cal.  316, 
320,  63  Pac.  468. 

So  where  one  of  several  cotenants  mortgages  his  in- 
terest, the  cotenants  cannot  intervene  in  the  action  to 
foreclose  such  mortgage:  Hoppe  v.  Fountain,  104  Cal. 
»4,  102,  37  Pac.  894. 

Rationale.— ^  ^  Sueh  titles  must  be  settled  in  a  differ- 
ent action,  giving  rise,  as  they  generally  do,  to  ques- 
tions of  purely  legal  cognizance '^ :  San  Francisco  v. 
Lawton,  18  Cal.  465,  474,  79  Am.  Dec.  187;  21  Cal.  589; 
McComb  V.  Spangler,  71  Cal.  418,  423,  12  Pac.  347; 
Ord  V.  Bartlett,  83  Cal.  428,  23  Pac.  705;  Cody  v.  Bean, 
93  Cal.  578,  29  Pac.  223. 

^^It  is  manifest  that  those  claiming  either  legal  or 
equitable  estates  adversely  to  that  of  the  mortgagor 
are  not  proper  parties  to  such  a  proceeding,  as  they 
have  no  interest  in  the  subject  matter  of  the  action'': 
Oroghan  v.  Spence,  53  Cal.  15. 

^^To  allow  such  issues  to  be  litigated  in  an  action 
to  foreclose  a  mortgage  when  the  sale  under  the  decree 
carries  to  the  purchaser  merely  such  title  as  the  mort- 
gagor had  would  be  to  sanction  a  condemned  practice 


§    99  SCOPE    OF    JUDICIAL    AUTHORITY.  183 

and  confuse  litigation '' :  Cody  v.  Bean,  93  Cal.  578, 
579,  29  Pac.  223. 

''The  object  of  a  suit  for  the  foreclosure  of  a  mort- 
gage is  to  subject  to  a  judicial  sale  and  vest  in  the 
purchaser  thereunder  the  same  title  or  estate  in  the 
mortgaged  property  which  the  mortgagor  had  at  the 
time  of  the  execution  of  the  mortgage,  and  the  only 
necessary  or  proper  parties  defendant  to  such  suit  are 
the  mortgagor  and  those  who  claim  an  interest  in  the 
property  derived  subsequent  to  the  date  of  the  mort- 
gage. Titles  adverse  to  that  of  the  mortgagor,  or  su- 
perior to  that  covered  by  the  mortgage,  are  not  proper 
subjects  for  determination  in  the  suif :  Beronio  v. 
Ventura  Co.  Lumber  Co.,  129  Cal.  232,  237,  79  Am.  St. 
Rep.  118,  61  Pac.  958. 

Illustrations  of  Claims  Which  cannot  6e  Litigated.— 
"Where  a  person  mortgaged  certain  land,  which  after- 
ward became  subject  to  a  street  assessment  lien  which 
was  foreclosed,  the  purchaser  at  the  foreclosure  sale 
under  the  assessment  lien  is  an  adverse  claimant:  Wil- 
son V.  California  Bank,  121  Cal.  630,  54  Pac.  119. 

Where  a  partner  mortgages  his  interest  in  the  part- 
nership, and  the  mortgagee  commences  a  foreclosure 
action,  a  person  holding  a  judgment  lien  against  the 
entire  partnership  property,  though  of  a  later  date 
than  the  mortgage,  is  not  a  proper  party:  Eamsbottom 
V.  Bailey,  124  Cal.  259,  56  Pac.  1036. 

A  person  obtaining  title  to  property  under  a  sheriff's 
tax  sale  is  an  adverse  claimant,  not  a  proper  party  in 
an  action  to  foreclose  a  mortgage  against  the  property 
given  by  the  person  whose  interest  was  terminated  by 
the  tax  sale:  Odell  v.  Wilson,  63  Cal.  159;  Williams  v. 
Cooper,  124  Cal.  666,  669,  57  Pac.  577. 

Where,  after  the  execution  of  a  mortgage,  the  mort- 
gagor transfers  the  mortgaged  property  and  the  in- 
strument of  transfer  is  first  recorded,  the  transferee's 
title  is  adverse  and  superior  to  that  of  the  mortgagee, 
and  cannot  properly  be  litigated  in  an  action  to  fore- 
close the  mortgage:  Cady  v.  Purser,  131  Cal.  552,  560, 
82  Am.  St.  Rep.  391,  63  Pac.  844. 


184  THE  FORECLOSURE   ACTION.  §    99 

the  property  interest  covered  by  the  encum- 
brance^^ cannot  properly  be  litigated  or  adjudi- 
cated upon  in  an  action  to  foreclose  the  encum- 
brance. In  such  action  the  claimant  may  refuse 
to  appear  and  put  his  claim  in  issue,  and  where 
the  claim  is  put  in  issue  by  him  the  pleading  is 
demurrable,  and  in  every  case  the  court  may  re- 
fuse to  adjudicate  such  claim..^^ 

13  Title  Paramount  Both  to  Encumbrance  and  In- 
terest Covered  Thereby.— The  doctrine  that  a  para- 
mount or  adverse  title  cannot  be  litigated  applies  only 
where  the  tifcle  of  the  claimant  is  paramount  to  that 
of  all  the  parties  to  the  encumbrance.  So  where  a 
mortgagor  held  the  property  by  a  fraudulent  convey- 
ance from  the  adverse  claimant,  but  the  mortgagee 
had  no  notice  of  the  fraud  at  the  time  of  the  execution 
of  the  mortgage,  but  afterward  obtained  notice,  the 
interest  of  the  claimant  was  clearly  subordinate  to  the 
mortgage  on  the  principle  of  estoppel,  and  the  mort- 
gagee, having  notice  of  his  claim  at  the  time  of  the 
commencement  of  the  foreclosure  action,  must  join 
him  as  a  party  necessary  to  a  complete  determination 
of  the  controversv:  Eandall  v.  Duff,  79  Cal.  115,  122, 
19  Pac.  532,  20  Pac.  610. 

In  Peachy  v.  Witter,  131  Cal.  316,  320,  63  Pac.  468, 
the  court  said:  **It  appears  to  be  the  settled  law  that 
an  adverse  claim  to  the  land  in  opposition  to  the  mort- 
gagor and  mortgagee  cannot  be  tried  in  the  equitable 
action  to  foreclose.'' 

It  seems  to  be  difficult  to  adjust  the  facts  held  in 
the  cases  of  Eamsbottom  v.  Bailey,  and  Cady  v.  Pur- 
ser, note  12,  above,  to  constitute  an  adverse  or  para- 
mount claim  with  the  principles  given  in  these  cases, 
and  those  cases  cannot  be  held  to  be  authoritative. 

14  Adverse  Claimant  may  Refuse  to  Appear,  etc.— 
The  claimant's  ^'adverse  claim  cannot  properly  be 
tried,  and  he  may  refuse  to  appear  and  put  it  in  issue, 
or  if  he  does  appear  and  put  it  in  issue,  the  court  may 


§    100  SCOPE    OF    JUDICIAL    AUTHORITY.  185 

100.     Homestead    Claimed    by  Party  to  Action 
must  be  Liquidated. 

A  jDarty  to  a  foreclosure  action  who  claims  a 
homestead  right  superior  to  the  encumbrance 
sought  to  be  foreclosed,  in  the  encumbered  prop- 
erty, must  set  up  his  claim  in  such  action,  and 
the  court  must  adjudicate  upon  such  claim;  if 
not  so  set  up  the  claim  cannot  thereafterward  be 
asserted.  ^^ 

refuse  to  pass  upon  it In  such  a  case,  tlie  proper 

course  undoubtedly  would  be  to  dismiss  the  action  as 
to  the  adverse  claimant,  or  to  specify  in  the  decree 
that  it  is  made  without  prejudice  to  his  adverse 
rights'':  Ord  v.  Bartlett,  87  Cal.  428,430,431,  23  Pac. 
705. 

^^  Whenever  it  is  made  to  appear  that  the  interest 
of  a  defendant  is  adverse  or  superior  to  that  covered 
by  the  mortgage,  the  proper  action  of  the  court  is  to 
dismiss  him  from  the  suit":  Beronio  v.  Ventura  Co. 
Lumber  Co.,  129  Cal.  232,  237,  79  Am.  St.  Eep.  118,  61 
Pac.    958. 

A  demurrer  will  be  sustained  to  a  pleading  setting 
up  an  adverse  title:  Ord  v.  Bartlett,  83  Cal.  428,  23 
Pac.  705;  Murray  v.  Etchepare,  129  Cal.  318,  321,  61 
Pac.  930. 

Evidence  to  show  a  paramount  title  is  immaterial: 
Cody  V.  Bean,  93  Cal.  578,  579,  29  Pac.  223. 

15  Question  of  Homestead  Must  be  Adjudicated.— 
Where  an  equitable  lien  against  certain  land  is  fore- 
closed, a  claim  of  homestead  against  the  liened  prop- 
erty preferred  by  a  party  to  the  foreclosure  action 
must  be  set  up  in  such  action,  as  the  judgment  therein 
is  conclusive  against  such  a  claim,  and  the  homestead 
claimant  is  not  entitled  to  an  injunction  to  restrain 
the  sale  of  the  propertv  in  satisfaction  of  the  lien: 
Eucker  v.  Langford  (Cal.),  71  Pac.  1123. 

In  Mabury  v.  Euiz,  58  Cal.  11,  15,  it  was  held  that 
the  question  whether  or  not  the  encumbered  property 


186  THE    FORECLOSURE    ACTION.  §    101 

101.     Litigation  of  Subordinate  Encumbrance  in 
Foreclosure  Action. 
An^®  inferior  encumbrancer  who  is  made  a 
party  or  who  intervenes  in  an  action  to  foreclose 
a  superior  encumbrance  may  either 

(1)  affirmatively  seek  a  foreclosure  of  his  own 
encumbrance,  or 

(2)  without  a  foreclosure  ask  for  an  application 
of  any  surplus  proceeds  arising  at  the  fore- 
closure sale  of  the  encumbered  property  to 
the  reduction  of  the  obligation  secured  by  his 
encumbrance. 

In  either  case  his  claim  must  be  adjudicated  in 
the  foreclosure  action.^'' 

was  subject  to  a  homestead  superior  to  the  encum- 
brance sought  to  be  foreclosed  was  a  proper  subject 
of  adjudication  in  a  foreclosure  action. 

IG  Inferior  Encumbrancer  may  Seek  Foreclosure  or 
Application  of  Surplus.— ^^  A  junior  mortgagee, 
brought  into  court  at  the  suit  of  a  superior  mortgagee, 
may  do  one  of  two  things — either  aflS.rmatively  seek  a 
foreclosure  upon  his  own  account,  or  without  foreclos- 
ure ask  for  an  application  of  any  surplus  to  the  reduc- 
tion of  his  own  debt'^  Camp  v.  Land,  122  Cal.  167, 
170,  54  Pac.  839. 

17  His  Claim  Must  be  Adjudicated.— In  foreclosure 
actions,  ^Ho  make  the  foreclosure  effectual,  it  is  neces- 
sary for  the  plaintiff  to  make  all  junior  lienholders 
parties;  and  this  implies  that  their  rights,  when 
brought  into  court,  shall  be  adjudicated' ':  Hibernia 
Sav.  etc.  Soc.  v.  London  etc.  Fire  Ins.  Co.  (Cal.),  71 
Pac.  138,  257,  334,  335A. 


§    102  VENUE   THEREOF.  187 


AETICLE  3. 

VENUE     OF     ACTIONS     AGAINST     IMMOVABLE 
PEOPEETY. 

102.  Foreclosure  action  must  be  commenced  in  county 

where  property  situate. 

103.  Place  of  trial  of  actions  to  foreclose  immovable 

property  encumbrances. 

102.     Foreclosure  Action  must  be  Commenced  in 
County  Where  Property  Situate. 

An^  action  for  the  foreclosure  of  any  encum- 
brance against  immovable  property  must  be  com- 

1  Foreclosure  Action  Must  "be  Commenced  in  County 
Where  Property  Situate.— Consj^tution,  article  6,  sec- 
tion 5:  ''The  superior  court  [s]  ....  shall  always  be 
open  (legal  holidays  and  nonjudicial  days  excepted), 
and  their  process  shall  extend  to  all  parts  of  the  state; 
provided,  that  all  actions  for  the  recovery  of  the  pos- 
session of,  quieting  the  title  to,  or  for  the  enforce- 
ment of,  liens  upon  real  estate,  shall  be  commenced  in 
the  county  in  which  the  real  estate,  or  any  part  thereof 
affected  by  such  action  or  actions,  is  situated." 

Code  of  Civil  Procedure,  section  78:  **The  process 
of  the  superior  court  shall  extend  to  all  parts  of  the 
state;  provided,  that  all  actions  for  the  recovery  of  the 
possession  of,  quieting  the  title  to,  or  for  the  enforce- 
ment of  liens  upon,  real  estate  shall  be  commenced  in 
the  county  in  which  the  real  estate,  or  any  part 
thereof  affected  bv  such  action  or  actions,  is  situ- 
ated.'' 


188  THE    FORECLOSURE    ACTION.  §    102 

meneed  in  a  county  where  some^  part  of  the  prop- 
erty to  be  affected  by  the  action  is  situate ;  other- 

The  court  will  take  judicial  notice  of  the  boundaries 
of  a  county,  and  of  the  location  of  lands  described  by 
government  subdivisions  as  by  township,  range,  and 
section,  and  the  legal  subdivisions  thereof;  but  it  can- 
not take  judicial  notice  of  the  locations  of  lands  des- 
ignated simply  by  name,  or  reference  to  a  private  sur- 
vey: Campbell  v.  West,  86  Cal.  197,  200,  24  Pac.  1000; 
Faekler  v.  Wright,  86  Cal.  210,  24  Pac.  996;  Scott  v.* 
Sells,  88  Cal.  599,  26  Pac.  350. 

Historical.— The  Constitution  of  1879,  article  22,  sec- 
tion 3,  provided  for  the  transfer  of  all  proceedings 
pending  in  the  district  courts  to  the  superior  courts, 
and  gave  these  courts  ''the  same  power  and  jurisdic- 
tion over  the  proceedings  as  if  they  had  been  in  the 
first  instance  commenced,  filed,  or  lodged  in  the  supe- 
rior court.''  Under  the  Constitution  of  1849,  actions 
for  the  foreclosure  of  mortgages  or  other  encumbrances 
against,  or  for  the  recovery  of  the  possession  of,  im- 
movable property  were  not  required  to  be  commenced 
in  the  county  where  the  property  was  situate.  In  view 
of  the  above  provision  of  the  Constitution  of  1879,  the 
requirements  that  certain  actions  be  commenced  in 
the  county  where  the  property  is  situate  does  not  ap- 
ply to  actions  pending  at  the  adoption  of  the  constitu- 
tion either 

(1)  for  the  recovery  of  the  possession  of  immovable 
property  (Curnee  v.  Superior  Court,  San  Jj'rancisco, 
58  Cal.  88),  or 

(2)  for  the  foreclosure  of  liens  (Watt  v.  Wright,  66 
Cal.  202,  204,  5  Pac.  91); 

but   such   actions   may   be   maintained   although    com- 
menced elsewhere. 

3  Where  Some  Part  of  Property  isituate.— Where 
separate  and  distinct  parcels  of  encumbered  immovable 
property  situate  in  different  counties  are  covered  by 
the  same  encumbrance,  the  encumbrance  against  all  the 
property  may  be  foreclosed  in  one  action  brought  iv 
any  county  wherein  anv  part  of  the  property  is  situ- 
ate: Murphy  v.  Superior  Court,  138  Cal.  69,  70  Pac. 
1070. 


§    102  VENUE  THEREOF.  189 

wise  any  proceedings  which  may  be  had  or  judg- 
ment rendered  are  absolutely  void.^ 

103.     Place  of  Trial  of  Actions  to  Foreclose  Im- 
movable Property  Encumbrances. 

When  the  plaintiff  in  an  action  to  foreclose  an 
encumbrance  prays  in  his  complaint  for  an  in- 
junction pending  the  action,  or  applies  pending 
the  action  for  an  injunction,  the  proper  county 
for  the  trial  is  the  county  in  which  the 
defendant  or  a  majority  of  the  defendants' 
reside  at  the  time  of  the  commencement  of 
the  action.  In  all  other  cases,  an  action 
to  foreclose  an  immovable  property  encum- 
brance must  be  tried  in  the  county  in  which 
the  subject  of  the  action  is  situated,  subject  to 
the  power  of  the  court  to  change  the  place  of 

3  otherwise     Proceedings     Absolutely     Void.— **A 

court  cannot,  by  any  decision  that  it  may  make, 
whether  implied  or  direct,  acquire  jurisdiction  over  a 
subject  matter  that  has  been  denied  to  it  by  the  con- 
stitution, and  whenever  it  appears  upon  the  face  of 
the  judgment  that  it  was  rendered  upon  a  subject  over 
which  the  court  could  have  no  jurisdiction,  such  judg- 
ment has  no  validity^':  Rogers  v.  Oady,  104  Cal.  288, 
292,  43  Am.  St.  Rep.  100,  38  I'ac.  8t 

Practice.— When  it  appears  from  the  description  of 
lands  set  forth  in  the  complaint  that  they  are  not  in 
the  county  in  which  the  action  is  commenced,  the  ac- 
tion should  be  dismissed:  Fritts  v.  Camp,  94  Cal. 
393,  398,  29  Pac.  867;  Rogers  v.  Cady,  104  Cal.  288, 
292,  43  Am.  St.  Rep.  100,  38  Pac.  81. 

This  rule  holds  in  an  action  to  foreclose  a  vendor's? 
lien:  Urton  v.  Woolsey,  87  Cal.  38,  25  Pac.  154. 


190  THE    FORECLOSURE    ACTIOX.  §    103 

trial  as  provided  by  law.  Where  the  immovable 
property  is  situated  partly  in  one  county  and 
partly  in  another,  the  plaintiff  may  select  either 
of  the  counties,  and  the  county  so  selected  is  the 
proper  county  for  the  trial  of  the  action.^ 

4  Place  of  Trial.— Code  of  Civil  Procedure,  section 
392:  *' Actions  for  the  following  causes  must  be  tried 
in  the  county  in  which  the  subject  of  the  action,  or 
some  part  thereof  is  situated,  subject  to  the  power  of 
the  court  to  change  the  place  of  trial,  as  provided  in 
this  code: 

(1)  for  the  recovery  of  real  property  .... 

(2)  for  partition  .... 

(3)  for  the  foreclosure  of  all  liens  and  mortgages  on 
real  property. 

When  the  real  property  is  situated  partly  in  one  county 
and  partly  in  another,  the  plaintiff  may  select  either 
of  the  counties,  and  the  county  so  selected  is  the 
proper  county  for  the  trial  of  such  action;  provided, 
that  in  the  case  mentioned  in  this  subdivision,  if  the 
plaintiff  prays  in  his  complaint  for  an  injunction  pend- 
ing the  action,  or  applies  pending  the  action  for  an 
injunction,  the  proper  county  for  the  trial  shall  be  the 
county  in  which  the  defendant  resides  or  a  majority 
of  the  defendants  reside  at  the  commencement  of  the 
action.''     As  amended  in  effect  March  19,  1889. 

The  corresponding  section  of  the  Practice  Act  was 
section  18. 

See,  also,  Yallejo  v.  Randall,  5  Cal.  461;  Watts  v. 
White,  13  Cal.  324;  Baker  v.  Fireman's  Fund  Ins.  Co., 
73  Cal.  182,  14  Pac.  686  (the  mortgagor  here  being 
a  corporation);  Goldtree  v.  McAlister,  86  Cal.  93,  105, 
24  Pae.  801. 

Unless,  however,  the  cause  of  action  set  forth  in  the 
complaint  falls  wholly  within  the  provisions  of  this  sec- 
tion or  is  otherwise  the  subject  matter  of  a  local  ac- 
tion, the  plaintiff  cannot  deprive  the  defendant  of  his 
general  right  to  have  the  action  tried  in  the  county 
of  his  residence  by  uniting  in  his  complaint  matters 


§    103  VENUE    THEREOF.  191 

which  form  the  subject  of  a  local  action  with  matters 
which  form  the  subject  of  a  personal  action.  Tho 
right  to  have  the  action  tried  in  the  county  where  the 
property  is  located  being  an  exception  to  the  general 
rule,  the  conditions  under  which  the  exception  is 
claimed  must  be  clearly  and  distinctly  shown:  ISmith 
V.  Smith,  88  Cal.  572,  26  Pac.  356. 

Conversely,  where  the  plaintiff  sought  to  have  a  deed 
absolute  in  form  declared  a  mortgage,  and  to  ob- 
tain an  accounting  from,  the  defendant  on  the  ground 
that  he  was  a  mortgagee  in  possession,  the  action  is 
properly  brought  in  the  county  of  the  residence  of  the 
defendant,  although  a  foreclosure  of  the  mortgage 
could  not  there  be  obtained:  Penin.  etc.  Fishing  Co.  v. 
Pac.  Steam  Whaling  Co.,  123  Cal.  689,  695-697,  56 
Pac.  604. 

In  providing  that  an  action  for  the  foreclosure  of  a 
mortgage  should  be  commenced  and  tried  in  any 
county  in  which  any  part  of  the  mortgaged  property 
is  situated,  it  was  the  intention  of  the  legislature  that 
the  mortgage  should  be  wholly  foreclosed  in  such 
county;  that  is  to  say,  that  every  judicial,  ministerial, 
and  executive  official  act  necessary  to  effect  a  foreclos- 
ure might  be  performed  in  any  county  in  which  any 
part  of  the  mortgaged  property  was  situate:  Goldtree 
V.  McAlister,  86  Cal.  93,  106,  24  Pac.  801, 


192  THE  FOKECLOSURE  ACTION.  §  104 


ARTICLE  4. 

PARTIES    IN    ACTIONS    AGAINST    IMMOVABLE 
PROPERTY.l 

104.  Indispensable  parties. 

105.  Necessary  parties. 

106.  Proper  parties. 

307.     Certain  persons  need  not  be  made  parties. 

108.  Right  to  intervene  must  affirmatively  appear. 

109.  Holder  of  interest  in  property  when  necessary 

party,  but  not  joined,  not  affected  by  judgment. 

110.  Encumbrancer    when   necessary  party,   but   not 

joined,  may  redeem. 

111.  Relief  may  be  granted  purchaser  when  necessary 

party  not  joined. 

104.     Indispensable  Parties. 

In  an  action  to  foreclose  an  encumbrance  cre- 
ated for  security  only,  a  person  personally  liable 

1  Parties  in  Actions  Against  Immovable  Property.— 
The  cases  cited  in  this  article  are  almost  entirely  cases 
of  actions  brought  for  the  foreclosure  of  mortgages. 
There  can  be  little  doubt,  however,  that  the  same  rules 
apply  in  actions  for  the  foreclosure  of  all  sorts  of 
encumbrances  against  immovable  property,  in  the  ab- 
sence of  special  statutory  provisions.  •  That  this  state- 
ment holds  in  actions  for  the  foreclosure  of  mechan- 
ics' liens  has  been  expressly  held. 

In  Whitney  v.  Higgins,  10  Cal.  547,  70  Am.  Dec.  748, 
the  court  said:  ''The  principles  which  govern  as  to 
parties  in  those  suits  [which  are  brought  to  foreclose 
mortgages]  apply  equally  to  suits  for  the  enforcement 


§    104  PARTIES  THEREIN.  193 

upon  the  secured  obligation  against  whom  a  de- 
ficiency judgment  is  demanded^   [or  who  is  the 

of  a  mechanic's  lien''  (p.  553).  And  again,  the  court 
said:  '^ Though  the  lien  of  mechanics  is  purely  the 
creature  of  the  statute,  a  decree  for  the  sale  of  the 
premises  in  its  enforcement  has  the  same  and  no 
greater  effect  upon  the  rights  of  purchasers  and  encum- 
brancers, prior  to  the  commencement  of  suit,  than  a 
similar  decree  would  have  upon  the  foreclosure  of  a 
mortgage.  If  such  purchasers  or  encumbrancers  are 
not  made  parties,  they  are,  in  no  respect,  bound  by  the 
decree  or  proceedings  thereunder.  A  mortgage,  in 
this  state,  is  only  a  lien  or  encumbrance;  the  estate  in 
the  land  remains  in  the  mortgagor,  and  all  persons  in- 
terested in  the  estate  at  the  time  the  suit  is  instituted 
to  enforce  the  mortgage,  whether  purchasers,  heirs, 
devisees,  remaindermen,  reversioners,  or  encumbran- 
cers, should  be  made  parties,  or  their  rights  will  not  be 
affected.  The  same  is  true  as  to  suits  to  enforce  a 
mechanic's  lien"  (p.  551). 

Historical.— JJndev  the  Mechanic's  Lien  Statute  of 
1856,  as  amended  1861,  a  mechanic's  lien  was  enforced 
by  a  special  statutory  proceeding  not  subject  to  the 
rules  as  to  parties  of  an  action  to  foreclose  a  mort- 
gage, hence  a  mortgagee  could  not  intervene:  Van  Win- 
kle V.  Stow,  23  Cal.  457,  459,  460. 

2  Person  Personally  Liable  Against  Whom  Defi- 
ciency Judgment  Demanded  Indispensable  Party.— 
When  a  mortgagee  asks  for  an  order  of  sale,  and  then 
for  a  deficiency  judgment,  the  mortgagor  has  an  inter- 
est not  only  in  the  amount  of  the  judgment,  but  in  the 
conduct  of  the  sale  of  the  property  and  the  amount  it 
sells  for,  and  therefore  is  a  necessary  party:  Belloc 
V.  Eogers,  9  Cal.  123,  125,  126. 

Where  the  plaintiff  brings  in  a  party  personally  lia- 
ble into  a  pending  action  to  foreclose  a  mechanic's 
lien  after  the  time  for  commencing  a  foreclosure  ac- 
tion has  elapsed,  the  owner  suff'ers  no  prejudice  there- 
by, and  has  no  ground  tor  complaint:  Green  v.  Clifford^ 
94  Cal.  49,  52,  29  Pac.  331. 
Liens— 13 


194  THE  FORECLOSURE   ACTION.  §    104 

primary  debtor],^  and  every  person  beneficially 
interested  in  the  particular  obligation  to  satisfy 

3  Primary  Debtor  Indispensable  Party.— On  this 
point  there  is  a  disagreement  between  the  cases,  some 
apparently  holding  that  he  is  merely  a  necessary  party 
to  a  complete  settlement  of  the  controversy,  but  not 
an  indispensable  party. 

IndispensahJe  Party.— In  Belloc  v.  Eogers,  9  Cal.  123, 
125,  the  court  says  that  a  mortgagor  who  transfers 
the  mortgaged  property  with  a  warranty  against  the 
mortgage  is  an  indispensable  party  in  the  foreclosure 
action. 

In  London,  Paris,  and  American  Bank  v.  Smith,  101 
Cal.  415,  422,  35  Pac.  1027,  where  a  mortgage  was 
made  for  accommodation,  and  an  action  was  com- 
menced for  its  foreclosure  without  joining  the  primary 
debtor  as  a  party  defendant  in  the  action,  the  court 
said:  ''It  is  clear  that  the  surviving  partner  [the 
partnership  being  the  primary  debtor]  is  not  a  neces- 
sary party  in  the  sense  that  he  is  or  would  be  preju- 
diced by  the  decree,  since  it  cannot  be  enforced 
against  him,  and  would  not  be  concluded  by  it  in  an 
action  brought  by  appellants  [the  personal  representa- 
tives of  the  mortgagor]  for  contribution  or  reimburse- 
ment, but  he  comes  within  a  class  of  necessary  parties, 
not  because  of  his  interest,  or  that  of  the  plaintiff, 
but  where  his  presence  as  a  party  is  necessary  to  the 
full  protection  of  the  defendants  before  the  court." 
The  court  quotes  with  approval  the  following  state- 
ment: '' Persons  are  necessary  parties  ....  where  the 
defendants  already  before  the  court  have  such  an  in- 
terest in  having  them  made  parties,  as  to  authorize 
those  defendants  to  object  to  proceeding  without  such 
parties. ' ' 

In  Giant  Powder  Co.  v.  San  Diego  Plume  Co.,  78 
Cal.  193,  200,  20  Pac.  419,  it  was  said  that  where  the 
original  contractor  was  not  made  a  party  in  an  ac- 
tion to  foreclose  a  mechanic's  lien,  the  court  should 
order  him  made  a  party  defendant  in  order  that  there 
might  be  a  full  and  complete  determination  of  the  mat- 
ters in  controversy. 


§    104  PARTIES  THEREIN.  19p 

By  Mechanic's  Lien  Act,  Stats.  1862,  p.  384,  c.  297, 
sees.  6  and  7,  both  contracting  owner  and  original  con- 
tractor were  indispensable  parties. 

Under  Mechanic's  Lien  Act,  Stats.  1867-68,  p.  589, 
c.  448,  sec.  10,  fifth  subdivision,  all  persons  personally 
liable  and  all  *  ^  lienholders  whose  claims  have  been 
filed  for  record''  were  indispensable  parties,  and  *'ali 
other  persons  interestea  in  the  matter  in  controversy, 
or  in  the  property  sought  to  be  charged  with  the  lien" 
proper  parties. 

Satisfactory  reasons  are  pointed  out  in  London, 
Paris,  and  American  Banli  v.  Smith,  101  Cal.  415,  421, 
35  Pac.  1027,  why  the  person  primarily  liable  as  well 
as  the  owner  of  the  encumbered  property  are  indis- 
pensable parties,  when  it  is  possible  to  join  him.  If 
the  foreclosure  judgment  is  paid  by  the  owner  of  the 
land,  or  the  land  is  sold  unaer  the  foreclosure  judg- 
ment, without  the  primary  debtor  having  been  made 
a  party,  the  owner  will  have  the  right  to  proceed 
against  the  primary  debtor  for  reimbursement  or  con- 
tribution; but  in  an  action  for  that  purpose  the  pri- 
mary debtor  would  not  be  bound  by  the  foreclosure 
judgment,  and  it  could  not  be  used  in  evidence  against 
him  to  establish  th^  amount  of  his  indebtedness  to  the 
owner  of  the  land.  The  result  would  be,  therefore, 
not  only  that  the  owner  of  the  land  in  such  action 
would  be  obliged  to  establish  the  amount  of  the  liabil- 
ity of  the  primary  debtor  to  him,  but  if  the  amount  so 
established  should  be  less  than  the  amount  of  the  fore- 
closure judgment,  the  owner  of  the  land  would  lose 
the  diiference;  nor  could  they  m  such  a  case  have  re- 
course against  the  encumbrancer  for  the  difference,  as 
they  are  bound  by  the  foreclosure  judgment,  whilst  the 
fact  might  be  that  the  true  amount  due  the  encum- 
brancer was  less  than  the  judgment,  but  more  than 
their  judgment  against  the  primary  debtor. 

Necessary  Party.— The  following  cases  hold  the  pri- 
mary debtor  not  indispensable  as  a  party,  but  merely 
necessary  to  a  complete  adjustment: 

Where  a  mortgage  is  given  for  accommodation,  and 
a  deficiency  judgment  was  not  demanded  against  the 
person  personally  liable  upon  the  secured  demand,  he 
is  not  an  indispensable  party:  Kearsing  v.  Kilian,  18 
Cal.  491. 


196  THE  FORECLOSURE  ACTION.  §  104 

which  the  foreclosure  action  is  commenced,^  is, 
except    when    without    the    jurisdiction    of    the 

The  original  contractor  is  not  an  indispensable 
party  in  an  action  to  foreclose  mechanics'  liens 
brought  by  employees  of  such  contractor,  but  he  is 
merely  a  proper  party.  For  while  such  persons  could 
maintain  actions  against  the  contracting  owner  alone 
to  foreclose  their  liens,  the  contractor  with  whom  they 
dealt  was  alone  personally  liable  to  them  for  any  de- 
ficiency which  might  arise;  thus  the  practice  tends  to 
avoid  a  multiplicity  of  actions.  This  principle  applies 
equally  whether  the  original  contract  is  valid  or  void: 
Wood  V.  Oakland  etc.  Transit  Co.,  107  Cal.  500,  502, 
40  Pac.  806;  Holmes  v.  Eichet,  56  Cal.  307,  311,  38  Am. 
Rep.  59;  Green  v.  Clifford,  94  Cal.  49,  52,  29  Pac.  331; 
Yancy  v.  Morton,  94  Cal.  558,  560,  29  Pac.  1111;  San 
Francisco  Paving  Co.  v.  Fairfield,  134  Cal.  220,  226,. 
66  Pac.  255. 

Where  the  plaintiff  in  an  action  to  foreclose  a  me- 
chanic's lien  brings  a  party  personally  liable  into  the 
action  after  the  time  for  commencing  a  foreclosure 
action  has  elapsed,  the  owner  suffers  no  prejudice 
thereby,  and  has  no  ground  for  complaint;  Green  v. 
Clifford,  94  Cal.  49,  52,  29  Pac.  331. 

4  Persons  Interested  in  Obligations  Enforced  Indis- 
pensable Parties.— In  Tyler  v.  Yreka  Water  Co.,  14 
Cal.  212,  218,  the  following  passage  from  Story's 
Equity  Pleading  is  quoted  with  approval:  "All  per- 
sons who  have  the  legal  interest  in  the  mortgage,  as 
well  as  those  who  have  the  equitable  interest  therein, 
are  necessary  parties  to  the  bill  to  foreclose.  There 
can  be  no  redemption  or  foreclosure  unless  all  the 
parties  entitled  to  the  whole  mortgage  are  before  the 
court.  Thus,  for  example,  a  person  ejititled  to  a  part 
only  of  the  mortgage  money  cannot  file  a  bill  to  fore- 
close the  mortgage  as  to  his  own  part  of  the  money, 
but  all  the  other  persons  in  interest  must  be  made 
parties.  So,  if  the  mortgage  has  been  made  to  a 
trustee  in  trust,  all  the  cestuis  que  trust  (or- bene- 
ficiaries) should  be  made  parties,  as  well  as  the  trus- 
tee to  the  bill  to  foreclose/' 


§    104  PARTIES    THEREIN.  197 

court,^  an  indispensable  party  therein;  but  a  per- 
son personally  liable  npon  the  secured  obligation 
[who  is  not  a  primary  debtor  and]^  against  whoia 
judgment  is  not  demanded  is  not  an  indispensable 
party,^  and  the  holder  of  one  of  several  separate 

5  Except  When  Without  Jurisdiction  of  Court.— So 

where  the  primary  debtor  is  a  nonresident  of  the  state, 
the  action  may  be  prosecuted  without  making  him  a 
party.  This  exception  is  founded  on  the  utter  im- 
practicability of  making  such  a  debtor  a  party  to  the 
action,  as  the  action  must  be  brought  where  the  prop- 
erty is  situated:  London,  Paris,  and  American  Bank  v. 
Smith,  101  Cal.  415,  422,  423,  35  Pac.  1027. 

6  Person  Personally  Liable  in  Proper  Case  not  Indis- 
pensable Party.— Where  a  mortgagor  sells  the  mort- 
gaged property  to  a  third  person  without  warranty, 
the  mortgagor  is  not  an  indispensable  party  in  an 
action  to  foreclose  the  mortgage,  unless  the  mortgagee 
wants  a  deficiency  judgment  against  the  mortgagor, 
and  the  grantee  of  the  mortgagor  could  not  complain 
because  the  mortgagor  was  not  made  a  party,  as  the 
grantee  could  not  be  injured  thereby.  For  as  the 
mortgagee  asked  no  more  than  the  value  of  the  mort- 
gaged property  and  sought  no  personal  judgment  over 
against  the  mortgagor,  the  latter,  having  sold  his  re- 
maining interest  in  the  property,  had  no  interest  in 
the  amount  of  the  judgment  or  in  the  sale  of  the  prop- 
erty. Whenever  t^he  mortgagee  looks  only  to  the  mort- 
gaged property  for  the  satisfaction  of  the  secured  ob- 
ligation, the  mortgagor  could  have  no  interest  either 
in  the  amount  of  the  judgment  or  in  the  sale  of  the 
property:  Belloc  v.  Eogers,  9  Cal.  123,  125,  126. 

Where  a  mortgagor  conveys  the  mortgaged  prop- 
erty in  his  lifetime  and  no  personal  deficiency  judg- 
ment is  asked,  his  personal  representative  is  not  a 
necessary  partv  in  an  action  to  foreclose  the  mortgage: 
Hibernia  Sav.  "etc.  Soc.  v.  Herbert,  53  Cal.  375,  378. 

Where  a  mortgagor  conveys  the  mortgaged  property 
in  his  lifetime,  and  the  mortgagee  in  his  complaint  in 
foreclosure    expressly   waives   a    deficiency   judgment, 


198  THE  FORECLOSURE  ACTION.  §  104 

obligations  secured  by  the  same  encumbrance 
may  foreclose  his  encumbrance  without  making 
the  holders  of  the  remaining  obligations  secured 
thereby  parties^ 

the  grantee  of  the  property  cannot  insist  that  the 
mortgagor  or  his  personal  representatives  be  made 
parties  to  the  foreclosure  action:  Gutzeit  v.  Pennie,  98 
Gal.  327,  33  Pac.  199. 

Where  the  original  contractor  for  an  improvement 
abandons  his  contract,  and  the  contracting  owner  com- 
pletes the  work,  the  contractor  is  not  a  necessary 
party  to  an  action  brought  to  enforce  liens  for  labor 
and  materials  furnished  after  the  abandonment  of  his 
contract  by  the  contractor:  Green  v.  Clifford,  94  Gal. 
49,  53,  29  Pac.  331. 

7  Separate  Obligation  may  be  Foreclosed  Without 
Making  Holders  of  Other  Equal  Obligations  Parties.— 
Where  a  single  mortgage  secures  several  separate  ob- 
ligations, in  a  foreclosure  action  brought  by  the 
holder  of  one  secured  obligation,  the  holders  of  the 
other  demands  are  not  necessary  parties:  Tyler  v. 
Yreka  Water  Go.,  14  Gal.  212,  218.  This  conclusion 
seems  to  overlook  the  fact  that  the  mortgage  security 
might  be  insufficient,  in  which  case  the  holders  of  the 
secured  obligations  would  have  to  prorate. 

Gompare  the  provision  of  the  Mechanic 's  Lien  Act, 
Stats.  1867-68,  p.  589,  c.  448,  sec.  10,  fifth  subdivision, 
that  ''all  lienholders  whose  claims  have  been  filed  for 
record^'  are  indispensable  parties  to  an  action  to  fore- 
close the  liens. 

In  the  following  case,  however,  the  other  encum- 
brancers clearly  are  not  indispensable  parties.  Where^ 
several  obligations,  one  of  which  was  preferred  to  the 
remainder,  were  secured  by  the  same  mortgage,  the 
holders  of  the  secured  obligations  are  proper  parties 
as  coplaintiffs  with  the  holder  of  the  preferred  obliga- 
tion in  an  action  to  foreclose  the  mortgage,  so  that 
they  could  receive  any  overplus  of  the  proceeds  of  the 
sale  of  the  mortgaged  property  which  might  remain 
after   the   payment    of   the   preferred    obligation,    but 


§    105  PARTIES    THEREIN.  199 

105.     Necessary  Parties. 

In  such  action,  every  person  who  holds  any 
subordinate  interest^  amounting  to  an  estate  of 

they  are  not  necessary  parties  in  the  sense  that  no 
foreclosure  judgment  could  be  made  without  bringing 
them  in.  They  could  not  insist  upon  having  their 
claim  to  this  surplus  litigated  until  it  was  ascertained 
that  there  would  be  a  surplus.  It  is  true  that  their 
interest  in  the  secured  obligation  and  the  mortgage 
could  not  be  affected  by  a  judgment  rendered  in  a 
foreclosure  action  to  which  they  were  not  made  par- 
ties; still,  as  that  interest  only  extended  to  a  right  to 
have  the  surplus  proceeds  of  the  sale  applied  to  their 
debt,  it  would  have  made  very  little  difference  in  this 
case  whether  they  were  made  parties  or  not,  for  the 
surplus  remaining  amounted  to  only  about  five  hundred 
dollars:  Grattan  v.  Wiggins,  23  Cal.  16,  31,  32. 

8  Person  Holding  Subordinate  Interest  Necessary 
Party. — Thus  the  transferee  of  the  whole  or  any  part 
of  the  propertv  is  a  necessarv  party:  Haffley  v.  Maier, 
13  Cal.  13;  Goodenow  v.  E^er,  16  Cal.  461,  468,  469, 
76  Am.  Dec.  540;  Boggs  v.  Hargrave,  16  Cal.  559,  563, 
76  Am.  Dec.  561;  Burton  v.  Lies,  21  Cal.  87,  91;  Carpen- 
tier  V.  Williamson,  25  Cal.  154,  161;  Skinner  v.  Bock, 
29  Cal.  253;  Bludworth  v.  Lake,  33  Cal.  255,  264,  33 
Cal.  265;  Porter  v.  Muller,  65  Cal.  512,  4  Pac.  531; 
Johnston  v.  McDuffee,  83  Cal.  30,  23  Pac.  214;  Adams 
V.  Hopkins  (Cal.),  69  Pac.  228,  231A. 

The  owner  of  mortgaged  premises  whose  attorney  in 
fact  had  fraudulently  conveyed  the  property  to  the 
mortgagor,  the  mortgagor  having  mortgaged  the  prop- 
erty to  a  bona  fide  mortgagee  for  value  is  a  necessary 
party,  the  mortgagee  having  received  notice  of  the 
fraud  prior  to  the  commencement  of  the  foreclosure 
action:  Eandall  v.  Duff,  79  Cal.  115,  119,  19  Pac.  532, 
20  Pac.  610. 

One  of  two  mortgagees  who  subsequently  to  the  exe- 
cution of  the  mortgage  receives  a  conveyance  of  the 
mortgaged  property  is  a  proper  party  defendant: 
Johnston  v.  McDuffee,  83  Cal.  30,  23  Pac.  214. 


200  THE  FORECLOSURE   ACTION.  §    105 

When  Property  a  Homestead. —In  an  action  to  fore- 
close a  mortgage  executed  by  the  husband  alone 
against  property  claimed  as  the  homestead,  the  wife 
is  a  proper  party:  Fitzgerald  v.  Fernandez, 71  Cal.  504, 
508,  12  Pac.  562. 

The  wife  is  a  proper  party  defendant,  and  if  not 
joined  may  intervene:  Sargent  v.  Wilson,  5  Cal.  504; 
Moss  V.  Warner,  10  Cal.  296;  Mabury  v.  Kuiz,  58  Cal. 
h,   14,  15. 

Where  a  homestead  selected  out  of  the  comnmnitj" 
property  was  mortgaged,  and  the  wife  afterward  died, 
her  minor  children  succeeded  to  her  interest  therein 
and  became  necessary  parties  in  a  foreclosure  action 
brought  after  her  death:  Johnston  v.  San  Francisco 
Sav.  Union,  63  Cal.  554,  560,  561. 

Where,  subsequently  to  the  making  of  a  mortgage, 
the  mortgagor  declared  a  homestead  on  the  mort- 
gaged property,  and  thereafter  an  action  to  fore- 
close the  mortgage  was  begun,  the  wife  is  a  necessary 
party  to  a  complete  settlement  of  the  controversy. 
For  by  the  declaration  of  homestead  some  part  of  the 
husband  ^s  title  (just  what  portion  is  not  necessary 
now  to  be  determined)  passed  from  him  to  his  wife; 
he  could  no  longer  mortgage  or  sell  unless  she  joined 
with  him;  she  had  the  right  of  residence  thereon  with 
him  and  the  family  during  their  joint  lives,  with 
some  rights  in  case  she  should  survive  him.  She  has 
a  right  to  question  the  execution  and  validity  of  the 
mortgage;  whether  it  was  barred;  whether  it  had 
been  paid:  Hefner  v.  Urton,  71  Cal.  479,  12  Pac. 
486;  Stockton  Bldg.  etc.  Assn.  v.  Chalmers,  75  Cal. 
332,  334,  7  Am.  St.  Eep.  173,  17  Pac.  229;  Watts  v. 
Gallagher,  97  Cal.  47,  51,  31  Pac.  626;  Brackett  v. 
Banegas,  116  Cal.  278,  283,  58  Am.  St.  Bep.  164,  48 
Pac.   90. 

The  mere  fact  that  a  wife  executes  a  mortgage 
with  her  husband  is  sufficient  reason  for  making  her 
a  party  defendant  in  an  action  to  foreclose  the  same: 
Anthony  v.  Nye,  30  Cal.  401. 

Persons  not  Necessary  Parties.— Where  the  admin- 
istrator or  executor  of  a  deceased  mortgagor  is  made 
a  party,  the  heirs  of  the  mortgagor  are  not  necessary 


§    105  PARTIES    THEREIN.  iiv/i 

parties.  For,  by  the  Code  of  Civil  Procedure,  sectioii 
1582:  ''Actions  ....  founded  upon  contracts  may 
be  maintained  by  and  against  executors  and  admin- 
istrators in  all  cases  in  which  the'  same  might  have 
been  maintained  against  their  respective  testators 
or  intestates '':  Bayly  v.  Muehe,  65  Cal.  345,  3  Pac. 
467,  4  Pac.  486,  in  bank,  Thornton^  J.,  dissenting: 
Collins  V.  Scott,  100  Cal.  446,  452,  34  Pac.  1085; 
Hearfield  v.  Bridges,  67  Fed.  (C.  C.)  333,  335;  75  Fed. 
47,  50,  54,  21  C.  C.  A.  212;  Finger  v.  McCaughey,  119 
Cal.  59,  51  Pac.  13;  Dickey  v.  Gibson,  121  Cal.  276,  53 
Pac.    704. 

A  person  holding  an  interest  in  mortgaged  property 
at  one  time,  but  who,  before  the  commencement  of 
the  foreclosure  action,  conveyed  all  his  rights  to 
another  person,  is  not  a  necessary  party  therein:  In- 
gham V.  Weed  (Cal.),  48  Pac.  318,  321A. 

Averment.— Where  a  complaint  averred  that  the 
parties  other  than  the  mortgagor  who  were  made 
defendants  then  had,  or  claimed  to  have,  some  in- 
terest in  or  claim  upon  the  mortgaged  premises,  or 
some  part  thereof,  as  mortgagees,  attaching  creditors, 
or  otherwise,  which  interest  and  'claims  were  all  sub- 
sequent and  subject  to  the  lien  of  plaintiff's  mort- 
gage, the  court  said:  ''The  facts  stated  as  to  those 
defendants  who  were  made  parties  because  they  had, 
or  claimed  to  have,  some  interest  in  the  mortgaged 
premises  are  sufficient.  The  plaintiff  was  not  bound 
to  set  forth  their  interests.  The  general  allegation 
that  they  had,  or  claimed  to  have,  some  interest,  is 
all  that  is  required  on  the  part  of  the  plaintiff.  And 
the  defendants,  if  they  have  any  interest,  and  desire 
to  defend  the  suit,  must  set  it  ouf :  Poett  v.  Stearns, 
28  Cal.  226. 

Where  a  foreclosure  complaint  averred  that  a  cer- 
tain defendant  had,  or  claimed  to  have,  some  interest 
or  claim  upon  the  mortgaged  premises,  or  some  part 
thereof,  which  interest  or  claim  is  subject  to  the 
plaintiff's  mortgage,  the  court  said:  "The  allega- 
tion of  her  claim  and  interest  is  in  the  form  univer- 
sally adopted  and  long  established.  The  plaintiff  is 
not  supposed  to  know  the  nature  of  every  person's 
claim.     It  is  enough  that  a  claim  is  set  up.     It  is  the 


202  THE   FORECLOSURE    ACTION.  §    105 

inheritance^  in  the  encumbered  property,  or  any 
inferior  encumbrance^^  against  the  property, 
of  whose  rights  the  plaintiff  has  actual  or  con- 

dof endant 's  business,  when  thus  called  upon,  to  dis- 
close its  nature'':    Anthony  v.   Nye,   30   Cal.   401. 

In  an  action  to  foreclose  a  street  assessment  lien, 
an  averment  in  the  complaint  that  the  defendants 
therein  named  have,  or  claim  to  have,  some  interest 
in  the  premises  is  sufficient  to  bind  such  parties,  and 
the  defendants,  if  they  have  any,  interest  in  the 
premises,  must  set  it  out  if  they  desire  to  defend  the 
action:    Himmelmann   v.    Spanagel,    39    Cal.    389,    391. 

An  averment  in  a  complaint  to  foreclose  a  mort- 
gage that  a  certain  person  ^'has,  or  claims  to  have, 
some  interest  or  claim  upon  said  premises,  which 
interest  or  claim  is  subsequent  to  and  subject  to 
the  lien  of  plaintiff's  mortgage,"  shows  sufficient 
reason  for  making  such  person  a  party  defendant  in 
the  action.  ''The  character  of  his  interest  is  im- 
material to  the  plaintiff,  and  need  not  be  set  forth 
in  the  complaint If  the  appellant  [such  per- 
son] had  desired  to  protect  such  interest,  he  should 
have  appeared  and  presented  it  to  the  court  with  the 
grounds  upon  which  he  claimed  its  protection": 
Sichler  v.  Look,  93  Cal.  600,  608,  609,  29  Pac.  220. 

Where  a  complaint  in  an  action  to  foreclose  a 
mechanic's  lien  averred  that  a  certain  person  had, 
or  claimed,  some  interest  in  the  encumbered  prop- 
erty, which  was  subject  to  the  plaintiff's  lien,  the 
circumstance  that  such  person  had,  or  claimed,  some 
interest  in  the  land,  was,  of  itself,  wholly  immaterial 
except  in  so  far  as  it  showed  that  he  was  a  necessary 
party  to  the  action;  but  the  averment  that  his  in- 
terest was  subject  to  plaintift's  lien  presented  a 
material  issue:  Elder  v.  Spinks,  53  Cal.  293,  294-296, 
by  the  court,  Crockett,  J.;  Rhodes,  J.,  dissenting; 
Sichler  v.   Look,   93   Cal.   600,   608,   29  Pac.   220. 

9  Must  be  Estate  of  Inheritance.— For  a  tenant  of 
a  mortgagor  is  not  beneficially  interested  in  the 
claim  secured  nor  in  the  title  which  is  hypothecated 
as   security,  nor  has  he  succeeded   to   any  portion  of 


§    105  PARTIES    THEREIN.  206 

the  hypothecated  estate,  and  hence  is  not  a  necessary 
party:   McDermott  v.  Birke,  16  Cal.  580,  '590. 

10  Person  Holding  Inferior  Encumbrance  Neces- 
sary Party.— The  holder  of  a  mortgage  inferior  to  a 
mechanic's  lien  against  the  same  property  is  a  neces- 
sary party  in  an  action  to  foreclose  the  lien:  Whitney 
V.  Higgins,  10  Cal.  547,  70  Am.  Dec,  748. 

^^The  general  rule  of  courts  of  equity  is,  that  all 
j^ersons  materially  interested  in  the  subject  matter 
of  the  suit  ought  to  be  made  parties,  in  order  that 
complete  justice  may  be  done,  and  a  multiplicity  of 
fruits  avoided;  and  this  requires  subsequent  encum- 
brancers, existing  at  the  time  of  the  filing  of  the 
bill,  to  be  made  parties  in  a  suit  for  a  foreclosure  of 
a  mortgage.  They  are  interested  in  the  property, 
and  unless  made  parties,  their  rights  will  not  be 
affected  by  the  decree;  and  to  this  extent  they  are 
necessary  parties' ':  Montgomery  v.  Tutt,  11  Cal.  307, 
314. 

^ '  The  law  seems  to  be  pretty  well  settled,  that 
junior  encumbrancers  are  not  necessary  [indis- 
pensable], though  proper  [necessary],  parties  to  an 
action  to  foreclose  a  mortgage'':  Grattan  v.  Wiggins, 
23  Cal.   16,  32. 

Where  encumbered  property  is  also  affected  by  an 
inferior  lien,  and  an  action  is  commenced  for  the 
foreclosure  of  the  superior  encumbrance,  in  order 
' '  to  make  the  foreclosure  effectual,  it  is  necessary 
for  the  plaintiff  [superior  encumbrancer]  to  make 
all  junior  lienholders  parties":  Hibernia  Sav.  etc. 
Soc.  V.  London  etc.  Fire  Ins.  Co.,  138  Cal.  257,  71 
Pac.   334. 

A  holder  of  a  judgment  lien  inferior  to  a  mortgage 
against  the  same  property  is  a  necessary  party  in  an 
action  to  foreclose  the  mortgage:  Alexander  v.  Green- 
wood, 24  Cal.  505. 

The  administrator  of  the  estate  of  a  junior  mort- 
gagor is  a  necessary  party  in  an  action  to  foreclose 
the  superior  mortgage  against  the  same  property: 
Ward  V.  McNaughton,  43  Cal.  159,  161. 

Right  of  Necessary  Party  to  Intervene.— In  an  action 
to  foreclose  a  mechanic's  lien  on  a  ditch,  a  mortgagee 


204  THE  FORECLOSURE  ACTION.  §  105 

structive  notice  at  the  time  of  the  cominencc- 
ment  of  the  action/^  and  every  person  acquiring 

of  the  ditch  subsequent  to  the  lien  does  not  have 
an  absolute  right  to  intervene  when  the  motion  to 
intervene  was  not  made  until  plaintiff  was  about  to 
take  judgment,  but  must  resort  to  his  remedy  by  an 
action  to  redeem:  Hocker  v.  Kelley,  14  Cal.  164. 

Siihseqnent  Encumbrancers  not  Indispensable  Parties. 
' '  That  subsequent  encumbrancers  are  prop-er  parties,  it 
is  clear;  that  they  are  necessary  parties  to  a  complete 
adjustment  of  all  interest  in  the  property  is  equally 
clear;  that  the  chancellor  would  be  justified  in 
ordering  them  to  be  brought  in  when  not  made 
parties,  is  also  clear;  but  we  do  not  think  that  they 
are  in  all  cases  indispensable  parties  to  a  decree  de- 
termining the  rights  of  the  parties  before  the  court 
as  between  themselves.  The  property  mortgaged  may 
be  insufficient  to  cover  the  debt  secured;  the  encum- 
brances may  be  so  numerous  and  their  claims  so 
large,  that  the  parties  possessing  the  latest  liens 
could,  by  no  possibility,  receive  any  portion  of  the 
proceeds  of  the  sale.  It  would  not  only  be  a  great 
inconvenience,  but  a  great  hardship,  to  compel  the 
mortgagee  in  such  case  to  bring  in  all  such  persons 
who  have  acquired,  without  any  fault  of  his,  liens 
upon  the  property.  As  the  foreclosure  suit  is  pros- 
ecuted for  his  benefit,  the  expense  of  making  the  sub- 
sequent encumbrancers  parties  must  fall  upon  the 
estate,  and  in  instances  within  our  experience  would 
have  exhausted  its  entire  proceeds.  We  do  not  think* 
then^  that  subsequent  encumbrancers  are  indispen-. 
sable  parties.  If  not  made  parties,  their  rights  can- 
not be  affected;  they  are  not  bound  by  the  decree; 
their  equity  of  redemption  from  the  purchaser  con- 
tinues, r.nd  this  they  can  assert  at  any  time  within 
the  period  allowed  by  the  statute  of  limitations: 
Montgomery  v.  Tutt,   il   Cal.   307,   315,  316. 

11  Person  of  Whose  Rights  Plaintiff  Has  Notice  at 
Time  of  Commencement  of  Action  Necessary  Party.— 
Compare  Code  of  Civil  Procedure,  section  726  (Prac- 
tice Act,  sec.  246,  as  amended  1868),  in  part:    '*No 


§    105  PARTIES  THEREIN,  205 

person  holding  a  conveyance  from  or  under  the  mort- 
gagor of  the  property  mortgaged, .  or  having  a  lien 
thereon,  which  conveyance  or  lien  does  not  appear 
of  record  in  the  proper  office  at  the  time  of  tho 
commencement  of  the  action,  need  be  made  a  partj' 
ill  such  action,  and  the  judgment  therein  rendered, 
and  the  proceedings  therein  had,  are  as  conclusive 
against  the  party  holding  such  unrecorded  conveyance 
or  lien  as  if  hej  had  been  a  party  to  the  action/' 

Before  the  enactment  of  this  provision,  the  rule 
was  that  such  a  person  was  a  necessary  party  so 
long  as  hig  instrument  of  title  was  recorded  before 
the  filing  of  the  notice  of  pendency  was  filed.  Thus 
in  Davenport  v.  Turpin,  41  Cal.  100,  102,  the  court 
held  that  where  the  mortgagor  had  conveyed  the 
mortgaged  property  before  the  commencement  of  the 
action  to  foreclose  the  mortgage,  but  the  conveyance 
was  not  recorded  until  after  the  commencement  there- 
of, but  before  the  filing  of  the  notice  of  the  pendency 
of  the  action,  the  transferee  was  a  necessary  party. 
The  effect  of  this  enactment  was  to  make  such  a 
person  a  necessary  party  only  when  the  encumbrancer 
had  constructive  notice  of  his  encumbrance. 

Actual  Notice.— It  seems  that,  notwithstanding  this 
provision,  actual  notice  of  the  rights  of  the  transferee 
on  the  part  of  the  encumbrancer  would  make  him 
a  necessary  party,  for  before  the  enactment  of  this 
provision  the  question  of  notice  was  immaterial,  and 
its  object  seems  to  have  been  merely  to  declare  that, 
unless  the  encumbrancer  had  at  least  constructive 
notice  of  the  encumbrance,  the  transferee  was  not 
a  necessary  party. 

Constructive  Notice  —Illustrations.— A  person  hold- 
ing a  subsequent  judgment  lien  against  mortgaged 
property  at  the  time  of  the  commencement  of  an 
action  to  foreclose  the  superior  mortgage  is  a  neces- 
sary party  therein:  Alexander  v.  Greenwood,  24  Cal. 
505. 

The  filing  of  a  lis  pendens  in  an  action  brought  by 
a  grantor  of  a  mortgagor  against  the  mortgagor  to 
set  aside  the  conveyance  to  him  is  constructive  notice 
to  the  mortgagee  of  the  interest  of  the  grantor  in  the 


206  THE    FORECLOSURE    ACTION.  §    105 

any  such  right  in  respect  to  the  encumbered 
property  after  the  commencement  of  the  action 
without  actual  or  constructive  notice  of  the  pen- 
dency thereof/^  the  constructive  notice  to  be 
given  by  the  filing  of  a  notice  of  pendency/^  is  a 

property,  and  he  is,  therefore,  a  necessary  party  in 
a  foreclosure  action  subsequently  brought  by  the 
mortgagee:  EandaU  v.  Duff,  79  Cal.  115,  118,  121,  122, 
128,  129,  19  Pac.  532,  20  Pac.  610. 

12  Person  Acquiring  Right  After  Commencement 
of  Action  Without  Notice  of  Pendency  Thereof, 
Necessary  Party.— Thus  a  person  without  actual  or 
constructive  notice  of  the  pendency  of  the  action  is 
a  necessary  party:  Abadie  v.  Lobero,  36  Cal.  390,  400. 

Actual  Notice. — On  the  other  hancl,  a  person  with 
actual  notice  of  pendency  is  bound:  Wise  v.  Griffith, 
78  Cal.  lo2,  20  Pac.  675;  Sharp  v.  Lumley,  34  Cal. 
611,  615. 

The  effect  of  actual  notice  is  not  changed  by  the 
requirement  as  to  filing  a  notice  of  pendency:  Simp- 
son V.  Lumley,  22  Cal.  200,  210,  211.  (Notice  of 
pendency— see  note  13,  below.) 

Constructive  Notice  —A  person  with  constructive 
notice  of  the  pendency  is  bound:  Daniels  v.  Hender- 
son, 49  Cal.  242. 

The  wife  of  a  party  duly  joined,  who,  after  the 
commencement  of  the  foreclosure  action  and  the 
filing  of  a  notice  of  its  pendency,  claims  a  homestead 
in  the  property  involved,  is  bound  by  the  judgment 
rendered  therein,  being  a  purchaser  within  the  mean- 
ing of  the  code  provision  providing  for  the  filing  of 
a  notice  of  pendency:  Boach  v.  Eiverside  Water  Co., 
74  Cal.  263,  15  Pac.  776;  McNamara  v.  Oakland  Bldg. 
etc.  Assn.,  132  Cal.  247,  64  Pac.  277. 

13  Constructive  Notice  of  Pendency  to  be  Given 
by  Filing  a  Notice  of  Pendency.— The  common-law 
rule  that  the  commencement  of  an  action  is  notice 
to  all  the  world  of  its  pendency  is  so  modified  by  the 
provisions  of  the  Code  of  Civil  Procedure,  section  409, 


§    105  PARTIES    THEREIN.  207 

necessary  party  to  an  adjustment  of  the  various 
rights  claimed  in  respect  to  the  property  and  to 
the  passage  of  a  clear  title  at  the  foreclosure  sale 
of  the  property ;  but  is  not  an  indispensable  party 
to  a  judgment  determining  the  rights  of  the  par- 
ties before  the  court  as  between  themselves. ^^ 

106.     Proper  Parties. 

Any  holder  of  an  obligation  already  due  which 
is  secured  by  an  encumbrance  against  .any  prop- 
erty superior  to  the  encumbrance  to  foreclose 
which  the  action  is  commenced/^  any  person  sec- 
Practice  Act,  section  27,  that  a  notice  of  the  pendency 
of  the  action  must  be  filed  in  order  to  impart  notice 
of  the  pendency  thereof  to  purchasers  and  encum- 
brancers becoming  such  after  its  commencement: 
Bentley  v.  Mountain  Lake  Water  Co.,  13  Cal.  306,  319, 
73  Am.  Dee.  575;  Head  v.  Fordyce,  17  Cal.  149,  151; 
Richardson  v.  White,  18  Cal.  102,  107;  Ault  v.  Gass- 
away,  18  Cal.  205;  Horn  v.  Jones,  28  Cal.  194,  204; 
Sharp   V.   Lumley,   34   Cal.   611,   615. 

14  Although  Necessary  Parties  not  Joined,  Judg- 
ment may  be  Rendered  Between  Parties  Before 
Court. — That  subsequent  encumbrancers  are  necessary 
parties  to  a  complete  adjustment  of  all  interest  in  the 
property  is  clear;  but  they  are  not  indispensable 
parties  to  a  judgment  determining  the  rights  of  the 
piarties  before  the  court  as  between  themselves: 
Montgomery  v.  Tutt,  11  Cal.  307,  315;  Carpentier  v. 
Brenham,  40  Cal.  221,  235. 

Where  an  encumbrancer  is  not  made  a  party  in  a 
foreclosure  action,  the  judgment,  while  incomplete 
as  to  him,  is,  nevertheless,  sufficient  in  other  respects: 
Ilayward  &  Co.  v.  Stearns,  39  Cal.  58,  60. 

15  Superior  Encumbrancer  Whose  Obligation  is 
Due   Proper   Party. — Superior   encumbrancers   may   be 


208  THE  FORECLOSURE   ACTION.  §    106 

ondarily  liable  on  the  secured  obligation/^  and 
any  inferior  encumbrancer  who  becomes  such  af- 
ter the  commencement  of  the  foreclosure  action 
with  actual  or  constructive  notice  of  the  pendency 
thereof ^^''  is  a  proper  party  in  such  action;  but 

made  parties  for  the  purpose  of  liquidating  their  de- 
mands and  paying  them  out  of  the  proceeds  of  the 
sale:  San  Francisco  v.  Lawton,  18  Cal.  4.65,  473,  79 
Am.  Dec.  187;  Croghan  v.  Spence,  53  Cal.  15;  Gutzeit 
V.  Pennie,  97  Cal.  484,  489,  32  Pac.  584;  Stockton 
Sav.  etc.  Soc.  v.  Harrold,  127  Cal.  612,  617,  60  Pac. 
165;  Van  Loben  Sels  v.  Bunnell,  131  Cal.  489,  494,  63 
Pac.   773. 

But  the  obligation  secured  by  the  superior  encum- 
brance must  be  due.  ^^A  junior  mortgagee  has  a 
right,  in  an  action  to  foreclose  his  mortgage,  to 
bring  before  the  court  the  holder  of  a  prior  mortgage 
which  has  matured,  and  obtain  a  decree  for  the  sale 
of  the  premises  and  the  satisfaction  of  his  own  mort- 
gage after  the  payment  of  the  amount  of  the  prior 
mortgage ^^:  Gutzeit  v.  Pennie,  97  Cal.  484,  489,  32 
Pac.   584. 

*^In  the  exceptional  cases,  where  prior  mortgagees 
are  made  parties,  this  is  done  that  the  court  may 
order  the  sale  of  the  whole  estate,  and  thus  make 
a  complete  title  in  the  purchaser.  In  such  cases  the 
complaint  may  be  treated  as  in  the  nature  of  a  bill 
to  foreclose  and  to  redeem  from  the  prior  mortgage. 
If  the  debt  secured  by  the  prior  mortgage  is  past  due, 
it  would  seem  that  the  prior  mortgagee  may  be 
compelled  to  accept  the  full  amount  of  his  claim 
from  the  proceeds  of  the  sale  of  the  mortgaged  prem- 
ises, without  any  interference  with"  the  obligation 
of  his  contract^':  McComb  v.  Spangler,  71  Cal.  418, 
424,  12  Pac.  347. 

In  Eodgers  v.  Parker,  136  Cal.  313,  316,  68  Pac. 
975,  the  court  doubt  whether  a  superior  encumbrancer 
could  be  compelled  to  submit  his  rights  to  adjudica- 
tion in  an  action  to  foreclose  an  inferior  encumbrance, 
but  held  that  as  in  the  case  before  the  court,  the  su- 


§    lOG  PARTIES    THEREIN.  209 

perior  encumbrancer  had  in  fact  filed  a  cross-com- 
plaint, he  must  be  deemed  to  have  voluntarily  submit- 
ted! himself  to  the  jurisdiction,  and  was  bound  by  the 
judgment. 

Whenever  a  superior  encumbrancer  is  made  a 
party  defendant,  it  is  his  right  to  file  a  cross-com- 
plaint to  foreclose  his  encumbrance:  Van  Loben  Sels 
v..  Bunnell,   131   Cal.  489,  494,   68  Pac.   773. 

A  superior  encumbrancer  is  not,  however,  a  neces- 
sary party:   Carpentier  v.  Brenham,  40  Cal.  221,  237. 

Averment  and  Its  Effect.— ''Umler  the  usual  allega- 
tion in  a  complaint  of  foreclosure,  that  a  defendant 
other  than  the  mortgagor  claims'  some  interest  in  the 
premises,  and  that  such  interest  is  subsequent  and 
subordinate  to  that  created  by  the  mortgage,  any 
prior  interest  held  by  such  defendant  is  not  affected 
by  the  judgment  therein.  Such  an  averment  is  not 
material  to  the  plaintiff's  cause  of  action,  nor  is  it 
an  issuable  fact,  and  whether  the  court  rendered 
judgment  upon  the  default  of  the  defendant,  or  upon 
an  issue  created  bv  his  denial  of  this  averment, 
without  setting  forth  the  character  of  his  interest, 
anv  prior  interest  held  bv  him  ia  not  affected  by  such 
judgment'':  Beronio  v.  Ventura  Co.  Lumber  Co.,  129 
Cal.  232,  238,  79  Am.  St.  Rep.  118,  61  Pac.  958.  See, 
also.  Elder  v.  Spinks,  53  Cal.  293,  294-296,  and  Sichler 
V.  Look,  93  Cal.  600,  608,  29  Pac.  220,  as  cited  under 
section  105,  note  8,  at  end. 

Insufficient  Averment. — An  averment  that  a  claim  is 
''subordinate''  to  a  mortgage  is  but  a  legal  con- 
clusion, and  the  averment  of  fact  upon  which  that 
conclusion  depends — that  the  claim  was  subsequent 
to  the  mortgage — negatives  any  claim  that  it  was 
prior  thereto:  Beronio  v.  Ventura  Co.  Lumber  Co., 
129  Cal.  232,  238,  79  Am.  St.  Eep.  118,  61  Pac.  958. 

16  Person  Secondarily  Liable  Proper  Party.— An 
indorser  of  a  note  secured  by  mortgage  is  a  proper 
party  defendant  in  an  action  to  foreclose  the  mort- 
gage: Hubbard  v.  University  Bank  of  Los  Angeles, 
125   Cal.   684,   58   Pac.   297. 

17  In  Certain  Cases  Inferior  Encumbrancer  Proper 

Liens— 14 


210  THE  FORECLOSLRE   ACTION.  §    lOG 

an  adverse  claimant  to  the  encumbered  property 
is  never  a  proper  party.*^ 

107.     Certain  Persons  Need  not  be  Made  Parties. 

'No  person  holding  any  right  in  respect  to  the 
encumbered  property  of  which  the  plaintiff  has 
neither  actual  nor  constructive  notice  at  the  time 
of  the  commencement  of  the  action/^  nor  ac- 

Party. — An  inferior  encnmbrancer  who  becomes  such 
after  the  comm  en  cement  of  an  action  to  foreclose  a 
superior  encumbrance,  but  with  actual  notice  (Mont- 
gomery V.  Byers,  21  Cal.  107),  or  constructive  notice 
(Eichardson  v.  White,  18  Cal.  102;  Ault  v.  Gassaway, 
18  Cal.  205),  thereof y  is  a  proper  party  therein. 

18  Adverse  Claimant  not  a  Proper  Party:  See  sec- 
tion 99,  and  notes  above. 

19  See  Code  Civ.  Proc,  sec.  726,  Practice  Act, 
sec.  246,  as  amended  1868,  in  part  as  quoted  under 
section  105,  note  11,  above. 

Illustrations.— A  grantee  of  a  mortgagor,  who  be- 
comes such  before  the  action  to  foreclose  the  mort- 
gage is  commenced,  but  whose  conveyance  is  not 
recorded  until  after  the  commencement,  is  bound  by 
the  foreclosure  judgment,  although  not  made  a  party 
to  the  action:  Daniels  v.  Henderson,  49  Cal.  242,  248; 
Henderson  v.  Grammar,  53  Cal.  649;  66  Cal.  332,  335, 
5  Pac.  488;  Breedlove  v.  Norwich  etc.  Ins.  Co.,  124 
Cal.   164,   166,  56  Pac.  770. 

Where  a  mortgagor  transfers  the  mortgaged  prop- 
erty, but  the  conveyance  is  not  recorded,  the  trans- 
feree is  not  a  necessary  party  in  a  foreclosure  action 
thereafterward  brought  by  the  mortgagee,  and  the 
proceedings  in  such  action  are  conclusive  against  him: 
Aldrich  v.   Stephens,  49   Cal.   676. 

Where  an  inferior  mortgagee  brought  an  action  to 
foreclose  his  mortgage,  and  joined  as  party  defendant 
the  superior  mortgagee  in  order  to  liquidate  his  claim, 
the  judgment  therein  rendered  is  binding  upon  an 
assignee    of    the    superior    mortgagee    whose    assign- 


§    107  PARTIES  THEREIN.  211 

quiring  any  right  in  respect  thereto  after  the 
commencement  of  the  action^  but  with  actual  or 
constructive  notice  of  the  pendency  thereof,^^  is 
either  a  necessary  or  a  proper  party  to  a  com- 
plete determination  of  the  various  rights  claimed 
in  respect  to  the  property;  and  the  judgment 
in  the  foreclosure  action  is  conclusive  against 
such  person.^^  Where,  however,  a  person  who 
is  a  necessary  or  proper  party  in  a  foreclosure 
action,  or  who  holds  a  right  of  record  in  respect 
to  the  encumbered  property,  is  not  duly  joined  as 
a  party  therein,  a  successor  .in  interest  of  such  per- 
son is  in  no  respect  affected  by  the  foreclosure 
judgment  unless  himself  actually  made  a  party 
in  the  action.^^ 

108.  "Right  to  Intervene  must  Affirmatively  Ap- 
pear. 
Any  person  who  seeks  to  intervene  in  a  fore- 
closure action  must  affirmatively  show,  before  in- 
tervention is  permissible,  that  his  right  in  respect 
to  the  encumbered  property  is  such  as  can  be 

ment  was  unrecorded,  although  not  made  a  party: 
Spaulding  v.  Howard,  121  Cal.  194,  198,  53  Pac.  563. 

20  See  section  105,  notes  12  and  13,  above. 

SI  See  cases  cited  under  note  19,  above. 

-2  Successor  in  Interest  of  Party  not  Joined  not 
Bound  by  Judgment.— Where  a  grantee  of  a  mort- 
gagor who  is  a  necessary  party  is  not  joined,  the  filing 
of  a  notice  of  pendency  does  not  operate  as  notice 
to  a  subsequent  grantee  of  the  first  grantee:  Jeffers 
v.  Cook,  58  Cal.  147,  152. 


212  THE  FORECLOSURE  ACTION.  §    108 

properly  litigated  and  adjudicated  -upon  in  the 
foreclosure  action.^^ 

109.  Holder  of  Interest  in  Property  When  Nec- 
essary Party,  but  not  Joined,  not  Affected 
by  Judgment. 

A  person  holding  any  interest  in  encumbered 
property  which  is  covered  by  an  encumbrance  to 
foreclose  which  an  action  is  commenced,  if  a 
necessary  party  in  the  foreclosure  action  but  not 
made  a  party  therein,  is  in  no  wise  affected^^  by 
and  may  collaterally  attack^^  any  judgment  ren- 

23  Peachy  v.  Witter,  131  Cal.  316,  320,  63  Pac.  468. 

24  Such  Person  not  Affected  by  Judgment:  Mont- 
gomery V.  Tutt,  11  Cal.  307,  315,  316;  Kirkham  v. 
Dupont,  14  Cal.  '559,  564;  Alexander  v.  Greenwood, 
24  Cal.  505,  512;  Oarpentier  v.  WiHiamson,  25  Cal'. 
154,  161;  Carpentier  v.  Brenham,  40  Cal.  221,  234; 
Jeffers   v.    Cook,    58    Cal.    147. 

This  is  likewise  true  in  an  action  to  foreclose  a 
ntechanic's  lien:  Whitney  v.  Higgins  10  Cal. '547,  551, 
70  Am.  Dec,  748. 

Thus  an  order  directing  the  sale  of  the  interest  of 
a  necessary  party  who  was  not .  joined  in  the  action 
is  erroneous:  Porter  v.  Muller,  65  Cal.  512,  513,  4 
Pac.  531;  Woodward  v.  Brown,  119  Cal.  283,  307,  63 
Am.   St.   Eep.   108,   51  Pac.   2. 

Thus  the  rights  of  a  noncontracting  owner  of  prop- 
erty affected  by  a  mechanic's  lien,  when  not  made  a 
party  in  the  action  to  foreclose  the.  lien,  cannot  be 
affected  bv  the  judgment  rendered  therein:  March  v. 
McKoy,  56  Cal.  85,  87. 

25  Such  Person  may  Collaterally  Attack  Judgment: 
Montgomery  v.  Tutt,  11  Cal.  307,  315,  316;  Horn  v. 
Jones,  28  Cal.  194,  203;  Carpentier  v.  Brenham,  40 
Cal.  221,  237. 


§    109  PARTIES    THEREIN.  213 

dered  therein;  and  cannot  be  dispossessed^^  by 
the  purchaser  at  a  judicial  sale  held  pursuant  to 
the  judgment.  But  any  such  person,  upon  seek- 
ing relief  against  the  cloud  arising  from  the  fore- 
closure proceedings,  must,  as  a  prerequisite  to  se- 
curing such  relief,  be  prepared  to  liquidate  his 
proportion  of  the  secured  obligation,  although 
such  obligation  has  been  barred  by  lapse  -  of 
tinie.27 

110.     Encumbrancer  When  Necessary  Party,  but 
not  Joined,  may  Redeem.^^ 
An  encumbrancer,  not  made  a  party  in  a  f  ore- 

The  judgment  cannot,  however,  be  attacked  by  a 
person  duly  joined:  Hutchins  v.  Ebeler,  46  Cal.  557. 
Nor  by  a  person  who  by  section  107  above,  need 
not  be  joined  as  a  party:  Spaulding  v.  Howard,  121 
Cal.  194,  198,  53  Pac.  '563. 

26  Such  Person  Cannot  be  Dispossessed.— That  .i 
writ  of  assistance  cannot  be  issued  against  a  neces- 
sary party  in  a  foreclosure  action,  who  was  not  duly 
joined  as  such,  see  section  161,  below. 

Nor  can  the  purchaser  at  the  judicial  sale  maintain 
an  action  to  recover  the  possession  of  the  land  from 
such  person:   Ault  v.  Gassaway,  18   Cal.  205. 

27  Such  Person  Seeking  Relief  from  Cloud  Must 
Do  Equity:  Johnson  v.  San  Francisco  Sav.  Union, 
75  Cal.  134,  143,  7  Am.  St.  Eep.  129,  16  Pac.  753. 

A  necessary  party  defendant  in  a  foreclosure  action* 
as  a  wife  of  a  mortgagor  when  the  mortgage  is 
against  the  homestead  of  a  married  homestead  claim- 
ant, when  not  duly  joined  may  maintain  an  action 
against  the  purchaser  to  remove  a  cloud  from  her 
title  (McMillan  v.  Eeynolds,  11  Cal.  372,  379);  or  an 
action  to  recover  possession  (Watts  v.  Gallagher,  97 
Cal.  47,  31  Pac.  626). 

28  Encumbrancer    may    Redeem.— '^  The    considera- 


'214  THE  FORECLOSURE   ACTION.  §    110 

closure  action  in  which  he  is  a  necessary  party, 
or  his  successor  in  interest,  may  at  any  time  be- 
fore his  encumbrance  is  extinguished  by  lapse  of 

tlon  of  the  proper  parties  to  a  suit  of  foreclosure, 
and  the  effect  of  the  decree  upon  the  rights  of  per- 
sons interested  in  the  mortgaged  estate,  clearly 
establishes  the  title  of  the  plaintiff  [a  purchaser  at 
foreclosure  sale  in  a  foreclosure  action  brought  by 
an  inferior  encumbrancer  who  was  not  a  party  to 
the  action  to  foreclose  the  superior  encumbrance]  to 
redeem.  The  principles  which  govern  as  to  parties 
in  those  suits  apply  equally  to  suits  for  the  enforce- 
ment of  a  mechanic's  lien.  The  mortgage  under 
which  plaintiff  claims  was  placed  upon  the  premises 
before  suit  was  brought;  the  mortgagees,  as  subse- 
<[iient  encumbrancers,  were  necessary  parties  to  the 
suit;  not  being  mad o  such  parties,  they  wero  not  bound 
by  the  decree  or  sale  under  it;  the  plaintiff,  by  his 
purchase,  took  the  title  as  it  existed  in  the  mort- 
gagor, at  the  date  of  the  mortgage;  his  position  in 
court,  therefore,  is  that  of  the  owner  of  the  legal 
title,  subject  to  the  mechanic's  lien'':  Whitney  v. 
Higgins,  io  Cal.  547,  553,  70  Am.  Dec.  748. 

^'The  law  seems  to  be  pretty  well  settled,  that 
junior  encumbrancers  are  not  necessary,  though 
proper,  parties  to  an  action  to  foreclose  a  mortgage. 
....  They  have  a  right  to  redeem  the  prior  mort- 
gage, and  if  they  are  not  made  parties  to  the  action 
to  foreclose  the  mortgage,  that  right  of  redemption 
still  remains  unaffected  by  the  decree  and  sale  under 
it":  Grattan  v.  Wiggins,  23  Cal.  16,  32.  See,  also, 
Montgomery  v.  Tutt,  11  Cal.  307,  315,  316;  Frink  v. 
Murphy,  21  Cal.  108,  112,  81  Am.  Dec.  149;  TuoHimne 
Eedemption  Co.  v.  KSedgwick,  15  Cal.  515,  527,  529. 

IllKStratiGns,— Where  a  person  holding  a  mortgage 
on  certain  property  subsequent  to  a  mechanic's  lien 
thereon  was  not  made  a  party  defendant  in  an  action 
to  foreclose  the  mechanic's  lien,  he  is  entitled  to 
maintain  an  action  to  redeem:  Gamble  v.  Voll,  15 
Cal.   508,   510.  Jdi.^  .'^^s-H  IH  ,v     . 


§    110  PARTIES  THEREIN.  •      2l5 

time^^  maintain  an  action  to  cause  the  superior 
encumbrance  to  be  discharged  upon  the  satisfac- 

Where  a  judgment  lienor  is  not  made  a"  party  to 
an  action  to  foreclose  a  superior  mortgage  against 
property  covered  by  the  judgment  lien,  the  judg- 
ment lienor ^s  rights  are  not  affected  by  the  judg- 
ment foreclosing  the  mortgage:  Alexander  v.  Green- 
wood, 24  Cal.  505,  512. 

In  Brown  v.  Winter,  14  Cal.  31,  where  a  second 
mortgagee  not  made  a  party  in  an  action  to  fore- 
close the  first  mortgage  afterward  foreclosed  his 
mortgage  and  bought  the  property  at  the  judicial 
sale,  and  then  brought  an  action  to  eject  the  pur- 
chaser at  the  foreclosure  sale  under  the  first  mort- 
gfige,  the  court  held  that  the  action  to  eject  would 
not  lie,  because  the  purchaser  of  the  property  at  the 
sale  under  the  first  mortgage  obtained  a  title  to  the 
property  superior  to  that  of  the  purchaser  at  the  sale 
under  the  second  mortgage.  It  is  clear  that  whatever 
are  the  equities  of  the  inferior  mortgagee  and  the 
purchaser  at  the  sale  under  the  second  mortgage, 
they  are  held  in  subordination  to  those  obtained  by 
the  purchaser  under  the  first  mortgage. 

29  Action  must  be  Commenced  Before  Inferior  En- 
cumbrance Extinguished  by  Lapse  of  Time.— In  sev- 
eral cases  where  the  second  mortgagee  brought  an 
action  to  redeem  from  the  first  mortgage,  it  is  said 
that  it  must  be  brought  within  four  years,  but  fails 
to  state  when  the  four  years  begin  to  run:  Grattan  v. 
-Wiggins,  23  Cal.  16,  33;  Cunningham  v.  Hawkins,  24 
Cah  409,  410,  8o  Am.  Dec.  73;  Siter  v.  Jewett,  33  Cal. 
92,  95;  Arrington  v.  Liscom,  34  Cal.  365,  369,  94  Am. 
Dec.  722.  In  Carpentier  v.  Brenham,  40  Cal.  221, 
where  the  action  was  commenced  more  than  four  years 
after  the  maturity  of  the  first  mortgage,  but  less 
than  four  years  after  the  maturity  of  the  second 
mortgage,  there  is  no  intimation  that  the  action  to 
redeem  is  barred.  It  is  clear  then,  that  the  time  is 
measured  from  the  maturity  of  the  encumbrance 
whose  owner  is  bringing  the  action  to  redeem. 


21^  THE    FOEECLOSUEE    ACTION.  §    110 

lion  thereof,^^  in  which  action  he  may  show  that 
the  claim  of  the  superior  encumbrancer  is  ex- 
aggerated or  fraudulent  or  without  consideration, 
or  any  kindred  fact  which  will  increase  the  fund 
with  which  to  satisfy  his  encumbrance.^^  The 
purchaser  of  the  encumbered  property  at  a  sale 
in  satisfaction  of  the  superior  encumbrance  is 
deemed  the  assignee  of  so  much  of  the  pbligation 
which  was  thereby  enforced  as  was  satisfied  by 
his  purchase.^^ 

111.     Relief    may  be  Granted    Purchaser  When 
Necessary  Party  not  Joined.^^ 

Where  a  necessary  party  defendant  in  a  fore- 
closure action  is  not  duly  joined^  the  court  may, 

30  To   be   Discharged   upon   Its   Satisfaction.— The 

amount  to  be  paid  in  satisfaction  is  the  amount  of 
the  superior  encumbrance,  together  with  interest, 
ccjsts  and  taxes:  Kirkham  v.  Dupont,  14,Cal.  559,  566. 

31  Carpentier  v.  Brenham,  40  Cal.  221,  236, 
237,  239. 

33  Relief  may  be  Granted  Purchaser  When  Neces- 
sary Party  not  Joined:  Boggs  v.  Hargrave,  16  Cal. 
559,  565,  566,  76  Am.  Dec.  561;  Barnard  v.  Wilson, 
66  Cal.  251,  5  Pac.  237;  Goodenow  v.  Ewer,  16  Cal. 
461,  470,  76  Am.  Dec.  540;  Heyman  v.  Lowell,  23  Cal. 
106;  Kreichbaum  v.  Melton,  49  Cal.  50,  55,  56;  Al- 
drich  V.  Stephens,  49  Cal.  676;  Jeffers  v.  Cook,  58 
Cal.  147. 

In  Abadie  v.  Lobero,  36  Cal.  390,  401-403,  where 
this  doctrine  is  doubted,  it  was  held  that  a  mere 
statutory  redemptioner  or  assignee  of  the  certificate 
of  sale  is  not  entitled  to  obtain  an  order  without 
notice  to  the  original  plaintiff  vacating  the  original 
judgment,   and   substituting   himself   as   plaintiff,   and 


§    111  PARTIES    THEREIN.  217 

to  file  a  supplemental  complaint  against  the  parties 
omitted  from  the  original  action. 

^^  Courts  of  equity  are  ever  readj  to  grant  relief 
from  sales  made  upon  their  decrees,  where  there  haa 
been  irregularity  in  the  proceedings,  ....  provided 
application  be  made  to  them  in  the  suits  in  which 
such  decrees  are  entered,  within  a  reasonable  time, 
and  the  relief  sought  will  not  operate  to  the  preju- 
dice of  the  just  rights  of  others.  The  nature  and  ex- 
tent of  the  relief  in  such  cases  are  matters  resting 
very  much  in  the  sound  discretion  of  the  court.  As 
a  general  rule,  the  purchaser  will  be  released,  and  a 
resale  ordered,  or  such  new  or  additional  proceedings 
directed  as  may  obviate  the  objections  arising  from 
those  originally  taken,  when  the  consequences  of  the 
mistake  are  such  that  it  would  be  inequitable,  either 
to  the  purchaser  or  to  the  parties,  to  allow  the  sale 
t('  stand.  But  when  the  relief  is  sought  in  one  ac- 
tion, from  a  mistake  of  law  as  to  the  effect  of  a 
judgment  in  another  action,  there  would  seem  to  be 
no  just  reason  why  the  ordinary  rules  as  to  mistake 
of  law  should  not  apply ^':  Goodenow  v.  Ewer,  16  Cal. 
461,  470,  471,  76  Am.  Dec.  540.  See,  also,  Boggs  v. 
Hargrave,  16  Cal.  'o59,  565,  566,  76  Am.  Dec.  561; 
Heyman  v.  Lowell,  23  Cal.  106;  Bernheim  v.  Cerf,  123 
Cal.  170,  55  Pac.  759. 

In  Brackett  v.  Banegas,  116  Cal.  278,  284,  58  Am. 
St.  Bep.  164,  48  Pac.  90,  in  department,  referring  to 
the  Goodenow  and  Boggs  cases,  the  court  said; 
*' Courts  of  equity  will  not,  save  in  exceptional  cases, 
in  a  separate  action  relieve  a  party  from  errors  of 
law,  but  will  grant  such  relief  in  the  original  action 
upon  motion  or  supplemental  bill.  In  this  case,  how- 
ever, the  mistake  is  not  one  of  law,  but  of  fact.  The 
mistake  consisted  not  in  the  legal  effect  of  the  home- 
stead, but  in  its  existence.  In  such  a  case,  the  orig- 
inal decree  having  been  void  for  want  of  jurisdiction 
of  the  court  below,  to  enter  it  without  the  presence 
of  the  wife,  or  what  is  the  same  thing,  such  service 
upon  her  as  required  her  to  appear  and  defend,  if 
any  defense  she  had,  no  good  reason  is  perceived  why 
an  independent  action  may  not  be  had  to  adjust  the 
eqiuties  of  all  the  parties.  ^ ' 


218  THE    FORECLOSURE    ACTION.  §    HI 

at  any  time  within  six  months  after  judgment  is 
rendered,^^  upon  the  application  of  a  purchaser 
id  the  judicial  sale  and  after  notice  to  the  plain- 
tiff, set  the  judgment  and  sale  aside,  authorize  a 
supplemental  pleading  to  be  filed,  direct  any  nec- 
essary party  to  be  brought  in,  and  make  such 
other  orders  as  will  mete  out  exact  justice. 

In  Aldrich  v.  Stephens,  49  Cal.  676,  and  Bernheim 
V.  Cerf,  123  Cal.  170,  55  Pac.  759,  and  possibly  others, 
relief  from  a  mistake  of  fact  was  granted  in  the 
original  action;  and  in  the  Aldrich  case  it  was  held 
that  where,  through  defective  proceedings,  as  failure 
to  duly  serve  summons,  a  necessary  party  is  not 
joined,  the  relief  must  be  sought  by  supplemental  pro- 
ceedings in  the  original  action,  and  not  by  instituting 
a  new  action. 

Where  through  mistake  of  law  a  necessary  party  is 
not  joined,  relief  must  be  sought  in  the  original  suit: 
Boggs  V.  Hargrave,  16  Cal.  559,  566,  76  Am.  Dec.  561. 

33  Relief  must  be  Sought  Within  Six  Months.— 
Code  of  Civil  Procedure,  section  473,  in  part:  "The 
court  ....  may  also,  upon  such  terms  as  may  be 
just,  relieve  a  party  or  his  legal  representative  from 
a  judgment,  order,  or  other  proceeding  taken  against 
him  through  his  mistake,  inadvertence,  surprise,  or 
excusable  neglect;  provided,  that  application  there- 
for be  made  within  a  reasonable  time,  but  in  no  case 
exceeding  six  months  after  such  judgment,  order,  or 
proceeding  was  taken."  In  Brackett  v.  Banegas,  99 
Cal.  623,  625,  627,  34  Pac.  344,  the  court,  in  depart- 
ment, says  that  under  this  provision  '^a  party  in 
whose  favor  judgment  has  been  rendered  is  entitled 
to  relief  the  same  as  though  the  judgment  had  been 

rendered  against  him By  declaring  that  it  [the 

time]  shall  in  no  case  exceed  six  months  after  the 
judgment  was  taken,  it  [the  legislature]  precluded 
the  court  from  exercising  this  power  in  any  case, 
unless  the  application  therefor  shall  be  made  within 
six  months  after  the  judgment  was  made." 


§    111  PARTIES  THEREIN.  219 

Thus  where  the  purchaser  did  not  discover  the  mis- 
take of  fact  until  twelve  months  after  judgment,  he 
cannot  obtain  relief  in  the  original  action:  Brackett 
V.  Banegas,  99  Cal.  623,  34  Pac.  344;  116  Cal.  278, 
282,  283,  58  Am.  St.  Eep.  164,  48  Pac.  90. 

But  where  a  mistake  of  fact  was  discovered  two 
months  after  judgment,  the  purchaser  may  have  the 
sale  set  aside  and  the  case  restored  to  the  calendar 
for  trial:  Bernheim  v.  Cerf,  123  Cal.  170,  55  Pac.  759. 

Before  the  enactment  of  the  six  months'  limitation, 
the  court  held  that  the  relief  must  be  sought  within 
a  reasonable  time.  In  Heyman  v.  Lowell,  23  Cal. 
106,  and  Barnard  v.  Wilson,  66  Cal.  251,  5  Pac.  237, 
the  time  was  held  unreasonable. 


^^0  THE  FORECLOSURE  ACTION. 


AETICLE  5. 
THE    FOEECLOSUEE    JUDGMENT. 

Subdivision  1,    Requisites  of  Judgment. 

112.  General  requisites  of  judgment. 

113.  Provision  as  to  deficiency  judgment. 

114.  Provision  protecting  rights  of  subsequent  encum- 

brancers. 

115.  Specified    kind   of   money   sometimes   to   be   re- 

quired in  payment. 

116.  Provision  when  land  situate  in  two  counties. 

117.  Movable  property  may  be  taken  into  custody. 

118.  Paramount  title  generally  not  affected  by  judg- 

ment. 

Subdivision  2.    Special  Sales  Officer. 

119.  Sale  may  be  made  by  duly  sworn  commissioner. 

120.  Compensation  of  commissioner. 

121.  Elisor  may  be  appointed  in  case  of  disability  of 

commissioner. 

Subdivision  3.    Effect  of  Judgment', 

122.  Encumbrances  of  actors  merged  into  judgment. 

Subdivision  Jf.    Action  to  Enforce  Judgment. 

123.  Action  to  enforce  judgment  maintainable. 

Subdivision  5.    Judgment  not  Leviable. 

124.  Judgment  not  leviable. 


§    112  THE  JUDGMENT  THEREIN.  221 

Subdivision  1.    Requisites  of  Judgment, 

112.     General  Requisites  of  Judgment.^ 

A  judgment  whereby  an  encumbrance  is  fore- 
closed must  contain: 

1  General  Requisites  of  Judgment.— Code  of  Civil 
Procedure,  section  726,  provides:  ''In  such  action  the 
court  may,  by  its  judgment,  direct  a  sale  of  the 
encumbered  property  (or  so  much  thereof  as  may  be 
necessary),  and  the  application  of  the  proceeds  of 
the  sale.'' 

Eeferring  to  the  foreclosure  judgment,  the  court,  in 
Leviston  v.  Swan,  33  Cal.  480,  483,  said:  ''All  that 
it  need  or  should  contain  is  a  statement  of  the  amount 
due  the  plaintiff— a  designation  of  the  defendants  who 
are  personally  liable  for  the  payment  of  the  debt, 
and  a  direction  that  the  mortgaged  premises,  or  so 
much  thereof  as  may  be  necessary,  be  sold  according 
to  law  and  the  proceeds  applied  to  the  payment  of 
the  expenses  of  sale,  the  costs  of  the  action,  and  the 
debt. 

"Nothing  further  is  required.  All  else  is  minis- 
terial, and  is  expressly  regulated  by  the  statute,  which 
is  not  made  clearer  or  more  binding  by  being  copied 
into  the  judgment.  There  is,  under  our  system,  no 
master  in  chancery— no  master's  report— and  no  con- 
firmation of  the  sale  by  the  court.  That  mode  of 
procedure  is  wholly  foreign  to  our  system." 

This  decision  is  approved  in  Ontario  Land  etc.  Co. 
V.  Bedford,  90  Cal.  181,  185,  27  Pac.  39. 

"In  the  ordinary  action  of  foreclosure,  the  judg- 
ment need  only  determine  the  amount  of  the  debt, 
the  defendant  who  is  personally  liable  therefor, 
and  direct  a  sale  of  the  mortgaged  lands  and  an 
application  of  their  proceeds  to  satisfy  this  amount, 
with  such  provision  for  the  rights  of  the  defendants 
among  themselves  as  may  be  presented  in  the  case": 
Sichler  v.  Look,  93  Cal.  600,  610,  29  Pac.  220. 

Where  a  mortgagee  brought  an  action  to  foreclose 
his  mortgage  making  a  second  mortgagee  a  party 
defendant,  and  the  second  mortgagee  set  up  his  mort- 


22^  THE    FORECLOSURE    ACTION.  §    112 

(1)  a  statement  of  the  amonnt  owing  upon  each 
obligation  secured  by  the  encumbrance  fore- 
closed to  each  secured  creditor  whose  claim 
was  adjudicated  and  established  in  the  action,^ 

gage,  the  demand  secured  thereby  being  due,  the 
court  could  and  should  have  ascertained  not  only 
the  amount  due  on  the  obligation  secured  by  the  first 
mortgage,  but  also  the  amount  due  from  the  mortga- 
gor to  the  second  mortgagor  on  the  demand  secured 
by  the  second  mortgage,  and  by  its  foreclosure  judg* 
ment  have  directed  a  sale  of  the  mortgaged  premises 
or  so  much  thereof  as  should  be  necessary,  and  the 
application  of  the  proceeds  of  the  sale  to  the  pay- 
ment of  the  costs  and  expenses  of  sale,  nnd  the 
amount,  due,  first,  to  the  plaintiff  on  his  first  note  and 
mortgage,  and,  secondly,  of  the  amount  due  to  the 
defendant  second  mortgagee  on  the  second  note  and 
mortgage,  and  further  directing,  in  the  event  that 
the  sheriff's  return  should  show  the  proceeds  to  be 
insuflSLcient,  and  a  balance  to  remain  due  on  either  or 
both  of  the  amounts  found  due  by  the  foreclosure 
judgment,  that  judgment  be  docketed  for  said  balance 
against  the  defendant  so  found  personally  liable  for 
the  debt,  which  under  the  law  would  have  become 
a  lien  on  such  real  estate  as  the  judgment  debtor 
might  have  in  the  county,  and  on  which  an  execution 
might  have  been  issued  as  in  other  cases:  Brown  v. 
Willis,   67    Cal.    235,   236,   7   Pac.   682. 

Historical.— ^TSiCtiee  Act,  sec.  246,  as  enacted  1851, 
provided:  ^^In  an  action  for  the  foreclosure  and  satis- 
faction of  a  mortgage  of  real  property,  or  the  sat- 
isfaction of  a  lien  or  encumbrance  upon  property, 
real  or  personal,  the  court  shall  have  power  by  its 
judgment  to  direct  a  sale  of  the  property,  or  any 
part  of  it;  the  application  of  the  proceeds  to  the 
payment  of  the  amount  due  on  the  mortgage,  lien, 
or  encumbrance,  with  costs,  and  execution  for  the 
balance. ' ' 

This  section  was  amended  by  an  act  of  April  28, 
1860,  and  again  by  an  act  approved  May  8,  1861  (p. 
306),   so    as  to   conform   substantially  to   the   present 


112  THE  JUDGMENT  THEREIN.       Qp 

provisions  of  the  Code  of  Civil  ProceaSty,  y^^^on  726, 
first,   second,  and  fourth  sentences. 

Particular  Provisions  of  Judgment.— In  a  ^  proper 
case,  as  where  one  of  two  entirely  distinct  obligations 
to  different  parties  secured  by  encumbrances  against 
the  same  property  is  foreclosed,  the  court  may,  by 
its  judgment,  save  from  the  sale  to  be  made  there- 
under the  other  encumbrance  against  the  property 
to  be  sold:  Stockton  Sav.  etc.  Soc.  v.  Herrold,  127  Cal. 
612,  620,  60  Pac.   165. 

Likewise,  the  rights  of  adverse  claimants  should 
generally  be  saved  from  the  operation  of  the  fore- 
closure judgment:  See  sec.  99  and  notes,  above. 

A  provision  in  a  foreclosure  judgment  *'that  the 
defendant  ....  and  all  persons  claiming  or  to  claim 
under  him,  ....  be  forever  barred  and  foreclosed 
of  and  from  all  equity  of  redemption  and  claim  in 
and  to  said  mortgaged  premises,"  is  immaterial  under 
our  system  of  procedure.  ''Its  insertion  is  due  to 
the  conservatism  of  the  profession,  which  hesitates 
to  adopt  a  reform  in  procedure,  and  prefers  to  adhere 
to  the  forms  which  were  used  under  a  different  svs- 
tem'':  Sichler  v.  Look,  93  Cal.  600,  609,  29  Pac.  220. 

2  Amount  Due  on  Each  Secured  Demand  to  be 
Stated. — Where  three  mortgages  executed  by  one 
mortgagor,  each  given  to  secure  a  separate  obligation 
and  each  upon  different  property,  are  foreclosed  in 
the  same  action,  a  general  judgment  for  the  aggregate 
of  the  amounts  due  on  the  three  mortgages  and  for 
the  sale  of  all  the  property  as  though  covered  by  one 
mortgage  is  unauthorized;  but  there  should  be  an  ad- 
judication in  the  judgment  of  the  amount  due  on 
each  secured  obligation  and  a  separate  sale  of  the 
property  hypothecated  by  each  mortgage,  each  for 
the  particular  amount  due  on  such  mortgage:  Taylor 
V.  Ellenberg,  128  Cal.  411,  414,  60  Pac.  1034.  Also, 
to  the  same  effect,  see  Home  Loan  Associates  v.  Wil- 
kins,  66  Cal.  9,  4  Pac.  697. 

In  rendering  a  judgment  foreclosing  a  mechanic's 
lien,  which  judgment  provides  for  a  personal  defi- 
ciency judgment,  it  is  necessary  for  the  court  to  as- 
certain and  determine  the  amount  for  which  the 
defendant   was  liable   to   the  plaintiff,   so   that   when 


224  THE  FORECLOSURE  ACTION.         §  112 

(2)  a  description  of  the  property  to  be  sold  in 
satisfaction  of  the  amounts  so  adjudged  to  be 
owing^^  and 

(3)  a  direction  that  the  encumbered  property, 
or  so  much  thereof  as  may  be  necessary,  be 
sold^  and  the  proceeds  applied  in  accordance 
with    the    principles    herein  provided.^ 

The  direction  for  the  sale  of  -the  encumbered 
property  is  not  of  itself  a  warrant  to  any  officer 
to  make  the  sale;  but  as  a  prerequsite  to  a  valid 
s'ale  a  writ  of  sale  must  be  issued  as  hereinafter 
provided.^ 

the  sheriff  ^s  return  comes  in  it  might  be  seen  whether 
there  was  a  deficiency  of  proceeds  or  not:  Hines  v. 
Miller,  126  Cal.  683,  685,  59  Pac.  142. 

3  Description  of  Property.— In  case  of  the  fore- 
closure of  a  mortgage,  the  description  may  or  may 
not  follow  the  description  in  the  mortgage:  De  Se- 
pulveda  v.  Baugh,  74  Cal.  468,  16  Pac.  223,  5  Am. 
St.  Eep.  455,  note,  in  which  Crosby  v.  Bowd.  61  Cal. 
558,  602,  is  overruled.     See,  also,  section  98  above. 

What  Property  to  he  Subjected  to  Sale.— In  case  of  a 
mortgage,  the  judgment  must  order  a  sale  of  the 
interest  described  in  the  mortgage  and  complaint  as 
being  mortgaged,  not  of  any  greater  or  less  interest 
than  that  mortgaged:  Schwartz  v.  Palm,  65  Cal.  54, 
2  Pac.  735. 

So  where  the  instrument  of  mortgage  described  the 
interest  mortgaged  as  '^one  undivided  fourth  inter- 
est in  certain  property,  to  order  the  sale  of  the 
entire  interest  of  the  mortgagor  in  the  property,  is 
erroneous:   Schwartz  v.  Palm,  65  Cal.  54,  2  Pac.  735. 

4  Proceeds,    How    Applied:   See  sec.   163,  below. 

5  Judgment  is  not  in  Itself  a  Warrant  of  Sale. 
See  Code  of  Civil  Procedure,  section  684,  as  amended 

1874,  in  part:  ^^When  the  judgment  requires  the  sale 


§    112  THE  JUDGMENT  THEREIN.  22,6 

of  property,  the  same  may  be  enforced  by  a  writ 
reciting  such  judgment  or  the  material  parts  thereof, 
and  directing  the  proper  officer  to  execute  the  judg- 
ment, by  making  the  sale  and  applying  the  proceeds 
in  conformity  therewith.'' 

The  case  of  Heyman  v.  Babcock,  30  Cal.  367,  de- 
cided before  the  enactment  of  this  code  provision, 
contains  a  statement  of  the  law,  which  with  certain 
limitations  still  remains  applicable.     The  court  says: 

^^The  first  question  for  consideration  is  whether  it 
is  necessary  that  an  execution  or  order  of  sale  issue 
to  the  sheriff,  to  authorize  him  to  make  a  sale  of  the 
mortgaged  premises  under  a  decree  of  foreclosure  and 
sale  of  the  character  of  the  one  presented  in  this 
case. 

^^The  only  order  respecting  the  sale  contained  in 
the  decree  is  that  the  mortgaged  premises  'be  sold 
according  to  law.'  No  directions  are  given  as  to 
the  time,  place,  terms,  or  manner  of  sale;  nor  is  the 
duty  of  making  the  sale  committed  by  the  decree  to 
the  sheriff. 

^^The  sheriff  does  not  bear  any  such  relation  to  the 
court  that  he  must  take  notice  of  its  orders  and  judg- 
ments, and  without  process  execute  and  carry  into 
effect  those  that  require  the  aid  of  a  ministerial  offi- 
cer. The  general  rule  is  that  process  is  the  authority 
of  the  sheriff,  and  no  reason  is  given  why  in  the  case 
of  a  decree  of  foreclosure,  and  especially  in  one  that 
is  devoid  of  all  directions  as  the  one  before  us,  an 
exception   should  be  found  to  the  rule 

^'No  express  provision  is  found  in  the  Practice  Act 
prescribing  the  mode  of  making  a  sale  of  the  mort- 
gaged premises  under  a  decree  of  foreclosure,  but  the 
courts  have,  in  a  great  number  and  variety  of  cases, 
acted  upon  the  assumption  ....  that  the  sheriff  acts 
under  and  by  virtue  of  an  order  of  sale  issued  upon 

the  decree It  is  very  evident  that  the  practice 

we  have  mentioned  has  too  long  been  adopted,  and 
too  uniformly  been  acquiesced  in,  to  be  now  changed 
by  the  court    on  the   ground   that   it  was    not    fully 

authorized  by  that  act 

Liens— 15 


226  THE  FORECLOSURE  ACTION.  §  113 

113.     Provision  as  to  Deficiency  Judgment.^ 

Where  any  parties  to  a  foreclosure  action  are 
also  personally  liable  for  the  payment  of  the  se- 
cured obligation,  the  foreclosure  judgment  must 
also  designate  the  parties  so  liable  therefor,  and 
make  such  provision  concerning  the  rights  among 

''The  order  of  sale  (and  in  many  cases  a  certified 
copy  of  the  decree  will  be  sufficient  for  that  purpose) 
is  as  essential  to  a  recovery  as  the  decree  or  the 
sheriff  ^s  deed.  ^' 

o  The  Deficiency  Judgment.— The  provision  of  Code 
of  Civil  Procedure,  section  726,  that  ''if  it  appear 
from  the  sheriff ^s  return,  or  from  the  commissioner's 
report,  that  the  proceeds  are  insufficient,  and  a  bal- 
ance still  remains  due,  judgment  must  then  be  dock- 
eted by  the  clerk  in  the  manner  provided  m  this  code 
for  such  balance  against  the  defendant  or  defendants 
personally  liable  for  such  debt,  and  it  becomes  a 
lien  upon  the  real  estate  of  such  judgment  debtor, 
as  in  other  cases  in  which  execution  may  be  issued," 
authorizes  a  personal  deficiency  judgment  whenever 
it  does  not  appear  that  the  encumbrancer  was  to  look 
to, the  encumbered  propertv  exclusively:  Leviston  v. 
Swan,  33  Cal.  480,  484;  Hibberd  v.  Smith,  50  Cal. 
511,  518. 

Before  the  amendment  to  Practice  Act,  section 
246,  by  which  it  was  amended  to  read  substantially 
as  above,  the  court  reached  the  same  conclusion  in 
regard  to  the  deficiency  judgment:  Moore  v.  Rey- 
nolds, 1  Cal.  351,  353;  Eollins  v.  Forbes,  10  Cal.  299; 
Rowland  v.  Lieby,  14  Cal.  156;  Chapin  v.  Broder,  16 
Cal.  403,  420. 

A  foreclosure  judgment  may  properly  state  the 
amount  due  upon  the  secured  obligation,  and  the  per- 
sons personally  liable  therefor.  It  is  not  necessary 
to  wait  until  after  the  deficiency  of  proceeds  is  deter- 
mined to  exist  by  the  sale  of  the  property  for  the 
rendition  of  a  personal  judgment  against  the  per- 
sons personallv  liable:  Cdrmerais  v.  Genella,  22  Cal. 
116,   125-127. 


V     §  113  THE  Judgment  therein.  227 

themselves  of  the  owners  of  the  property  and  the 
persons  personally  liable  as  may  be  presented  in 
the  case/  and  must  provide  that  in  case  the  pro- 
ceeds of  the  sale  of  the  property  are  insufficient 
to  satisfy  the  secured  obligation,  a  personal  judg- 
ment for  the  deficiency  be  docketed  against  the 
persons  determined  to  be  personally  liable  there- 
for.^ 

7  As  to  Provision  Concerning  Rights  of  Owners  of 
Property  and  Persons  Personally  Liable.— The  judg- 
ment may  direct  a  deficiency  judgment  to  be  en- 
tered against  a  grantee  of  a  mortgagor  who  has  as- 
sumed the  payment  of  the  mortgage  obligation:  San 
Francisco  Paving  Co.  v.  Fairfield,  134  Cal.  220,  226, 
^<o  Pac.  255.  See,  also,  Hopkins  v.  Warner,  109  Cal. 
133,   137,  41  Pac.   868. 

Where  a  purchaser  of  mortgaged  property  from  the 
mortgagor  assumes  the  payment  of  the  mortgage  obli- 
gation, the  court  is  not  required  at  the  instance  of 
the  mortgagor,  without  the  request  of  the  mortgagee, 
to  direct  a  deficiency  judgment  to  be  docketed  against 
the  purchaser  as  well  as  against  the  mortgagor,  but 
a  provision  of  the  judgment  that  whatever  deficiency 
the  mortgagor  actually  pays  the  mortgagee  shall 
thereupon  be  docketed  against  the  purchaser  is  all 
that  the  mortgagor  is  entitled  to:  O'Neal  v.  Hart, 
116  Cal.  69,  70,  47  Pac.  926.  See,  also,  Sichler  v. 
Look,  93  Cal.  600,  610,  29  Pac.  220,  as  quoted  under 
section  112,  note  1. 

8  Must  be  Docketed  Against  the  Persons  Person- 
ally Liable  Therefor.— Where  an  action  to  foreclose  a 
mortgage  was  brought  against  the  mortgagors  and  an 
association  under  the  name  of  which  they  did  business, 
and  the  mortgagors  were  individually  served  with 
summons  and  were  jointly  and  personally  liable  for 
the  payment  of  the  secured  obligation,  the  foreclosure 
judgment  must  direct  the  deficiency  judgment  to  be 
docketed  against  each  such  member  of  the  association 


228  THE    FORECLOSURE    SUIT.  §    114 

114.  Provision  Protecting  Rights  of  Subsequent 
Encumbrancers. 

Where  a  subordinate  encumbrancer  is  made  a 
party  in  the  foreclosure  action  and  his  answer 
sets  up  his  encumbrance,  but  he  does  not  file  a 
cross-complaint  for  the  foreclosure  of  his  encum- 
brance, the  judgment  must,  in  ease  his  claim  is 
established,  provide  that  after  the  payment  of 
the  superior  encumbrances  which  were  foreclosed 
with  costs  and  expenses  the  surplus  proceeds  of 
the  sale,  if  any,  be  applied  in  satisfaction  of  his 
demand.^ 

115.  Specified  Kind  of  Money  Sometimes  to  be 
Required  in  Payment.^^ 

Where  an  averment  is  made  and  the  fact  is 
admitted  or  established  that  the  obligation  se- 
cured b}'"  the  encumbrance  foreclosed  is  made 
payable  in  a  specified  kind  of  money  or  currency, 

who  was  personally  liable  for  the  payment  of  the 
secured  obligation,  and  a  direction  to  docket  the  de- 
ficiency judgment  against  the  association  as  such  and 
against  it  solely  is  erroneous:  Goodlett  v.  St.  Elmo 
Investment  Co.,  94  Cal.  297,  29  Pac.  505;  Palmer  v. 
St.  Elmo  Investment  Co.  (Cal.),  29  Pac.  507;  Flagg  v. 
St.  Elmo  Investment  Co.  (Cal.),  30  Pac.  579.  See 
Brown  v.  Willis,  67  Cal.  235,  236,  7  Pac,  682,  as  quoted 
under  section  112,  note  1,  above. 

9  Ward  v.  McISTaughton,  43  Cal.  159,  161.  See, 
also,  Hiberhia  Sav.  etc.  Soc.  v.  London  etc.  Fire  Ins. 
Co.,  138  Cal.  257,  71  Pac.  334. 

10  See  Code  Civ.  Proc,  sec.  667,  last  sentence, 
in  part. 


§    115  THE    JUDGMENT    THEREIN.  229 

the  foreclosure  judgment  must  be  made  payable 
in  such  specified  kind  of  money  or  currency ;  and 
in  any  action^^  for  the  direct  payment  of  money 
brought  on  a  written  obligation  made  payable  in 
a  specified  kind  of  money  or  currency,  the  judg- 
ment may  be  made  payable  in  such  specified  kind 
of  money  or  currency. 

116.  Provision  When  Land  Situate  in  Two  Coun- 
ties. 

If  the  encumbered  property  consists  of  a  single 
parcel  of  land,  or  of  two  or  more  contiguous  par- 
cels, situate  in  two  or  more  counties,  the  court 
may,  by  the  judgment,  direct  the  whole  thereof 
to  be  sold  in  one  of  such  counties  by  the  sheriff, 
commissioner,  or  elisor,  as  the  case  may  be,  and 
upon  such  proceedings  and  with  like  effect  as  if 
the  whole  were  situate  in  that  county.^^ 

117.  Movable  Property  may  be  Taken  into  Cus- 
tody. 

A  foreclosure  judgment  which  provides  for  the 
sale  of  encumbered  movable  property  capable  of 
manual  delivery  may  direct  the  sheriff  or  com- 

11  The  court  has  held  that  a  foreclosure  nudgment 
is  a  *^ judgment  for  the  recovery  of  money.''  Hence 
this  latter  provision  would  probably  be  applicable  to 
foreclosure  actions:  See  sec.  125,  note  4  (historical), 
below. 

12  Code  Civ.  Proc,  sec.  726,  last  sentence,  a  new 
provision  in  effect  February  26,  1901,  reads  substan- 
tially as  this  section. 


230  THE    FORECLOSURE    ACTION.  §    117 

missioner  to  take  immediate  possession  of  the 
property.^^ 

118.     Paramount  Title  Generally  not  Affected  by 
Judgment. 

Where  in  a  foreclosure  action  a  title  to  the  en- 
cumbered property  claimed  to  be  paramount  both 
to  the  encumbrance  in  litigation  and  to  the  prop- 
erty interest  covered  by  the  encumbrance  is  ex- 
pressly pleaded  and  litigated  by  the  claimant 
thereof  and  the  parties  interested  in  the  fore- 
closure action  and  an  adjudication  is  made  by  the 
court  in  respect  thereto,  the  Judgment  of  the 
court  in  such  regard  is  valid  and  binding;^'*  but 

13  For  '^the  property  must  be  taken  into  pos- 
session, for,  being  capable  of  manual  delivery,  'the 
officer  making  the  sale  must  deliver  to  the  purchaser 
the  property':  Code  "Civ.  Proc,  sec.  698'':  Pacific 
Investment  Co.  v.  Boss,  131  Cal.  8,  63  Pac.  67. 

See  sec.  146  below. 

14  By  Mutual  Consent  Paramount  Title  may  be 
Conclusively  Litigated.— ^*  If,  however,  the  plaintiff 
[in  a  foreclosure  action]  makes  the  holder  of  an  ad- 
verse title  a  party  defendant  ....  setting  forth  facts 
from  which  he  claims  that  such  title  is  subordinate  to 
his  mortgage,  and  issues  upon  these  facts  are  pre- 
sented for  adjudication  without  objection  on  the  part 
of  the  defendant,  the  judgment  of  the  court  therein 
will  not  be  void.  The  court  may  decline  to  pass  upop 
the  question  as  not  germane  to  the  suit  for  foreclosure, 
or  it  may  determine  that  such  claim  of  the  defend- 
ant is  unfounded,  or  that  his  interest  in  the  premises 
is  subordinate  to  the  mortgage,  or  it  may  render  a  de- 
cree of  foreclosure  subject  to  the  prior  rights  of  such 
defendant.  The  subject  matter  of  such  controversy 
will  be  within  the  jurisdiction  of  the  court,  and  the 


§    118  THE    JUDGMENT    THEREIN.  231 

unless  the  claim  is  so  expressly  set  up  and  adjudi- 
cated upon  without  objection  a  foreclosure  judg- 
ment does  not  affect  any  such  paramount  title/^ 

judgment  thus  rendered  will  be  as  conclusive  upon 
them  as  if  rendered  in  an  action  specially  brought  for 
that  purpose,  and  will  not  be  subject  to  collateral  at- 
tack^ ^:  Beronio  v.  Ventura  Co.  Lumber  Co.,  129  Cal. 
232,  237,  79  Am.  St.  Eep.  118,  61  Pac.  938. 

/*It  is  argued  for  this  plaintiff  that  his  interest  was 
adverse  to  that  of  the  mortgagor,  and  therefore,  that 
it  could  not  have  been  litigated  in  the  foreclosure  suit, 
and  that  the  decree  is  void  as  to  him  for  that  reason. 

^^  Conceding  for  the  purpose  of  the  case  that  his  in- 
terest was  adverse^  within  the  meaning  of  the  rule  in- 
voked, and  that  therefore  it  could  not  have  been  prop- 
erly tried  and  determined  in  that  suit,  the  fact  remains 
that  it  was  there  tried  and  determined.  The  court 
had  jurisdiction  of  the  subject  matter  and  of  the 
person;  and  this  being  the  case,  we  fail  to  perceive  how 
the  circumstance  that  the  issues  tried  were  improperly 
mixed  up  with  other  issues  can  render,  the  judgment 
void.  If  that  were  the  rule,  it  would  follow  that  ques- 
tions as  to  misjoinder  of  causes  of  action  and  defense 
could  be  made  on  collateral  attack,  Avhich  it  is  hardly 
necessary  to  say  is  not  the  case.  If  the  party  did  not 
desire  to  have  his  interest  passed  upon  in  the  fore- 
closure suit,  and  was  right  in  his  position  in  respect 
to  it,  he  should  have  taken  steps  to  present  the  ques- 
tion in  that  suit;  or  if  he  wished  a  jury  trial,  he  should 
have  asked  for  it  there^':  Johnston  v.  San  Francisco 
Sav.  Union,  75  Cal.  134,  140,  7  Am.  St.  Eep.  129,  16 
Pac.  753. 

Thus  the  judgment  rendered  in  such  a  case  will  not 
be  set  aside  by  the  appellate  court:  Hibernia  Sav.  etc. 
Soc.  V.  Ordway,  38  Cal.  679,  681. 

15  Unless  Adjudicated  upon,  Judgment  does  not 
Affect  Paramount  Title:  See  cases  cited  in  the  next 
note;  also  Cady  v.  Purser,  131  Cal.  552,  560,  561,  82 
Am.  St.  Eep.  391,  63  Pac.  844. 


232  THE   FORECLOSURE   ACTION.  §    118 

and  may  with  propriety  expressly  save  the  same 
from  the  operation  of  the  judgment.^^ 

Subdivision  2.     Special  Sales  Officer, 

119.     Sale  may  be  Made  by  Duly  Sworn  Commis- 
sioner. 

The  court  may,  by  its  judgment,  or  at  any  time 
after  judgment,  appoint  a  commissioner  to  sell 

10  Judgment  may  Save  Rights  of  Paramount  Claim- 
ant.— Where  adverse  claimants  have  been  made  par- 
ties defendant  in  a  foreclosure  action,  the  proper 
course  is  to  dismiss  the  action  as  to  the  adverse  claim- 
ants, or  to  specify  in  the  foreclosure  judgment  that 
it  is  made  without  prejudice  to  the  adverse  rights: 
Odell  V.  Wilson,  63  Cal.  159;  Ord  v.  Bartlett,  83  Cal. 
428,  23  Pac.  705;  Cody  v.  Bean,  93  Cal.  578,  29  Pac. 
223;  Eamsbottom  v.  Bailey,  124  Cal.  259,  263,  56  Pac. 
1036;  Beronio  v.  Ventura  Co.  Lumber  Co.,  129  Cal. 
232,  237,  79  Am.  St.  Eep.  118,  61  Pac.  958;  Stearns 
Kanchos  Co.  v.  McDowell,  134  Cal.  562,  66  Pac.  724. 

In  Gregory  v.  Keating  (Cal.),  22  Pac.  1084,  where 
a  party  defendant  in  a  foreclosure  action  held  certain 
rights  in  the  encumbered  property  adversely,  the  court 
held  that  the  foreclosure  judgment  should  expressly 
preserve  such  adverse  rights  unaffected  and  unpre- 
judiced by  the  judgment,  and  remanded  the  case  to  the 
superior  court  with  directions  so  to  modify  the  judg- 
ment. 

But  in  Murray  v.  Etchepare,  129  Cal.  318,  321,  61 
Pac.  930,  the  court  said  that  the  judgm-ent  would  have 
been  in  better  form  if  it  had  expressly  saved  all  the 
rights  of  the  adverse  claimant  which  are  paramount- 
and  adverse  to  those  of  the  mortgagor  and  mortgagee, 
but  that  as  it  has  been  so  clearly  declared  by  the  court 
that  a  foreclosure  judgment,  no  matter  what  its  terms 
may  be,  has  no  effect  upon  a  paramount  title,  the  court 
did  not  deem  it  necessary  to  order  the  judgment  modi- 
fied in  that  respect. 


§    119  THE    JUDGMENT    THEREIN.  233 

the  encumbered  property.  It  must  require  of 
him  an  undertaking  in  an  amount  to  be  fixed  by 
the  courts  with  sufficient  sureties^  to  be  approved 
by  the  judge,  to  the  effect  that  the  commissioner 
will  faithfully  perform  the  duties  of  his  office  ac- 
cording to  law.  Before  entering  upon  the  dis- 
charge of  his  duties  he  must  file  such  undertak- 
ing, so  approved,  together  with  his  oath  that  he 
will  faithfully  perform  the  duties  of  his  office.^'' 

17  Sale  by  Duly  Sworn  Commissioner:  Code  Civ. 
Proc,  sec.  726,  in  part,  as  amended  in  effect  February 
26,  1901. 

Historical.— The  appointment  of  a  commissioner  to 
sell  the  property  was  first  allowed  by  the  enactment 
of  the  first  sentence  above  in  effect  March  9,  1893. 
The  provisions  of  the  second  sentence  are  substantially 
contained  in  the  Code  of  Civil  Procedure,  section  729, 
enacted  at  the  same  time.  The  third  sentence  is  a  new 
provision  effective  February  26,  1901.  Before  Febru- 
ary 26,  1901,  there  was  no  provision  requiring  the 
oath  of  office  to  be  filed.  So  the  court  held  in  May 
V.  Hatcher,  130  Cal.  627,  629,  63  Pac.  33:  ''There  is  no 
provision  that  he  [the  commissioner]  must  make  a 
written  affidavit,  or  that  an  affidavit  must  be  filed 
anywhere."  The  law  has  evidently  been  changed  by 
the  amendment. 

Constitutionality.— Thia  provision  is  not  unconstitu- 
tional under  Constitution,  article  11,  section  5,  pro- 
viding that  the  legislature,  by  general  and  uniform 
laws,  shall  prescribe  the  duties  of  sheriffs  and  other 
officers,  as  the  sheriff  owes  all  his  authority  to  stat- 
utory enactment,  and  it  is  not  his  duty  to  conduct 
judicial  sales  when  other  methods,  as  the  appointment 
of  a  commissioner  by  the  court,  are  prescribed:  Mc- 
Dermot  v.  Barton,  106  Cal.  194,  39  Pac.  538. 

The  fact  that  the  prayer  of  a  complaint  asks  for  a 
sale  by  the  sheriff  does  not  invalidate  a  sale  by  a 
commissioner   appointed   for   that  purpose,   as  the   es- 


234  THE     FORECLOSURE     ACTION.  §    120 

120.  Compensation  of  Commissioner. 

In  all  cases  of  sales  made  by  a  cominissioner, 
the  court  in  which  the  proceedings  are  pending 
must  fix  a  reasonable  compensation  for  the  com- 
missioner's services,  but  in  no  case  to  exceed  the 
sum  of  ten  dollars. ^^ 

121.  Elisor   may  be    Appointed  in  Case  of  Dis- 

ability of  Commissioner. 

In  case  of  the  death,  absence  from  the  state, 
other  disability,  or  disqualification  of  the  com- 
missioner who  may  be  appointed  to  sell  encum- 
bered property,  the  court  may  appoint  an  elisor  to 
perform  the  duties  of  such  commissioner  which 
remain  unperformed.  Before  entering  on  the 
discharge  of  his  duties,  the  elisor  must  give  the 
undertaking  and  take  the  oath,  each  as  required 
of  the  commissioner,  and  must  thereafter  per- 
form all  duties  left  unperformed  by  the  commis- 
sioner whom  he  is  appointed  to  succeed,  with 

sence  of  the  prayer  is  for  a  judicial  sale:  McDermot 
V.  Barton,  106  Cal.  194,  39  Pac.  538. 

Such  commissioner  is  clothed  with  executive  powers 
only.  He  cannot  determine  the  value  of  the  property, 
or  that  the  mortgagee  is  entitled  to  a  deficiency  judg- 
ment, otherwise  than  by  a  sale  of  the  property  as 
directed:  Kedlands  Hotel  Assn.  v.  Kichards,  125  Cal. 
569,  571,  58  Pac.  152. 

18  See  Code  Civ.  Proc,  sec.  729,  last  sentence; 
new  provision,  in  effect  March  9,  1893. 


§    121  THE    JUDGMENT    THEKEIN.  23S 

like  effect  as  if  sneh  duties  had  been  performed 
by  the  commissioner.^^ 

Snbdivision  S.     Effect  of  Judgment. 

122.     Encumbrances  of  Actors  Merged  into  Judg- 
ment. 

The  rendition  of  a  foreclosure  judgment 
merges  into  such  judgment  every  encumbrance 
the  holder  of  which  affirmatively  sought  a  fore- 
closure thereof  in  the  foreclosure  action.^^ 
From  the  time  of  judgment,  the  conventional  in- 
terest agreed  upon  by  the  parties  is  no  longer 
payable  upon  the  obligation  secured  by  such  en- 
cumbrance, but  merely  the  legal  rate  of  seven  per 

19  See  Code  Civ.  Proc,  sec.  726,  as  amended,  in 
c^ect  February,  26,  1901,  in  part. 

SO  Merges  into  Judgment  Every  Encumbrance  Af- 
firmatively Sought  to  "be  Foreclosed:  Black  v.  Gerich- 
ten,  58  Cal.  56,  57;  Camp  v.  Land,  122  Cal.  167,  170,  54 
Pac.  839. 

'^A  junior  mortgagee,  brought  into  court  at  the 
suit  of  a  superior  mortgagee,  may  do  one  of  two  things 
—  either  affirmatively  seek  a  foreclosure  upon  his  own 
account,  or,  without  foreclosure,  ask  for  an  applica- 
tion of  any  surplus  to  the  reduction  of  his  own  debt. 
In  the  one  case  his  mortgage  lien  is  merged  in  the 
judgment;  in  the  other  it  is  not^':  Camp  v.  Land,  122 
Cal.   167,  170,  54  Pac.  839. 

It  is  immaterial  whether  the  encumbrance  was  fore- 
closed in  an  action  in  which  the  encumbrancer  was 
plaintiff  or  one  in  which  he  was  defendant,  ^ut  filed  a 
cross-complaint  praying  for  the  foreclosure  of  his 
mortgage:  Black  v.  Gerichten,  58  Cal.  56,  57;  San  Jose 
Water  Co.  v.  Lyndon,  124  Cal.  518,  57  Pac.  481. 


236  THE     FORECLOSUBE     ACTION.  §    122 

cent  per  annum  simple  interest.^^  But  where 
an  inferior  encumbrancer  who  is  a  party  in  an 
action  to  foreclose  a  superior  encumbrance  mere- 
ly asks  for  the  application  of  any  surplus  pro- 
ceeds arising  at  the  foreclosure  sale  to  the  re- 
duction of  the  obligation  secured  by  his  encum- 
brance^ his  encumbrance  is  not  merged  into  the 
judgment.^^ 

Subdivision  4.     Action  to  Enforce  Judgment, 

123.  Action  to  Enforce  Judgment  Maintainable.^^ 

A  judgment  creditor  may,  within  five  years 
after  the  entry  of  judgment,^^  commence  and 
maintain  an  action  to  enforce  a  judgment  for  the 
sale  of  encumbered  property  which  has  not  been 
sold  thereunder. 

31  Taylor  v.  Ellenberg,  134  Cal.  31,  66  Pac.  4. 

22  Camp  V.  Land,  122  Cal.  167,  170,  54  Pac.  839. 

23  Action  Maintainable:  Amoy  v.  Hoy,  12  Cal.  11; 
Stuart  V.  Lander,  16  Cal.  372,  76  Am.  Dec.  538. 

The  fact  that  the  property  has  already  been  ordered 
to  be  sold  in  satisfaction  of  the  secured  obligation  doe,«» 
not  affect  the  right  to  bring  this  action,  as  the  code 
gives  the  right  to  bring  an  action  to  enforce  any  ob- 
ligation: Eowe  V.  Blake,  99  Cal.  167,  37  Am.  St.  Eep. 
451,  33  Pac.  864;  112  Cal.  637,  641,  44  Pac.  1084. 

24  Within  Five  Years  After  Entry  of  Judgment: 
Mason  v.  Cronise,  20  Cal.  211;  Trenouth  v.  Farrington, 
54  Cal.  273;  Crim  v.  Kessing,  89  Cal.  478,  491,  23  Am. 
St.  Eep.  491,  26  Pac.  1074;  Eowe  v.  Blake,  99  Cal.  167, 
171,  37  Am.  St.  Eep.  451,  33  Pac.  864. 


§    124  THE    JUDGMENT    THEREIN.  237 

Subdivision  5.     Judgment  not  Leviable. 

124.     Judgment  not  Leviable. 

A  foreclosure  judgment  cannot  be  levied  upon 
and  sold  under  execution.^^ 

•  35  Judgment  not  Leviable:  Dore  v.  Dougherty,  72 
Cal.  232,  1  Am.  St.  Eep.  48,  13  Pac.  621;  Latham  v. 
Blake,  77  Cal.  646,  654,  655,  18  Pac.  450,  20  Pac.  417. 

Rationale.— ^ ^ The  judgment  is  but  the  evidence  of 
a  debt,  and  the  statute  has  made  no  provision  for  at- 
taching or  levying  upon  evidences  of  debt;  but  it  is 
the  debt  itself,  and  not  the  evidence  of  it,  which  maj' 
be  levied  upon  by  the  writ  of  attachment,  or  on  exe- 
cution in  like  manner  as  upon  writs  of  attachment. 
And  to  confirm  this  view  the  court  [in  McBride  v. 
Fallon,  65  Cal.  301,  4  Pac.  17]  alludes  to  the  case  of 
Davis  V.  Mitchell,  34  Cal.  81,  where  it  was  held  that 
a  promissory  note  was  the  subject  of  a  levy  and  sale, 
when  the  sheriff  could  get  possession  of  it,  and  could 
deliver  it  to  the  purchaser,  and  say  that  they  could 
not  assent  to  the  doctrine  of  that  case.  Of  course  it  is 
not  denied  that  a  judgment  is  property,  or  that  it  can 
be  the  subject  of  assignment.  The  ruling  is  based 
entirely  upon  the  statute '':  Dore  v.  Dougherty,  72 
Cal.  232,  234,  235,  1  Am.  St.  Eep.  48,  13  Pac.  621. 


238  THE     FORECLOSUEE     ACTION. 


AETICLE  6'. 

SALE   OF  ENCUMBEEED  PEOPEETY.l 
SuMivision  1.     The  Writ  of  Sale, 

125.  Writ  when  to  issue. 

126.  May  be  issued  notwithstanding  death  of  person 

interested  in  property. 

127.  Form   and   contents   of  writ. 

Subdivision  2,    Notice  of  Sale. 

128.  Manner  of  giving  notice. 

129.  Notice  must  specify  kind  of  money  required  in 

payment. 

130.  Penalty  for  selling  without  notice. 

131.  Penalty  for  defacing  notice  of  sale. 

Subdivision  3.    Mode  and  Conduct  of  Sale. 

132.  Sale   to   be   made   at   auction— time   and   limits 

of  sale. 

^  Sale  of  Encumbered  Property.— The  sale  is  made 
under  a  writ.  Code  of  Civil  Procedure,  section  684, 
second  sentence,  provides:  ^'When  the  judgment  re- 
quires the  sale  of  property,  the  same  may  be  en- 
forced by  a  wTit  reciting  such  judgment,  of  the  ma- 
terial parts  thereof,  and  directing  the  proper  officer 
to  execute  the  judgment  by  making  the  sale  and  ap- 
plying the  proceeds  in  conformity  therewith. '^ 

Rules  Governing  Execution  Sales  Apply.— The  leg- 
islature apparently  intended  the  provisions  of  the 
code  as  to  sales  on  execution  to  apply  so  far  as  pos- 
sible to  foreclosure  sales.  Code  of  Civil  Procedure, 
section  726,  in  part,  reads:  ''If  the  court  appoint  a 


I 


SALE     OF     PROPERTY.  239 

133.  Property,  how  offered  for  sale. 

134.  Sale  in  mass  of  separate  parcels  sometimes  void- 

able. 

135.  Person   conducting   sale   cannot   purchase. 

136.  Judgment  creditor  may  purchase. 

137.  Kind   of   money   specified   must   be   required   in 

payment. 

138.  Liability  of  purchaser  who  refuses  to  pay  pur- 

chase money. 
339.     May  thereafter  be  disqualified  to  bid. 

Suhdivislon  4.    Report  of  Sale. 
140.     Ofiicer   must   file   written  report. 

commissioner  for  the  sale  of  the  property,  he  shall 
sell  it  in  the  manner  provided  by  law  for  the  sale 
of  like  property  by  the  sheriff  upon  execution;  and 
the  provisions  of  chapter  1,  title  9,  part  2,  of  the 
Code  of  Civil  Procedure,  are  hereby  made  applicable 
to  sales  made  by  such  commissioners,  and  the  pow- 
ers therein  given  and  the  duties  therein  imposed  on 
sheriffs  are   extended  to   such   commissioners. ' ' 

Foreclosure  Sales  and  Execution  Sales  Distinguished. 
'^A  writ  of  execution  is  defined  to  be  ^process  author- 
izing the  seizure  and  appropriation  of  the  property 
of  the  defendant  for  the  satisfaction  of  the  judgment 
against  him.'  When  issued  upon  a  judgment  run- 
ning generally  against  the  property  of  the  defend- 
ant, it  is  authority  to  the  sheriff  to  seize  of  the  prop- 
erty of  the  defendant  a  sufficient  amount  to  satisfy 
the  judgment.  As  the  judgment  itself  does  not 
specify  the  property  which  is  to  be  taken,  none  of 
the  property  of  the  defendant  is  affected  thereby,  ■ 
or  charged  with  the  lien  of  the  judgment,  until  it  is 
taken  by  the  sheriff  under  the  writ.  'Until  a  levy, 
property  is  not  affected  by  the  execution.'  As  thei 
sheriff  can  justify  an  interfe.rence  with  the  posses- 
sion of  the  defendant  of  any  of  his  property  only 
upon  the  production  of  a  writ  therefor,  it  is  incum- 
bent upon  him  to  show  that  a  seizure  of  the  partic- 
ular property  is  within  the  scope  of  his  writ;  and  if, 


240  THE     FORECLOSURE     ACTION. 

Stihdivision  5.     Finality   of   ^ale, 

141.  Sale  presumed  to  be  final. 

142.  Inadequacy   of   price   not   ground   for   annulling 

sale. 

143.  Nor  is  mere  reduction  of  amount  of  encumbrance 

upon  appeal. 

144.  Belief  of  party  injuriously  affected  by  irregular- 

ity in  sale. 

145.  Belief  of  purchaser  when  sale  null. 

Subdivision  6.    Delivery  of  Property  and  Certificate  of 
Sale. 

146.  Movable  property  capable  of  manual  delivery  to 

be  delivered  to  purchaser. 

147.  Certificate  of  sale  of  other  movable  property  to 

be  given  purchaser. 

148.  Certificate  of  sale  of  immovable  property  to  be 

given  purchaser. 

149.  Certificate  of  sale  evidence  of  title. 

150.  What  equivalent  to  assignment  of  certificate. 

151.  Duplicate  certificate  of  sale  of  immovable  prop- 

erty must  be  filed. 

152.  When  filed,  certificate  imparts  notice. 

by  the  terms  of  the  writ,  such  seizure  is  authorized 
only  within  a  limited  period  of  time,  a  seizure  after 
the  time  has  expired  is  unauthorized,  and  the  sheriff 

is  liable  for  a  trespass 

''A  decree  or  decretal  order  for  the  sale  of  cer- 
tain specific  property,  made  by  a  court  of  equity, 
differs  materially  from  a  common-law  judgment. 
Instead  of  running  against  the  entire  property  of 
the  judgment  debtor,  it  specifies  the  property  which 
the  court  directs  to  be  sold  for  the  purpose  of  carry- 
ing its  judgment  into  effect,  and  -the  officer,  in  exe- 
cuting this  order,  acts  under  the  direct  mandate  of 
the  court,  without  the  power  or  necessity  of  taking 
any  property  from  the  possession  of  the  defendant. 
....  When  ....  the  judgment  itself  designates 
the  property  which  is  to  be  sold,  there  is  no  occasion 


§    125  SALE     OF     PROPERTY.  241 

Sttbdivision  7.     Operation    of    Sale. 

153.  Sale   extinguishes   secured  obligation  pro  tanto. 

154.  Sale  vests  encumbered  property  in  purchaser. 

155.  Sale   extinguishes  rights   of   subordinate   encum- 

brancers therein. 

156.  Sale  does  not  affect  paramount  claims  thereto. 

157.  Effect  of  purchase  by  one  person  interested  in 

secured  obligation  at  request  of  another. 

Siihdwision  8.     Title  of  Purchaser  of  Immovable  Prop- 
erty. 

158.  Purchaser  entitled  to  deed  when  title  absolute. 

159.  Deed  prematurely  made  void. 

160.  Confers  right   of  possession. 

161.  Writ    of   assistance   issuable   against   parties   to 

action. 

162.  Muniments  of  title  of  purchaser  at  judicial  sale. 

Subdivision  9.    Proceeds  of  Sale. 

163.  Application  of  proceeds  of  sale. 

164.  When  too   much  paid  encumbrancer,  action  for 

recovery  sometimes  maintainable. 

Siiddivision  1.     The  Writ  of  Sale.^ 

125.    Writ  When  to  Issue. 

The  court  may^  at  the  time  of  rendering  the 
foreclosure  judgment,  or  upon  the  application  of 

for   a   levy Hence,   under   a   decree   foreclosing 

a  mortgage,  no  levy  need  be  made  of  the  mortgaged 
premises.  The  officer,  in  making  the  sale,  is  only 
executing  the  directions  of  the  court,  and  his  act  is 
attended  with  the  same  result  as  his  sale  after  a  levy 
under  the  common-law  execution  ^':  Southern  Cal. 
Lumber  Co.  v.  Ocean  Beach  Hotel  Co.,  94  Cal.  217, 
221-224,  28  Am.  St.  Eep.  115,  29  Pac.  627. 

2  Writ  of  Sale  Often  Termed  Order  of  Sale.— ''Un- 
der section  684  of  the  Code  of  Civil  Procedure,  a  writ 
Liens— 16 


242  THE     FORECLOSURE      ACTION.  §    125 

any  person  interested^  in  such  judgment  at  any 
time  thereafter^^  issue  a'  writ  for  the  sale  of  suf- 
iicient  of  the  encumbered  property,  movable  or 
immovable,^  to  satisfy  the  obligation  secured 
thereby  or  so  much  thereof  as  is  due,^  and  for  the 
due   application   of   the   proceeds   of   the   sale.'' 

reciting  the  judgment  or  the  material  parts  thereof, 
and  directing  the  officer  to  execute  the  judgment  by 
making  the  sale,  etc.,  is  the  proper  course.  By  anal- 
og3'  to  the  former  equity  practice,  this  writ  is  usually 
termed  an  order  of  sale'':  Tregear  v.  Etiwanda  Wa- 
ter Co.,  76  Cal.  537,  542,  9  Am.  St.  Eep.  245,  18  Pac. 
658.    ' 

s  Any  Interested  Person  may  Cause  Writ  to  be 
Issued.— '^  It  is  the  ownership  of  or  interest  in  the 
judgment,  or  in  the*  fruits  of  the  execution,  or  in  the 
property  upon  which  it  is  levied,  which  authorizes  a 
party  to  cause  it  to  be  issued The  writ  re- 
quired the  sale  of  the  property,  and,  as  no  provision 
was  made  in  the  decree  for  delaying  the  sale,  it  was 
the  duty  of  the  plaintiffs  to  proceed  without  unnec- 
essary delay  to  ha,ve  the  decree  executed,  and  upon 
their  failure  to  do  so  it  became  the  duty  of  the  court, 
upon  the  complaint  of  any  party  interested  in  its  ex- 
ecution, to  direct  that  its  execution  be  proceeded 
with ^^:  Thomas  v.  San  Diego  College  Co.,  Ill  Cal. 
358,  362-364,  43  Pac.  965. 

Query,  whether  the  sale  may  be  ordered  upon  ex 
parte  application:  Thomas  v.  San  Diego  College  Co., 
Ill  Cal.  358,  365,  43  Pac.  965. 

Under  similar  circumstances  it  seems  to  be  as- 
sumed, in  Byrne  v.  Hoag,  126  Cal.  283,  287,  58  Pac. 
688,  cited  under  note  9,  below,  that  notice  is  neces- 
sary. 

Where  a  mortgagee  brought  an  action  to  foreclose 
his  mortgage,  and  made  a  junior  mortgagee  a  party 
therein,  and  the  junior  mortgagee  filed  a  cross-com- 
plaint, and  judgment  was  entered  foreclosing  both 
mortgages,  the  junior  mortgagee  has  a  right  to  have  a 


§    125  SALE      OF      PROPERTY.  243 

writ  of  sale  issued  for  the  sale  of  the  mortgaged  prop- 
erty. The  first  mortgage  could  not,  either  capriciously 
or  by  any  orrangement  with  the  mortgagor  or  his  suc- 
cessors in  interest,  allow  the  judgment  in  his  favor 
to  remain  unexecuted,  and  the  amount  of  his  charge 
against  the  mortgaged  property  thereby  to  increase 
to  the  detriment  of  the  junior  mortgagee;  but  after 
the  entry  of  the  judgment  by  which  the  amount  and 
priority  of  the  several  encumbrances  against  the 
property  was  determined,  either  party  to  the  judg- 
ment had  the  right  to  its  execution:  Gutzeit  v.  Pen- 
nie,  97  Cal.  484,  489,  32  Pac.  584. 

4  Sale  may  be  Ordered  at  Any  Time  After  Judg- 
ment.—Code  of  Civil  Procedure,  section  685:  ''In  all 
cases  the  judgment  may  be  enforced  or  carried  into 
execution  after  the  lapse  of  five  years  from  the  date  of 
its  entry  by  leave  of  the  court,  upon  motion,  or  by 
judgment  for  that  purpose,  founded  upon  supple- 
mental pleadings.'^  As  amended,  in  effect  March  9, 
1895. 

Historical.— Bef 01  e  1895  the  section  read:  ''In  all 
cases  other  than  for  the  recovery  of  money  the  judg- 
ment may  be  enforced, '^  etc.,  and  was  held  to  apply 
"to  a  judgment,  the  object,  purpose,  and  effect  of 
which  is  to  enforce  the  payment  of  money,  whether 
the  same  be  a  personal  judgment  against  the  party 
indebted,  or  a  decree  foreclosing  a  lien  for  an  amount 
due.  ^'  Thus  a  foreclosure  judgment  could  not  be  en- 
forced after  the  lapse  of  five  years:  Dorland,  v.  Han- 
son, 81  Cal.  202,  15  Am.  St.  Eep.  44,  22  ^Q,e.  "552; 
Stoat  V.  Macy,  22  Cal.  647;  Jacks  v.  Johnson,  86  Cal. 
384,  21  Am.  St.  Eep.  50,  24  Pac.  1057;  Dorland  v. 
Smith,  93  Cal.  120,  124,  28  Pac.  812;  Cortez  v.  Su- 
perior Court,  86  Cal.  274,  21  Am.  St.  Eep.  37,  24  Pac. 
1011. 

5  Both  Movable  and  Immovable  Property  may  be 
Sold  under  the  Same  Writ:  San  Francisco  Breweries 
V.  Schurtz,  104  Cal.  420,  426,  38  Pac.  92. 

<*  To  Satisfy  Obligation  or  So  Much  Thereof  as  is 
Due:   See  section  96  above,  and  section  132  below. 

7  Due  Application  of  Proceeds  of  Sale:  See  sec. 
163,  below. 


244  THE     FORECLOSURE     ACTION.  §    125 

Where^  the  secured  obligation  is  not  all  due 
when  the  first  writ  of  sale  is  issued^  and  the  court 
does  not  order  the  whole  obligation  to  be  satis- 
fied from  the  property  at  that  time,  the  court  may 
afterward,  upon  motion  after  notice,^  as  soon  as 

8  Compare  Code  of  Civil  Procedure,  section  728: 
*']f  the  debt  for  which  the  mortgage,  lien  or  encum- 
brance is  held  is  not  all  due,  so  soon  as  sufficient  of 
the  property  has  been  sold  to  pay  the  amount  due 
with  costs,  the  sale  must  cease;  and  afterward 
as  often  as  more  becomes  due  for  principal  or  interest, 
the  court  may  on  motion  order  more  to  be  sold;  but  if 
the  property  cannot  be  sold  in  portions,  without  injury 
to  the  parties,  the  whole  may  be  ordered  to  be  sold  in 
the  first  instance,  and  the  entire  debt  and  costs  paid, 
there  being  a  rebate  of  interest  where  such  rebate 
is   proper.'' 

The  provision  of  the  code  that  ''As  soon  as  suffi- 
cient of  the  property  has  been  sold  to  pay  the  amount 
due,  with  costs,  the  sale  must  cease,  and  afterward 
....  the  court  may,  on  motion,  order  more  to  be 
sold,''  is  for  the  benefit  of  the  debtor,  to  prevent 
the  sale  of  more  of  his  property  than  is  necessary 
to  pay  the  amount  due.  But  where  the  judgment 
creditor,  instead  of  selling  a  part  of  the  land  to  sat- 
isfy the  amount  due  and  then  ceasing,  forbears  and 
sells  none  at  all  under  the  judgment  declaring  the 
mortgage  foreclosable  for  the  first  installment  due, 
it  would  be  a  strange  perversion  of  justice  to  hold, 
as  is  contended,  that  the  forbearance  of  the  creditor 
to  enforce  the  colle<ition  of  the  amount  due,  and 
thereby  to  impose  upon  the  defendant  the  cost  of 
several  sales,  must  lose  him  the  right  to  sell  at  all. 
We  cannot  give  the  section  such  a  construction: 
Bank  of  Napa  v.  Godfrey,  77  Cal.  612,  617,  618,  20 
Fac.   142. 

J^  Court  may,  on  Motion,  After  Notice,  Order  Fur- 
ther Sale.— Where  a  secured  obligation  becomes  due 
at  successive  times,  and  a  foreclosure  action  is  com- 
menced  and    judgment    rendered    therein  before  the 


§    12,5  SALE      OF      PROPERTY.  245 

more  becomes  due,  for  principal  or  interest,  issue 
another  writ  for  the  sale  of  more  of  the  encum- 
bered property. 

maturity  of  all  of  them  in  which  the  court  deter- 
mines the  amounts  to  become  due  at  successive  times, 
the  proper  practice  on  the  part  of  the  plaintiff 
lipon  further  installments  becoming  due  is  to  file  in 
the  same  court  a  motion  reciting  the  proceedings  in 
the  case,  and  that  other  installments  of  the  money 
payable  upon  the  secured  obligation  have  become  due, 
and  asking  for  a  sale  of  the  property,  or  enough  to 
satisfv  the  further  amount  due:  Bank  of  Napa  v. 
Godfrey,  77  Cal.  612,  617,  20  Pac.  142. 

On  motion  of  the  plaintiffs  and  notice  to  the  de- 
fendants, in  a  case  where  a  judgment  of  foreclosure 
for  interest  due  and  un])aid  had  already  been  ren- 
dered, althougli  the  right  to  direct  any  further  sale 
was  not  reserved  by  the  court  in  the  judgment,  the 
court  may  order  the  sale  of  the  property  in  default 
of  the  payment  of  the  principal  sum.  Code  of  Civil 
Procedure,  section  728,  supplies  such  a  supposed  omis- 
sion in  the  judgment,  and  the  court  has  authority  to 
make  an  order  subsequent  to  judgment  for  the  sale 
of  more  of  the  property  until  the  entire  mortgaged 
property  is  exhausted:  Byrne  v.  Hoag,  126  Cal.  283, 
287,  58  Pac.  688. 

Cases  of  DouMful  Authority, —In  McDougal  v.  Dow- 
ney, 45  Cal.  165,  and  Higgins  v.  San  Diego  Sav. 
Bank,  129  Cal.  184,  61  Pac.  943,  where  the  amounts 
to  become  due  upon  the  secured  obligation  were  not 
determined  by  the  court  in  the  original  proceeding, 
the  court  justified  a  second  action  brought  upon  the 
maturity  of  such  amounts  for  their  enforcement  by 
foreclosure  (instead  of  resorting  to  a  motion  as  pre- 
scribed by  the  Code  of  Civil  Procedure,  section  728, 
quoted  in  the  preceding  section),  on  the  ground  that 
no  relief  could  be  had  by  motion  unless  the  amount 
enforceable  thereunder  should  be  determined  in  the 
original  action.  In  Higgins  v.  San  Diego  Sav.  Bank, 
however,   the    court     entirely    overlooks   the   case    of 


246  THE    FORECLOSURE    ACTION.  §    126 

126.  May  be  Issued  Notwithstanding  Death  of 
Person  Interested  in  Property. 

The  writ  of  sale  may  be  issued  and  executed 
notwithstanding  the  death  after  the  rendition  of 
Judgment  of  any  person  interested  in  the  prop- 
erty ordered  to  be  sold.^^ 

127.  Form  and  Contents  of  Writ.^^ 

The  writ  for  the  sale  of  encumbered  property 
must   be   issued   in   the   name    of  the  people/^ 

Byrne  v.  Tloag,  above  cited,  where  the  contrary  con- 
clusion was  reached,  for  in  the  Byrne  case  the  court 
did  not  determine  in  the  first  instance  the  amounts 
to  become  due  at  future  times,  but  determined  that 
question  upon  hearing  the  motion,  this  matter  not, 
however,  being  essential  to  the  decision  of  the  case. 

10  Code  of  Civil  Procedure,  section  686,  provides: 
"Notwithstanding  the  death  of  a  party  after 
the  judgment,  execution  thereon  may  be  issued, 
or  it  may  be  enforced  as  follows:  ....  (2)  in  case 
of  the  death  of  the  judgment  debtor,  if  the  judgment 
bo  for  the  recovery  of  real  or  personal  property,  or 
the  enforcement  of  a  lien  thereon'^:  Nagle  v.  Macy, 
^>  Cal.  426,  429;  Cowell  v.  Buckelew,  14  Cal.  640, 
Compare  BeHoc  v.  Eogers,  9  Cal.  123,  127. 

11  Historical. — Before  the  amendment  to  Code  of 
Civil  Procedure,  section  684,  adopted  in  1874  (see 
note  14  below),  the  judgment  might  be  enforced  by 
a  certified  copy  of  the  judgment  being  placed  in  the 
hands  of  the  sheriff  for  execution.  • 

In  Southern  California  Lumber  Co.  v.  Ocean  Beach 
Hotel  Co.,  94  Cal.  217,  222,  223,  28  Am.  St.  Eep.  115, 
29  Pac.  627,  the  court,  referring  to  the  foreclosure 
judgment,  said:  "Such  a  writ,  under  the  chancery 
system,  was  not  carried  into  effect  by  a  writ  of  exe- 
cution, but  a  certified  copy  thereof  was  furnished  to 


§    127  SALE      OF     PROPERTY.  247 

the  master  as  his  authority  for  making  the  sale,  and 
the  master  was  at  liberty  to  exercise  his  discretion 
in   regard   to   the   time   and   place   at   which   the   sale 

should    be    made This    practice    prevailed     in 

many  parts  of  this  state  until  the  amendment  of  1874 
to  section  684  of  the  Code  of  Civil  Procedure!  .... 
In  1874,  by  an  amendment  to  section  684  of  the 
Code  of  Civil  Procedure,  authority  was  for  the  first 
time  given  for  the  issuance  of  anything  in  the  na- 
ture of  process  for  the  pmrpose  of  enforcing  a  judg- 
ment directing  a  sale  of  real  property. '' 

Thus  in  Leviston  v.  Swan,  33  Cal.  480,  484,  the 
court  says:  ^^ Under  our  system  the  sheriff  is  fur- 
nished with  a  certified  copy  of  the  judgment.  Armed 
with  his  process,  he  proceeds  to  sell  the  mortgaged 
property  in  the  mode  and  manner  and  at  the  place 
designated  in  the  Practice  Act  for  the  sale  of  real 
estate  under  judicial  process,  and  makes  a  return  of 
his  proceedings  as  in  a  case  of  an  execution  upon  a 
money  judgment.  If  it  appears  from  the  return  that 
the  amount  due  the  plaintiff  has  not  been  fully  paid 
by  the  sale,  the  clerk  then  ^dockets  the  judgment,  for 
the  balance  due,  against  those  defendants  named  in 
the  judgment  as  being  personally  liable  for  the  pay- 
ment of  the  debt,  without  any  further  order  from  the 
court.'' 

Since  the  amendment  to  section  684  of  the  code, 
the  practice  of  issuing  the  certified  judgment  is  er- 
roneous: Newmark  v.  Chapman,   53   Cal.  557. 

33  Writ  must  be  Issued  in  Name  of  People,  etc.— 
Compare  Code  of  Civil  Procedure,  section  682,  in 
part:  ^^The  writ  of  execution  must  be  issued  in  the 
name  of  the  people,  sealed  with  the  seal  of  the  court, 
and  subscribed  by  the  clerk,  and  be  directed  to  the 
sheriff.'' 

This  code  section  seems  to  be  in  some  degree  ap- 
plicable to  the  writ  for  the  sale  of  encumbered  prop- 
erty, in  view  of  the  provision  of  section  726  of  the 
Code  of  Civil  Procedure,  as  follows:  ^"If  the  court 
appoint  a  commissioner  for  the  sale  of  the  property, 
he  must  sell  it  in  the  manner  provided  by  law  for 
the  sale  of  like  property  by  the   sheriff  upon  execu- 


"248  THE     FORECLOSURE     ACTIOX.  §    127 

sealed  with  the  seal  of  the  court,  subscribed  by 
the  clerk,  and  directed  to  the  sheriff  of  any 
county  in  the  state^^  or  to  the  commissioner; 
and  m,ust^^  recite  the  foreclosure  judgment  or 
the  material  parts  thereof,  and  require  the  sheriff 
or  commissioner  to  execute  the  judgment  by 
making  the  sale  and  applying  the  proceeds  in 
conformity  therewith. 

tion;  and  the  provisions  of  chapter  1,  title  9,  part  2, 
of  this  code  (sections  681  through  709)  are  hereby 
made  applicable  to  sales  made  by  such  commissioner, 
and  the  powers  therein  given  and  the  duties  therein 
imposed  on  sheriffs  are  extended  to  such  commis 
si  oner. " 

In  Newmark  v.  Chapman,  53  Cal.  557,  where  the 
process  issued  was  held  erroneous,  although  not  void, 
the  court  said:  *^The  process  under  which  the  mort- 
gaged property  was  sold  \yas  only  a  copy  of  the  judg- 
ment issued  and  attested  by  the  clerk.  It  did  not 
conform  to  sections  682  and  684  of  the  Code  of  Civil 
Procedure,  as  it  did  not  purport  to  have  been  issued 
in  the  name  of  the  people,  nor  was  it  directed  to  the 
sheriff,  nor  did  it  direct  him  to  execute  the  judg- 
ment.^' Thus  in  this  case  the  court  recognized  the 
applicability  of  the  portion  of  section  682  above 
quoted  to  the  writ  for  the  sale  of  encumbered  prop- 
erty. 

In  Spaulding  v.  Howard,  121  Cal.  194,  197,  53  Pac. 
563,  however,  the  court  doubted  whether  the  writ 
of  sale  need  be  subscribed  by  the  clerk,  and  said: 
' '  The  findings  are  that  the  court .  ordered  the  land 
included  in  the  Ely  and  Griffin  mortgage  to  be  sold 
by  the  sheriff  of  Lake  county,  in  which  county  it  was 
found  that  the  decree  had^  been  duly  docketed  and 
recorded;  that  *an  order  of  sale  was  duly  issued  out 
of  the  superior  court  of  Yolo  county,  under  seal  of 
said  court,  upon  said  judgment  and  decree  and  re- 
citing the  same,  directed  to  the  said  sheriff  of  Lake 


§    127  SALE     OF     PROPERTY.  249 

county,  commanding  him,'  etc.  The  sheriff,  under  the 
Code  of  Civil  Procedure,  proceeds  with  the  sale  by 
virtue  of  the  decree  and  such  direction  as  the  court 
may  give  :  Code  Civ.  Proc,  sec.  726.  The  pro- 
ceeding follows  by  analogy  sales  upon  execution, 
tut  not  necessarily  so.  The  power  to  sell  comes  from 
the  statute  and  the  decree.  However,  the  court 
found  that  an  order  of  sale  was  duly  issued  upon  the 
decree,  and,  if  the  law  required  it  to  be  certified  or 
attested  by  the  clerk,  it  will  be  presumed  that  this 
was  done.''  The  net  result  of  this  case,  then,  is 
merely  to  express  certain  doubts,  but  not  to  impair 
the  validity  of  the  observations  in  the  Newmark 
case  above  quoted. 

The  provisions  of  section  682  subsequent  to  those 
quoted  above  seem  to  have  no  applicability  to  fore- 
closure sales,  as  the  subject  matter  of  the  remainder 
of  the  section,  so  far  as  applicable  to  such  sales,  is 
covered  by  the  provision  of  section  684  quoted  in 
note  14  below.  Thus,  in  Hibernia  Sav.  etc.  Soc.  v. 
Behnke,  121  Cal.  339,  342,  53  Pac.  812,  the  court  held 
that  ^Hhe  provision  of  section  682  that  an  execution 
for  money  shall  state  *the  amount  actually  due 
thereon'  does  not  apply  to  such  order  of  sale.  The 
sheriff  is  directed  by  such  judgment  to  sell  the  lands, 
or  so  much  thereof  as  may  be  necessary  to  satisfy  the 
plaintiff's  claim."  So  the  writ  of  sale  is  not  vitiated 
by  failure  to  refer  to  the  amount  that  had  been  actu- 
ally paid  upon  the  foreclosure  judgment. 

13  Must  "be  Directed  to  Sheriff  of  Any  County  in 
State. — Code  of  Civil  Procedure,  section  687,  pro- 
vides: '^  Where  the  execution  is  against  the  property 
of  the  judgment  debtor,  it  may  be  issued  to  the  sher- 
iff of  any  county  in  the  state.  Where  it  requires  the 
delivery  of  real  or  personal  property,  it  must  be  is- 
sued to  the  sheriff  of  the  county  where  the  property, 
01'  some  part  thereof,  is  situated.  Executions  may 
be  issued,  at  the  same  time,  to  different  counties." 

14  Must  Recite  Foreclosure  Judgment,  etc.— Code 
of  Civil  Procedure,  sec.  684,  as  amended  in  effect  July 
1,  1874,  provides,  in  part:  ''When  the  judgment  re- 
quires the  sale  of  property,  the  same  may  be  enforced 


250  THE  FORECLOSURE  ACTION.         §  128 

Subdivision  2.     Notice  of  Sale, 

128.     Manner  of  Giving  Notice.^^ 

Before  selling  any  property  under  a  writ  of 
sale,  the  sheriff,  commissioner,  or  elisor  must  give 
notice^^  thereof  as  follows: 

by  a  writ  reciting  such  judgment,  or  the  material  parts 
thereof,  and  directing  the  proper  officer  to  execute  the 
judgment  by  making  the  sale  and  applying  the  proceeds 
in  conformity  therewith." 

15  See  Code  Civ.  Proc,  sec.  692,  except  last  clause. 

16  Sheriff  must  Give  Notice.— The  judgment  cred- 
itor has  no  right  to  direct  the  sheriff  as  to  the  paper 
in  which  a  notice  of  sale  of  immovable  property 
should  be  published.  For  it  is  clear  that  code  sec- 
tions 692  and  693  (sections  128  through  131  hereof) 
''enjoin  upon  the  sheriff  both  the  duty  and  the 
responsibility  of  posting  and  publishing  the  notices 
of  sale  as  prescribed,  which  injunction  necessarily 
implies  the  duty  and  responsibility  of  selecting  the 
places  where  the  notices  are  to  be  posted,  and  the 
newspapers  in  which  they  are  to  be  published,  since 
they  are  not  specified.  He  is  required  to  post  the 
notices  in  three  public  places  in  the  township,  etc., 
and  to  publish  them  in  some  newspaper  in  the  county 
once  a  week  under  heavy  penalty,  besides  his  respon- 
sibility for  all  damages.  The  penalty  and  respon- 
sibility are  inconsistent  with  the  alleged  authority 
of  the  plaintiff  [mortgagee]  to  dictate  the  places  or 
papers  in  which  the  notices  are  to  be  published;  and 
consistent  only  with  his  duty  and  power  to  determine 
and  select  the  places  and  newspapers  in  which  to 
publish  the  required  notices.  Moreover,  the  require- 
ment of  notice  of  sales  on  execution  is  quite  as  much 
for  the  benefit  and  protection  of  the  defendant 
[mortgagor]  as  for  the  plaintiff;  and  the  defendant, 
if  not  insolvent,  ultimately  pays  the  expenses  of 
publication":     Northern    Counties    Investment    Trust 


§    128  SALE     OF     PROPERTY.  251 

(1)  in  case  of  perishable  property,  by  posting 
written  notice  of  the  time  and  place  of  sale  in 
three  public  places  of  the  township  or  city 
where  the  sale  is  to  take  place,  for  such  time  as 
may  be  reasonable  considering  the  character 
and  condition  of  the  property ;  or 

(2)  in  case  of  other  movable  property,  by  post- 
ing a  similar  notice  in  three  public  places  ia 
the  township  or  city  where  the  sale  is  to  take 
place,  for  not  less  than  five^''  nor  more  than 
ten  days;  or 

(3)  in  case  of  immovable  property,  by  posting  a 
similar  notice,  particularly  describing  the  prop- 
erty, for  twenty  days,  in  three  public  places  of 
the  township  or  city  where  the  property  is  situ- 
ated, and  also  where  the  property  is  to  be  sold, 
and  publishing  a  copy  thereof,  once  a  week  for 
the  same  period,  in  some  newspaper  published 
in  the  county  if  there  is  one. 

(Lim.)    V.    Cadman,    101    Cal.    200,    204,    205,    35   Pac. 
557. 

17  At  Least  Five  Days'  Notice.— Where  a  notice  of 
sale  of  personal  property  was  posted  on  February 
20tli,  and  the  sale  was  made  as  advertised  on  Febru- 
ary 25th,  this  amounts  to  five  days'  notice  under  the 
Code  of  Civil  Procedure,  section  12,  providing  that 
the  time  within  which  any  act  provided  by  law  is  to 
bo  done  is  computed  by  excluding  the  first  and  in- 
cluding the  last  day.  Or,  ^^if  the  rule  of  section  12 
does  not  apply  to  the  case,  it  might  well  be  argued 
that  the  first  day  of  posting  is  not  excluded  iu 
determining  the  length  of  the  notice' ':  Bellmerly  v. 
«mith,  136  Cal.  3,  68  Pac.  97. 


252  THE     FORECLOSURE     ACTION.  §    129 

129.  Notice  must  Specify  Kind  of  Money  Re- 
quired in  Payment. 

Whenever  the  Judgment  under  which  the  prop- 
erty is  to  be  sold  is  made  payable  in  a  specified 
kind  of  moaey  or  currency,  the  several  notices 
must  each  state  the  kind  of  money  or  currency  in 
which  bids  may  be  made  at  such  sale,  which  must 
be  the  same  as  that  specified  in  the  judgment.^^ 

130.  Penalty  for  Selling  Without  Notice.^^ 

An  officer  selling  any  encumbered  property 
without  the  notice  required  by  sections  128  and 
129,  the  sale  being  executed  by  the  transfer  of 
the  property  and  the  payment  of  the  purchase 
price,^^  forfeits  five  hundred  dollars  to  the  ag- 

18  See  Code  Civ.  Proc,  sec.  692,  last  clause.  As 
to  provision  of  the  judgment  in  this  respect,  see 
section   115    above. 

19  Penalty  for  Selling  Without  Notice:  See  Code 
Civ.  Proc,  sec.  693  (Practice  Act,  sec.  222),  first 
clause. 

Strict  Construction.— An  action  under  this  section 
being  to  enforce  a  penalty  or  forfeiture,  the  clause 
must  be  strictly  construed,  and  the  plaintiff's  case 
must  clearly  come  within  the  statute:  Askew  v.  Eb- 
borts,   22   Cal.   263. 

Thus,  in  Van  Loben  Sels  v.  Bunnell,  131  Cal.  498,  493, 
63  Pac.  773,  the  court  holds  that  where  the  sheriff  in 
good  faith  gave  an  erroneous  notice  of  a  foreclosure 
sale  by  reason  of  the  contradictory  mandate  of  the 
court,  it  would  be  unjust  to  impose  upon  him  the 
statutory  penalty  imposed  for  making  a  sale  without 
giving  proper  notice. 

20  Sale  must  be  Executed.— '  ^  The  party  is  not 
injured    or    ^aggrieved'    unless    it    appears    that,    by 


§    130  SALE      OF      PROPERTY.  25.3 

grieved^^  party,  in  addition  to  his  actual  dam- 
ages. This  is  an  exclusive  remedy  for  a  sale 
without  due  notice.^^ 

means  of  the  sale,  without  notice,  he  has  been 
deprived  of  his  property.  Unless  the  sale  is  per- 
fected by  a  transfer  of  the  title,  the  debtor  has 
suffered  no  injury,  and  is  not  'aggrieved'  within  the 
intent  and  meaning  of  the  statute.  It  is  the  fact 
that  the  party  has  been  injured  or  damaged  by  the 
sale  of  his  property  by  an  officer  without  notice  that 
entitles  him  to  the  forfeiture' ':  Askew  v.  Ebberts, 
23   Cal.   263. 

So  where  a  purchaser  at  a  defectively  advertised 
sale  did  not  pay  the  purchase  money,  and  no  certifi- 
cate of  purchase  was  ever  issued  to  him,  and  where 
the  officer  later  discovering  that  the  notice  was 
defective,  again  duly  advertised  and  sold  the  prop- 
erty, the  judgment  debtor  has  no  cause  of  action  to 
recover  the  penal  sum:  Askew  v.  Ebberts,  22  Cal. 
263. 

21  Purchaser  can  Never  be  Aggrieved  Party.— 
Where  the  officer  sells  without  due  notice,  the  pur- 
chaser cannot  be  aggrieved  party.  If  notice  of  the  sale 
has  been  defectively  given,  or  has  not  been  given 
at  all,  it  does  not  prejudice  the  right  which  the  pur- 
chaser has  acquired.  Questions,  therefore,  appertain- 
ing to  the  notice,  as  well  as  all  others  which  relate  to 
irregularities,  are  between  the  officer  selling  and  the 
persons  interested  in  the  property  sold  or  in  the 
judgment.  They  are  the  only  parties  aggrieved;  and 
from  any  injury  resulting  from  such  irregularities 
they  are  the  only  parties  entitled  to  the  remedy 
given  by  code  section  693:  Kelley  v.  Desmond,  63 
Cal.   517. 

23  Is  Exclusive  Remedy:  Smith  v.  Eandall,  6  Cal. 
47,   50,   65   Am.   Dec.   475. 

Compare,  however,  Van  Loben  Sels  v.  Bunnell,  as 
quoted  under  section  144,  note  51,  below. 


254  THE     FORECLOSURE     ACTION.  §    131 

131.  Penalty  for  Defacing  Notice  of  Sale. 

A  person  willfully  taking  down  or  defacing  the 
notice  of  sale  posted  by  the  officer,  if  done  before 
the  sale  or  the  satisfaction  of  the  judgment  (if 
satisfied  before  ^ale),  forfeits  ^ye  hundred  dol- 
lars.^^ 

Subdivision  S.     Mode  and  Conduct  of  Sale. 

132.  Sale    to  be    Made  at    Auction — Time  and 
Limits  of  Sale. 

The^^  sale  must  be  made  at  auction^^  to  the 
highest  bidder,  between  the  hours  of  9  in  the 

33  See  Code  Civ.  Proc,  sec.  693,  second  clause. 

24  Code  of  Civil  Procedure,  section  694,  first  sen- 
tence (Practice  Act,  sec.  223),  provides:  ^'All  sales 
of  property  under  execution  must  be  made  at  auction 
to  the  highest  bidder,  between  the  hours  of  nine  in 
the  morning,  and  five  in  the  afternoon. '' 

The  sale  of  the  property  is  to  be  conducted  as  an 
ordinary  sale  of  property  under  judicial  process: 
Leviston  v.  Swan,  33  Cal/480,  484. 

Where  the  foreclosure  judgment  does  not  contain 
any  provision  as  to  the  mode  or  place  of  sale  of 
encumbered  property,  the  sale  must  be  made  in  con- 
formity with  the  code  provisions:  Ontario  Land  etc. 
Co.  V.  Bedford,  90  Cal.  181,  185,  27  Pac.  39. 

25  At  Auction.— ^^  The  sale  by  the  sheriff  is  at 
auction,  and  the  rule  of  auction  sales  that  the  bidder 
may  withdraw  'his  bid  at  any  time  before  the  ham- 
mer falls,  applies  to  a  sale  by  the  sheriff'^:  Hibernia 
Sav.  etc.  Soc.  v.  Behnke,  121  Cal.  339,  342,  53  Pac. 
812. 

A  sheriff  has  no  right  to  sell  at  private  sale,  nor 
to  authorize  anyone  else  to  do  so:  Sheehy  v.  Graves, 
58    Cal.   449,   455. 


§    132  SALE      OF      PROPERTY.  255 

morning  and  5  in  the  afternoon.  As  soon  as 
sufficient  of  the  encumbered  property  has  been 
sold  to  pay  the  amount  to  liquidate  which  the 
writ  for  the  sale  of  the  property  was  issued,  to- 
gether with  costs,  the  sale  must  eease.^^  A  re- 
fusal by  the  officer  to  postpone  the  sale  at  the 
request  of  the  judgment  debtor  is  not,  of  itself, 
an  abuse  of  discretion.^''' 

133.     Property,  How  Offered  for  Sale .^s 

Movable  property  capable  of  manual  delivery 
must  be  sold  within  view  of  those  who  attend  the 
sale,  and  in  such  parcels  as  are  likely  to  bring  the 
highest  price. 

Unless  otherwise  ordered  by  the  court,^^  each 
known  lot  or  parcel  of  immovable  property  must 

26  See  Code  of  Civil  Procedure,  section  728,  as 
quoted  under  section  125,  note  8,  above— especially 
the  first  clause  thereof.     Also  see  section  96,  above. 

Compare  Code  of  Civil  Procedure,  section  694 
v'Practice  Act/  223),  second  sentence,  which  provides: 
*^  After  sufficient  property  has  been  sold  to  satisfy 
the  execution,  no  more  can  be  sold.'' 

27  Refusal  to  Postpone  not  Abuse  of  Discretion: 
Connick  v.  Hill,  127  Cal.  162,  166,  59  Pac.  832. 

28  See  Code  of  Civil  Procedure,  section  694,  latter 
part.  This  section  is  applicable  to  sales  under  a  fore- 
closure judgment  when  the  judgment  is  silent  as  to 
the  manner  or  order  in  which  the  separate  parcels 
shall  be  sold:  Ontario  Land  etc.  Co.  v.  Bed- 
ford, 90  Cal.  181,  185,  27  Pac.  39;  Marston  v.  White, 
91  Cal.  37,  40,  27  Pac.  588.  Compare  County  Bank 
V.   Goldtree,   129  Cal.   160,   163,   164,   61  Pac.   785. 

20  Sale  is  Subject  to  the  Order  of  the  Court.— The 
court   has  full   authority   to   direct,   by  its   judgment, 


256  THE     FORECLOSURE     ACTION.  §    133 

first  be  offered  for  sale  by  itself,^^  but  in  default 
of  purchasers,^^  or  with  the  consent  of  the 
owner^^^  the  whole  may  then  be  sold  in  mass  or 
otherwise  at  the  discretion  of  the  officer. 

that  the  property  be  sold  in  one  or  several  parcels, 
and  the  officer  making  the  sale  is  bound  to  follow 
the  directions  of  the  court.  Code  of  Civil  Procedure, 
section  684,  quoted  section  127,  note  14,  above,  is  the 
controlling  provision:  Hopkins  v.  Wiard,  72  Cal.  259, 
262,  12  Pac.  687;  Meux  v.  Trezevant,  132  Cal.  487, 
490,    64   Pac.    848. 

30  Parcels  to   be  Sold  Separately. 
Rationale.— ^^  Many    persons    might    be    disposed    to 

bid  for  separate  parcels  of  a  particular  tract,  who 
have  neither  the  wish  nor  the  means  to  acquire  the 
whole  tract.  Such  sales  are,  therefore,  generally  con- 
demned as  tending  to  the  sacrifice  of  the  property  of 
the  debtor,  and  his  consequent  oppression'':  San 
Francisco   v.  Pixley,  21   Cal.   57,   59. 

In  considering  a  sale  of  property  subject  to  redemp- 
tion, the  court  said  that  an  additional  reason  why, 
in  such  a  case,  a  separate  sale  of  the  property  should 
be  ordered,  is  found  in  the  fact  that  under  our 
statute  such  sales  are  made  subject  to  the  right  of 
the  owner  to  redeem.  The  exercise  of  this  righ^ 
would  be  wholly  destroyed  by  an  order  directing  the 
mortgaged  property  to  be  sold  together,  as  it  would 
then  be  impossible  to  discover  the  price  at  which  a 
particular  part  was  sold,  or  the  amount  necessary  to 
redeem  it:  Kaun  v.  Keynolds,  11  Cal.  14,  20. 

31  In  Default  of  Purchaser,  may  be  Sold  in  Mass. 
''But  while  the  rule  declared  by  the  code,  as  above, 
'8  controlling,  and  should  be  strictly  followed,  still, 
'.t  cannot  be  held  to"  apply  where  each  distinct  parcel 
Is  first  offered  fox  sale  separately,  and  no  bids  are 
received.  In  such  case,  the  property  may  then  be 
offered  and  sold  as  a  whole,  and  the  sale  will  be 
upheld,  unless  other  reasons  appear  for  setting  it 
aside'':    Marston   v.   "White,   91    Cal.    37,   40,    27   Pac. 


§    133  SALE     OF     PROPERTY.  257 

Any  portion  of  immovable  property  claimed  by 
a  third  party  must  upon  his  demand  be  sold  sep- 
arately. 

Subject  to  the  order  of  the  court,^^  the  judg- 
ment debtor,  if  present  at  the  sale,  may  direct 
the  order  in  which  any  property  consisting  of 
several  known  lots  or  parcels  or  of  articles  which 
can  be  sold  to  advantage  separately  shall  be 
sold;^^  and  such  direction  must  be  followed. 

588;  Hibernia  Sav.  etc.  Soc.  v.  Behnke,  121  Cal.  339, 
53  Pac.  812;  Connick  v.  Hill,  127  Cal.  162,  164,  59 
Pac.   832. 

32  Sale  in  Mass,  by  Consent  of  Owner.— The  owner 
may,  by  parol,  waive  a  sale  of  the  lands  in  parcels^ 
and  give  authority  to  sell  in  mass:  Hudepohl  v. 
Liberty  Hill  etc.  Min.  Co.,  94  Cal.  588,  591,  592,  28 
Am.   St.   Eep.   149,   29  Pac.    1025. 

Likewise,  a  sale  in  mass  will  be  upheld,  where  the 
debtor,    by    misleading    the    officer    with    a    false    de- 
scription,  or  by  withholding  information,   causes  him 
to   make   such   sale   in   good  faith:   Smith   v.   Eandall,  ♦ 
G   Cal.   47,   51,   65  Am.   Dec.   475. 

33  The  Judgment  Debtor  may  Direct  the  Order  in 
Which  the  Property  Shall  be  Sold.— In  Connick  v. 
Hill,  127  Cal.  162,  165,  59  Pac.  832,  in  discussing  the 
tjpplication  of  this  section  to  a  sale  at  foreclosure 
made  by  a  commissioner  under  an  order  of  sale  which 
did  not  direct  the  manner  in  which  the  sale  should 
be  made,  the  court  said:  ^^It  nowhere  appears  in  the 
affidavits,  or  record,  that  the  forty-one  lots  were 
'known  lots  or  parcels.'  It  does  appear  that  the 
appellant  [mortgagor]  requested  the  sale  of  forty- 
one  different  descriptions,  but  it  does  not  follow 
that  these  forty-one  different  descriptions  were  forty- 
one  different  'known  lots  or  parcels.'  They  may  all 
have  constituted  one  known  lot  or  parcel.  In  a  mo- 
tion to   set  aside   a   sale   on  this   ground,  i^-.  mup+   be 

Liens— 17 


258  THE  FORECLOSURE  ACTION.         §  134 

134.     Sale  in  Mass    of    Separate    Parcels  Some- 
times Voidable.^^ 

A  sale  in  mass  of  property  consisting  of  several 
known  lots  or  parcels,  or  of  articles  which  can  he 
sold  to  advantage  separately,  which  was  made 
in  disregard  of  the  requirements  of  section  133 
and  appears  to  have  heen  less  heneficial^^  either 
to  the  creditor  or  the  debtor  than  would  a  sale  in 
separate  parcels  have  heen,  is  voidable  and  will, 
on  timely  application,^^  be  set  aside;  but  other- 
wise cannot  be  avoided. 

made  clearly  to  appear  that  the  land  consisted  of 
several  ^ known  lots  or  parcels.'  "  Compare  Meux 
V.   Trezevant,   132   Cal.  487,   64  Pac.   848. 

34  Sale  in  Mass  of  Separate  Parcels  Sometimes 
Voidable:  San  Francisco  v.  Pixley,  21  Cal.  57; 
Vigoureux  v.  Murphy,  '54  Cal.  346,  351;  Hudepohl  v. 
Liberty  Hill  etc.  Min.  Co.,  94  Cal.  588,  591,  28  Am. 
St.  Eep.  149,  29  Pac.  1025;  Orton  v.  Brown,  113  Cal. 
561,  568,  45  Pac.  835  (relating  to  the  sale  of  movable 
property);  Meux  v.  Trezevant,  132  Cal.  487,  489,  64 
Pac.  848.  See,  also.  Blood  v.  Light,  38  Cal.  649, 
654,  99  Am.  Dec.  441;  Hibberd  v.  Smith,  67  Cal.  5^/, 
565,  56  Am.  Kep.  726,  4  Pac.  473,  8  Pac.  46. 

35  It  must  Appear  that  the  Method  of  Sale  Adopted 
was  Less  Beneficial.— Thus  the  mere  fact  that 
several  separate  tracts  of  land  were  sold  together 
by  the  sheriff  does  not  constitute  a  cause  of  action: 
Eiddell  v.  Harrell,  71  Cal.  254,  262,  12  Pac.  67;  Hude- 
pohl V.  Liberty  HiU  etc.  Min.  Co.,.  94  Cal.  588,  591, 
28  Am.  St.  Eep.  149,  29  Pac.   1025. 

36  Application  Must  be  Timely.— An  application 
made  after  the  lapse  of  more  than  three  years  is 
not  timely:  Vigoureux  v.  Murphy,  54  Cal.  346,  352. 

Applicationy  Hotv  AInde.—ln  San  Francisco  v.  Pix- 
ley, 21  Cal.  57,  60,  the  court  said  that  when  the  orig- 


w 


§    135  SALE      OF      PROPERTY.  259 

135.  Person  Conducting  Sale  cannot  Purchase. 

^N'either  the  officer  holding  the  writ  nor  his 
depnty  can  become  a  purchaser  or  be  interested 
in  any  purchase  at  such  sale.^'' 

136.  Judgment  Creditor  may  Purchase. 

A  judgment  creditor  may  purchase  at  his  sale 
of  property  affected  by  his  encumbrance  with  the 
same  effect  as  any  third  person^^^  the  authoriza- 
tion of  the  court  to  purchase  having,  in  case  of 
the  sale  of  pledged  property,  been  first  oh- 
tained.^^ 

inal  parties  alone  are  involved,  this  sale  should  be 
set  aside  by  motion  in  the  original  proceedings,  but 
when  the  rights  of  third  parties  have  intervened  by 
a  new  action. 

In  Browne  v.  Ferrea,  51  Cal.  552,  the  court  said 
that  the  remedy  is  by  motion  to  set  aside  the  sale 
on  notice  to  the  judgment  creditor,  sheriff  and  pur- 
chaser at  the  sale.  In  Orton  v.  Brown,  113  Cal.  561, 
4.5  Pac.   835,   such   notice   was   given. 

37  See  Code  of  Civil  Procedure,  section  694,  third 
sentence,  providing:  '^Neither  the  officer  holding  the 
execution,  nor  his  deputy,  can  become  a  purchaser, 
or  be  interested  in  any  purchase  at  such  sale.'' 

38  Judgment  Creditor  may  Purchase:  Hunter  v. 
Watson,  12  Cal.  363,  377,  73  Am.  Dec.  543;  Foorman 
V.  Wallace,  75  Cal.  552,  554,  17  Pac.  680;  Felton  v. 
Le   Breton,   92   Cal.   457,   466,   467,   28   Pac.   490. 

30  Authorization  in  Case  of  Pledged  Property  must 
be  Obtained. — Civil  Code,  section  3011,  pirovides: 
*^  Instead  of  selling  pledged  property  as  hereinbefore 
provided,  a  pledgee  may  foreclose  the  right  ,of 
redemption  by  a  judicial  sale,  under  the  direction  of 
a  competent  court;  and  in  that  case  may  be  author- 
ized by  the  court  to  purchase  at  the  sale. '^ 


^6t$  THE     FORECLOSURE     ACTION.  §    137 

137.     Kind  of  Money  Specified  must  be  Eeqnired 
in  Payment. 

The  officer  must  refuse  payment  in  any  other 
kind  of  money  or  currency  than  that  specified  in 
the  writ  of  sale,  and  upon  collecting  the  specified 
money  or  currency  must  pay  to  the  party  entitled 
thereto  the  same  kind  received  by  him.  The 
neglect  or  refusal  so  to  do  renders  him  liable  on 
his*  official  bond  to  the  judgment  creditor  in  three 
times  the  amount  of  the  money  collected.^^ 

Thus  a  pledgee  of  a  note  secured  by  mortgage,  who 
causes  the  mortgage  to  be  foreclosed,  may  purchase 
at  the  judicial  sale  of  the  mortgaged  property,  and, 
in  the  absence  of  fraud,  takes  an  absolute  title  there- 
to: Kelly  V.  Matlock,  85  Cal.  122,  129,  24  Pac.  642; 
McArthur  v.  Magee,  114  Cal.   126,   130,  45  Pac.   1068. 

40  See  Code  of  Civil  Procedure,  section  682,  fourth 
subdivision,  which  provides:  '^If  it  [the  writ  of 
execution]  be  issued  on  a  judgment  made  pay- 
able in  a  specified  kind  of  money  or  currency,  as 
provided  in  section  667,  it  must  also  require  the 
sheriff  to  satisfy  the  same  in  the  kind  of  money  or 
Currency  in  which  the  judgment  is  made  payable,  and 
the  sheriff  must  refuse  payment  in  any  other  kind  of 
money  or  currency;  and  in  case  of  levy  and  sale  of 
the  property  of  the  judgment  debtor,  he  must  refuse 
payment  from  any  purchaser  at  sach  sale  in  any  other 
kind  of  money  or  currency  than  that  specified  in  the 
execution.  The  sheriff,  collecting  money  or  currency 
in  the  manner  required  by  this  chapter,  must  pay  to 
the  plaintiff  or  party  entitled  to  recover  the  same, 
the  same  kind  of  money  or  currency  received  by  him, 
and  in  case  of  neglect  or  refusal  so  to  do,  he  shall 
be  liable  on  his  official  bond  to  the  judgment  creditor 
in  three  times  the  amount  of  the  money  so  collected. '  • 


§    138  SALE     OF     PROPERTY.  261 

138.     Liability  of  Purchaser  Who  Refuses  to  Pay 
Purchase  Money. 

If  the  purchaser  refuses  to  pay  the  amount  bid 
by  him  for  property  struck  off  to  him  at  a  sale, 
either 

(1)  the  officer  may  again  sell  the  property  at 
any  time  to  the  highest  bidder,  and  may  re- 
cover the  amount  of  any  loss  occasioned  there- 
by, with  costs,  from  the  bidder  so  refusing,  ia 
any  court  of  competent  jurisdiction,^^  or 

(2)  the  officer,  or  in  the  event  of  his  refusal  to 

act  any  person  entitled  to  the  proceeds  of  the 

sale,  may  maintain  an  action  against  the  pui-- 

chaser  for  the  recovery  of  the  amount  of  his 
bid.42 

41  Officer  may  Sell  Again.— Code  of  Civil  Pro- 
codiire,  section  695,  provides:  ''If  the  purchaser  re- 
fuses to  pay  the  amount  Did  by  him  for  property 
struck  off  to  him  at  a  sale  under  execution,  the  officer 
may  again  sell  the  property  at  any  time  to  the  highest 
bidder,  and,  if  any  loss  be  occasioned  thereby,  the 
officer  may  recover  the  amount  of  such  loss,  with 
costs,  from  the  bidder  so  refusing,  in  any  court  of 
competent  jurisdiction.^'  As  amended,  in  effect,  July 
1,    1874. 

This  is  not  an  exclusive  remedy  against  a  purchaser 
who  refuses  to  pay  the  amount  of  his  bid:  Meherin 
V.  Saunders,  131  Cal.  681,  689-691,  63  Pac.  1084,  per 
Beatty,  C.  J.,  Van  Dyke,  Temple,  and  Henshaw,  JJ.; 
McFarland,    Garoutte,    and    Harrison,    JJ.,    dissenting. 

43  Officer  or  Person  Entitled  may  Recover  Amount 
of  Bid:   Meherin  v.   Saunders,  above. 


262 


THE     FORECLOSURE     ACTION.  §    139 


139.  May  Thereafter  be  Disqualified  to  Bid. 

The  officer  may,  in  his  discretion,  thereafter 
reject  any  subsequent  bid  of  a  purchaser  who  has 
refused  to  pay.^^ 

Subdivision  ^.     Report  of  Sale. 

140.  Officer  must  File  Written  Report.^ 

Within  thirty  days'*^  after  the  sale,  the  officer 
who  conducts  the  same  must  file  with  the  clerk 
of  the  court  in  which  the  action  is  pending  a 
verified  report  and  account  of  the  sale,  together 

43  See  Code  Civ.  Proc,  sec.  696. 

44  Code  of  Civil  Procedure,  section  729,  second 
sentence,  new  provision  in  effect  Marcli  9,  1893, 
provides:  '^Within  thirty  days  after  such  sale,  the 
commissioner  must  file  with  the  clerk  of  the  court 
in  which  the  action  is  pending  a  verified  report 
and  account  of  the  sale,  together  with  the  proper 
affidavits,  showing  that  the  regular  and  required 
notice  of  the  time  and  place  of  the  sale  was  given, 
which  report  and  account  shall  have  the  same  force 
and  effect  as  the  sheriff's  return  in  sales  under  ex- 
ecution. ' ' 

45  Within  Thirty  Days  After  the  Sale.— The  time 
is  directory.  In  Southern  California  Lumber  Co.  v. 
Ocean  Beach  Hotel  Co.,  94  Cal.  217,  224,  28  Am.  St. 
Eep.  115,  note,  29  Pac.  220,  the  court  said:  ^^The 
same  reasons  which  uphold  the  validity  of  a  sale  by 
the  sheriff  after  the  return  day  of  the  writ,  where 
the  levy  was  made  in  its  lifetime,  uphold  a  sale  in 
cases  where  no  levy  is  required.  Having  a  right  to 
subject  the  property  to  sale  for  a  satisfaction  of 
the  judgm.ent,  the  time  within  which  it  may  be  done 
is  directory,  and  under  the  control  of  the  court.  The 
court  has  at  all  times  such  control  of  its  process  as 
to  prevent  it  from  becoming  a  source  of  injury,  but, 
in  the  absence  of   some   showing  that  injury  has  re- 


§    140  SALE      OF      PROPERTY.  •  263 

with  the  proper  affidavits,  showing  that  the  regu- 
lar and  required  notice  of  the  time  and  place  of 
the  sale  was  given,  which  report  and  account 
shall  have  the  same  force  and  effect  as  the  sher- 
iff's return^^  in  sales  under  execution. 

Stibdivision    5.     Finality  of  Sale. 

141.     Sale  Presumed  to  be  Final. 

A  sale  of  encumbered  property  made  by  an 
officer  of  court  under  the  mandate  thereof  is  pre- 
sumed to  be  final.^'' 

suited  from  a  delay  in  making  the  sale,  it  should  not 
bp  set  aside  merely  because  it  was  not  made  before 
the  return  day  of  the  writ. '^ 

This  decision  was  rendered  before  the  enactment 
of  code  section  729,  as  above,  but  the  time  for  the 
report  was  set  by  the  court.  There  seems  no  reason 
why  the  same  reasoning  should  not  apply  under  the 
code. 

46  The  Sheriff's  Return.— Compare  Code  of  Civil 
Procedure,  section  683,  which  provides:  ^^The  execu- 
tion must  be  made  returnable  at  any  time  not  less 
than  ten  nor  more  than  sixty  days  after  its  receipt 
by  the  sheriff,  to  the  clerk  with  whom  the  judgment- 
roll  is  filed.  When  the  execution  is  returned,  the 
clerk  must  attach  it  to  the  judgment-roll.  If 
any  real  estate  be  levied  upon,  the  clerk  must 
record  the  execution  and  the  return  thereto  at 
large,  and  certify  the  same  under  his  hand  as 
true  copies,  in  a  book  to  be  called  the  *  Execution- 
book,'  which  book  must  be  indexed  with  the  names 
of  the  plaintiffs  and  defendants  in  execution,  alpha- 
betically arranged,  and  kept  open  at  all  tipies  during 
office  hoars,  for  the  inspection  of  the  poiblic,  without 
charge.  It  is  evidence  of  the  contents  of  the  orig- 
inals whenever  they  or  any  part  thereof  may  be 
destroyed  or  mutilated.'' 

47  Hopkins  v.  Wiard,  72  Cal.  259,  263,  14  Pac. 
687;  Connick  v.  Hill,  127  Cal.  162,  165,  59  Pac.  832. 


264  THE     FORECLOSUBE      ACTION.  §    142 

142.     Inadequacy  of  Price  not  Ground  for  An- 
nulling Sale. 
[Where  the  property  is  redeemable  from  the 
sale]/^  mere  inadequacy  of  price  is  not  a  suffi- 
cient ground  for  annulling  such  sale.^^ 

48  Each  of  the  cases  where  the  rule  was  stated 
was  a  case  in  which  the  property  was  redeemable. 

49  Inadequacy  of  Price  is  a  fact  which  is  admitted 
ill  evidence  to  establish,  in  connection  with  other  cir- 
cumstances, fraud  in  the  officer  making  the  sale,  but 
is  never  of  itself  sufficient  to  annul  a  sale,  and  cer- 
tainly would  not  be  sufficient  under  our  law,  which 
provides  for  the  redemption  of  the  property  sold: 
Smith  v.  Eandall,  6  Cal.  47,  '52,  65  Am.  Dec.  475; 
Central  Pacific  E.  E.  Co.  v.  Creed,  70  Cal.  497,  501, 
11  Pac.  772;  Connick  v.  Hill,  127  Cal.  162,  165,  166, 
59  Pac.  832.  See,  also,  May  v.  Hatcher,  130  Cal.  627, 
630,  63  Pac.  33. 

In  Thomas  v.  San  Diego  College  Co.,  Ill  Cal.  358, 
366,  43  Pac.  965,  however,  the  court  thought  that  *^a 
court  may  set  aside  or  refuse  to  confirm  a,  sale  where 
special  circumstances  have  prevented  competition, 
and  assurance  is  given  that  upon  a^  resale  a  better 
price  can  be  obtained,  sufficient  to  justify  the  delay 
and  additional  expense.'' 

Moreover,  in  Haynes  v.  Backman  (Cal.),  31  Pac. 
745,  where  it  was  shown  that  the  mortgaged  property 
was  sold  for  a  very  inadequate  price,  that  the  deputy 
having  charge  of  the  sale  had  been  asked  to  bid  in 
the  mortgagee's  absence,  but  had  failed  to  do  so,  that 
the  purchaser  was  aware  of  the  mortgagee's  intention 
to  bid,  and  that  the  mortgagee  would  be  unable  to 
collect  the  deficiency  from  the  mortgagor,  the  sale 
was  set  aside  (apparently  on  the  ground  of  the  mort- 
gagee's excusable  neglect),  upon  his  application 
made  the  next  day  after  the  sale.  The  court  said: 
*'It  is  true,  it  has  been  held  that  mere  inadequacy 
of  price  will  not  justify  a  court  in  setting  aside  a 
sale  where  all  the  proceedings  are  regular  and   free 


§    143  SALE     OF     PROPERTY.  265 

143.     Nor  is  Mere  Reduction  of  Amount  of  En- 
cumbrance upon  Appeal. 

The  mere  reduction  by  the  appellate  court  o£ 
the  amount  adjudged  to  be  owing  upon  an  obli- 
gation secured  by  an  encumbrance  which  has 
been  foreclosed  is  not  sufficient  ground  for  set- 
ting aside  a  sale  of  the  encumbered  property 
which  had  been  made  in  satisfaction  of  the  se- 
cured obligation.^^ 

from  fraud  or  mistake.  Still,  in  numerous  cases 
upon  this  subject,  that  fact  figures  as  an  important 
factor.  Here  the  attorney  [of  the  mortgagee]  had 
left  with  the  deputy  sheriff  his  bid.  Such  course  is 
not  unusual,  and,  if  the  deputy  was  unwilling  to 
accept  the  bid  in  that  form,  he  ought  to  have  in- 
formed the  attorney  of  such  fact,  in  which  case,  very 
likely,  knowing  that  he  might  be  detained,  he  would 
have  had  some  person  present  to  bid  for  him.  Set- 
ting aside  the  sale  so  promptly  will  harm  no  one 
except  a  purchaser  who  insists  upon  an  unfair  ad- 
vantage obtained  by  this  excusable  neglect  on  the 
part  of  the  plaintiff  ^s  attorney,  while  the  client  will 
be  irreparably  injured  if  the  sale  i«  allowed  to 
stand.'' 

50  Mere  Reduction  of  Amount  on  Appeal  not 
Ground. — Where  a  party  appealed  from  a  foreclosure 
judgment,  but  filed  no  stay  bond,  and  the  property 
v/as  sold  to  the  mortgagee,  the  court,  considering 
whether  such  sale  should  be  set  aside,  said:  '^Upon 
the  reversal  of  a  [money]  judgment,  a  sale  to  the 
plaintiff  of  the  defendant's  property  for  the  satis- 
faction of  the  judgment  in  whole  or  in  part,  will  be 
set  aside.  The  reason  for  this  rule  is  that,  as  the 
plaintiff' 's  claim  to  have  the  property  sold  depends 
upon  the  judgment^  the  reversal  of  the  judgment 
destroys  this  claim,  and  takes  away  all  right  to  retain 
the  defendant's  property. 

^^The  reason  of  the  rule  ceases,  however,  when  a 
judgment   directing  the   sale   of   specific   property,   as 


266  THE     FORECLOSURE     ACTION.  §144 

144.  Relief  of  Party  Injuriously  Affected  by  Ir- 
regularity in  Sale. 
A  party  to  the  action,  or  a  third  person  holding 
an  interest  in  the  property  sold,  who  has  been  in- 
juriously affected  by  an  irregularity  in  the  sale 
of  the  property,  may,  upon  application  to  the 
court,  cause  the  sale  to  be  vacated.^^ 

in  the  case  of  a  foreclosure  of  a  mortgage  to  satisfy 
a  lien  thereon,  is  afterward  modified  on  appeal  by 
merely  reducing  the  amount  of  the  lien  without 
changing  that  portion  which  directs  a  sale  of  the 
property.  In  such  a  case,  unless  the  defendant 
[owner  of  the  encumbered  property]  tenders  to  the 
plaintiff  [encumbrancer]  the  amount  which  the  judg- 
ment, as  modified,  declares  he  is  entitled  to  receive 
from  the  sale  of  the  lands,  together  with  the  costs 
incurred  upon  the  original  sale,  it  should  be  made  to 
appear  that  there  was  som-e  unfairness  in  the  sale, 
or  that  the  property  would,  upon  a  resale,  bring  a 
larger  amount  than  at  the  first  sale,  before  he  could 
claim  a  right  to  have  the  sale  set  aside ^^:  Barnhart 
V.  Edwards,  128  Cal.  572,  576,  577,  61  Pac.  176. 

But  the  reversal  of  the  judgment  on  appeal  is  suffi- 
cient ground •  for  setting  the  sale  aside:  Cowdery  v. 
London  and  San  Francisco  Bank,  Lim.,  Cal.,  June  15, 
1903. 

f>i  Relief  of  Party  Injuriously  Affected  by  Irreg- 
ularity in  Sale.— '^Whether  a  motion  to  vacate  a  sale 
of  property  made  in  execution  of  a  judgment,  on  ac- 
count of  some  irregularity  on  the  part  of  the  officer 
m^aking  the  sale,  should  be  granted,  rests  very  largely 
in  the  discretion  of  the  court  before  whom  the  mo- 
tion is  made;  and  it  is  immaterial  whether  such  irreg 
ularity  consists  in  disregarding  the  provisions  of  the 
statute  for  making  the  sale,  or  in  failing  to  observe 
and  follow  some  express  direction  in  the  judgment. 
A  party  to  an  action  cannot  claim  an  absolute  right 
to  have  such  sale  vacated  unless  he  shall  show  that  he 
has    sustained    some    injury   by    reason    of    the    irreg- 


§    145  SALE     OF     PROPERTY.  267 

145.     Relief  of  Purchaser  when  Sale  Null, 

A  purchaser  who,  after  his  purchase,  discovers 

that  he  did  not  ohtain  the  interest  subjected  to 

sale  by  reason  of  a  failure  to  obtain  jurisdiction 

of  the  subject  matter  or  of  the  parties,  or  other 

cause,  may,  on  petition  to  the  court,  be  released 

from  his  purchase  and  cause  the  sale  to  be  va- 
cated.s2 

nlarity.  Even  if  the  judgment  contain  express  direc- 
tions as  to  the  form  and  manner  of  the  sale,  if  the 
parties  to  the  action  consent  that  the  officer  may  dis- 
regard these  provisions,  they  will  not  afterward  be 
permitted  to  object  to  such  disregard.  A  stranger 
will  not  be  permitted  to  intrude  himself  into  the 
controversy,  unless  he  shall  very  clearly  show  that  he 
has  some  interest  in  the  property  sold,  and  also  that, 
by  reason  of  the  manner  in  which  the  sale  was  con- 
ducted, he  will  be  injuriously  affected  if  the  sale  is 
permitted  to  stand^':  Humboldt  Sav.  etc.  Soc.  v. 
March,  136  Cal.  321,  68  Pac.  968. 

Where  a  foreclosure  action  was  grossly  irregular, 
and  a  party  to  the  action  was  injured  thereby,  the 
sale  may  be  set  aside  where  the  motion  to  set  aside 
was  made  before  the  expiration  of  the  time  of 
redemption:  Van  Loben  Sels  v.  Bunnell,  131  Cal.  489, 
492,  493,  63  Pac.  773. 

Where,  in  a  mortgage,  foreclosure  judgment,  writ 
of  sale,  and  notice  of  sale  the  land  was  erroneously 
described  through  mutual  mistake,  and  an  action 
was  brought  to  reform  the  mortgage  and  other  in- 
struments, ^^it  is  in  the  power  of  the  court  of  equity, 
after  having  reformed  the  mortgage  and  proceedings 
down  to  the  sale,  to  direct  a  new  notice  and  sale,  if 
justice  requires  if:  Busey  v.  Moraga,  130  Cal.  586, 
588,    589,    62   Pac.    1081. 

52  Boggs  V.  Hargrave,  16  Cal.  559,  564.  Com- 
pare the  case  of  Branham  v.  Mayor  and  Common 
Council  of  San  Jose,  24  Cal.  '585,  608,  where  relief 
was  denied  the  purchaser. 


268  THE     FORECLOSURE     ACTION.  §    145 

Where^  however,  the  purchaser  obtains  the  in- 
terest specifically  subjected  to  sale,  but  by  mu- 
tual mistake  of  fact  a  part  of  the  property  was 
omitted  from  the  description  of  the  property 
contained  in  the  writ  of  sale,  and  the  deed  fol- 
lowed the  writ,  the  purchaser  is  not  entitled  to 
maintain  an  independent  action  to  correct  the 
mistake.^^ 

Rationale.— While  the  purchaser  takes  the  risk  that 
the  interest  sold  him  may  not  constitute  a  valid  title, 
he  nevertheless  is  entitled  to  receive  the  interest 
specifically  subjected  to  sale,  as  it  is  for  that  interest 
he  m-akes  his  bid  and  pays  his  money:  Boggs  v.  Har- 
grave,  16  Cal.  550,  564,  76  Am.  Dec.  561.  See,  also, 
Code  Civ.  Proc,  sec.  708,  which  safeguards  the  pur- 
chaser at  execution  sale;  but  the  second  sentence  of 
this  section,  at  any  rate,  does  not  seem  to  be  ap- 
plicable in  foreclosure  cases. 

53  Hull  V.  Calkins,  137  Cal.  84,  69  Pac.  838. 

Quivey  v.  Baker,  37  Cal.  465  (see  section  245,  be- 
low), in  which  a  sheriff's  deed  was  reformed,  differs 
from  this  case  in  two  essential  respects:  (1)  There 
was  no  mistake  as  to  the  property  intended  to  be 
sold  or  as  to  that  in  fact  sold,  the  property  being 
pointed  out  to  the  bidders  on  the  ground,  though  the 
property  was  sold  under  a  mistaken  description;  but 
here  the  mistake  ^^was  not  in  describing  the  prop- 
erty to  be  sold,  but  in  omitting  to  provide  for  the 
sale  of  a  part  of  the  property  that  might  have  been 
sold.''  (2)  In  the  Quivey  case,  the  mistake  occurred 
originally  in  the  mortgage  and  from  that  was  carried 
into  the  foreclosure  proceedings,  and  "this  fact  ''fur- 
nished the  ground  of  the  decision,  the  court  saying, 
equity  '  will  not  only  go  back  to  the  original  error,  and 
reform  it,  but  will  administer  complete  justice  by  cor- 
recting all  subsequent  mistakes  which  grew  out  of  and 
were  superinduced  by  the  first ';  but  here  there  was  no 
mistake  in  the  trust   deed,  but  merely  a  mistake  of 


§    146  SALE      OF      PROPERTY.  269 

Subdivision  6.     Delivery  of  Property  and  Certifi- 
cate of  Sale. 

146.  Movable  Property  Capable  of   Manual  De- 
livery to  be  Delivered  to  Purchaser. 

When  the  purchaser  of  movable  property 
capable  of  manual  delivery  pays  the  purchase 
money,  the  officer  making  the  sale  must  deliver 
to  the  purchaser  the  property,  and,  if  desired, 
execute  and  deliver  to  him  a  certificate  of  sale.^* 

147.  Certificate  of  Sale  of  Other  Movable  Prop- 
erty to  be  Given  Purchaser. 

When  the  purchaser  of  any  movable  property 
not  capable  of  manual  delivery  pays  the  purchase 
money,  the  officer  making  the  sale  must  execute 
and  deliver  to  the  purchaser  a  certificate  of 
sale.^^ 

148.  Certificate  of  Sale  of  Immovable  Property 
to  be  Given  Purchaser. 

Upon  a  sale  of  immovable  property,  the  ofli- 
cer  must  give  the  purchaser  a  certificate  of  sale, 
containing 
(1)   a    particular    description    of    the    property 

sold; 

the  judge  sup^erinduced  by  the  mistake  of  the  at- 
torneys^' of  the  trustee,  in  the  production  of  which 
the  trustor  in  no  way  participated:  Hull  v.  Calkins, 
137  Cal.  84,  69  Pac.  838,  840. 

54  See  Code   Civ.  Proc,   sec.   698,  first   sentence. 

55  See  Code  Civ.  Proc,   sec.   699,  first   sentence. 


270  THE     FORECLOSURE     ACTION.  §    148 

(2)  the  price  bid  for  each  distinct  lot  or  parcel; 

(3)  the  whole  price  paid;  and 

(4)  in  case  the  sale  was  made  subject  to  re- 
demption^ a  statement  to  that  effect;  and  if 
the  judgment  under  which  the  sale  has  been 
made  is  payable  in  a  specified  kind  of  money 
or  currency,  the  certificate  must  also  specify 
the  kind  and  state  that  the  redemption  can 
only  be  effected  in  such  specified  kind  of  money 
or  currency.^^ 

149.  Certificate  of  Sale  Evidence  of  Title. 

The  certificate  of  sale  is  evidence  that  the 
title  of  the  property  sold  has  become  vested  in 
the  purchaser — conditionally  where  redemption 
is  allowable,  otherwise  unconditionally ;  and  when 
in  the  case  of  immovable  property,  the  title  is 
or  becomes  absolute,  the  certificate  is  evidence 
of  the  right  of  the  purchaser  or  his  assignee  to 
a  deed/'*'' 

150.  What  Equivalent  to  Assignment  of  Certifi- 

cate. 

A  deed  of  the  property  described  in  the  cer- 
tificate of  sale  made  by  the  certificate  holder  be- 

56  See  Code  Civ.  Proc,  sec.  700,  Practice  Act,  sec. 
229,  in  part.  The  last  clause  of  the  fourth  subdivision 
was  added  by  the  amendment  of  April  27,  1863,  to 
the  section  of  the  Practice  Act. 

57  Foorman  v.  Wallace,  75  Cal.  552,  556, 17  Pac.  680; 
Eiley  v.  Martlnelli,  97  Cal.  575,  583,  33  Am.  St.  Kep. 
209,  32  Pac.  576. 


r 


§    150  SALE     OF     PROPERTY.  271 

fore  the  sheriff's  deed  is  given^  whether  before  or 
after  the  expiration  of  the  time  of  redemption, 
is  equivalent  to  an  assignment  of  the  certifi- 
cate.^^ 

151.     Duplicate  Certificate  of  Sale  of  Immovable 
Property  must  be  Filed.^*^ 

The  officer  must  file  a  duplicate  certificate  of 
sale^^  of  immovable  property  in  the  office  of  the 
recorder  of  the  county;  and  the  recorder  must 
record  the  same  as  prescribed  by  law. 

58  Deed  by  Purchaser  Ectuivalent  to  Assignment 
of  Certincate:  Green  v.  Clark,  31  Cal.  591,  594,  595 
(where  the  deed  was  made  before  the  expiration  of 
the  time  of  redemption) ;  Ward  v.  Dougherty,  7'5  Cal. 
240,  244,  245,  7  Am.  St.  Rep.  151,  17  Pac.  193  (where 
the  deed  was  made  subsequent  thereto);  Leonard  v. 
rivnn,  89  Cal.  535,  539,  23  Am.  St.  Eep.  500,  26  Pac. 
1097. 

In  Page  v.  Rogers,  31  Cal.  293,  305,  the  court  says: 
'^If  a  sale  of  the  purchaser's  interest  after  the 
time  for  a  redemption  expires  operates  as  an  assign- 
ment of  the  sheriff's  certificate  of  sale,  a  sale  before 
the   time   expires  must   have   the   same   operation.'' 

59  See  Code  Civ.  Proc,  sec.  700,  last  sentence. 
Also  Pol.  Code,  seq.  4237. 

60  Insufacient  Duplicate  Certilcate.— Where  the 
certificate  originally  recorded  erroneously  stated  a  cer- 
tain person  to  be  the  purchaser,  and  an  amended  certifi- 
cate was  afterward  recorded,  in  which  the  date  of  the 
sale  was  stated  as  that  upon  which  the  amended 
certificate  was  made,  conceding  that  the  officer  could 
make  the  amended  certificate  after  several  months, 
and  that  redemptioners  or  other  parties  were  called 
to  look  for  additional  certificates  of  sale,  as  an  ex- 
amination of  the  record  would  not  in  this  case  have 
shown  the  amended   certificate   to   refer  to   the   sale, 


272  THE     FORECLOSURE     ACTION.  §    152 

152.     When  Filed,  Certificate  Imparts  Notice. 

The^^  filing  of  the  duplicate  certificate  of  sale 
by  the  ofiicer  imparts  constructive  notice  of  the 
interest  in  the  property  acquired  by  the  pur- 
chaser under  it,  which  notice  continues  after  the 
expiration  of  the  time  of  redemption  [at  least 
for  a  time  reasonable  for  procuring  a  sheriff^s 
deed]«2 

The^^  purchaser  is  also  protected  against  all 
rights  in  the  property  of  which  he  had  neither 
actual  nor  constructive  notice  at  the  time  of  such 
filing. 

as  the  date  thereof  was  not  correctly  stated,  the 
amended  certificate  would  not  be  notice  to  anybody: 
Fekin  etc.  Co.  v.  Kennedy,  81  Cal.  356,  22  Pac.  679.  "^ 

61  Page  V.  Eogers,  31  Cal.  293,  309-321;  Foorman 
V.  Wallace,  75  Cal.  552,  557,  558,  17  Pac.  680.  Nor 
does  filing  it  in  an  unusual  place  in  the  office  of  the 
recorder  render  the  filing  insufficient,  so  long  as  the 
duplicate  is  safely  kept  and  preserved:  Page  v. 
Eogers,  31  Cal.  293,   307-309,  Shafter,  J.,   dissenting. 

62  At  Least  for  Time  Reasonable  for  Procuring 
Sheriff's  Deed.— In  Page  v.  Eogers,  31  Cal.  293,  317, 
this  question  is  discussed,  but  not  determined,  al- 
though it  is  intimated  that  culpable  delay  might 
vitiate  the  notice.  It  was,  however,  determined  that 
a  mere  delay  of  a  year  and  ten  days  was  not  un- 
reasonable. 

63  This  follows  from  the  fact  that  the  certificate 
of  sale  is  an  instrument,  whereby  an  interest  or  title 
is  created  within  the  meaning  of  the  recording  acts: 
See  Civ.  Code,  sec.  1107;  Foorman  v.  Wallace,  75 
Cal.  552,  556,  557,  17  Pac.  680;  Eiley  v.  Martinelli,  97 
Cal.  575,  583,  32  Pac.  576,  33  Am.  St.  Eep.  209;  Duff 
V.  Eandall,  116  Cal.  226,  231,  58  Am.  St.  Eep.  158,  48 
Pac.  Q6.     For  the  term  "instrument^'  means  a  writ- 


§    153  SALE   OF   PROPERTY.  273 

Subdivision  7.     Operation  of  Sale. 

153.  Sale  Extinguishes  Secured  Obligation  Pro 
Tanto. 

A  sale  of  encumbered  property  extinguishes, 
so  far  as  satisfied,  each  obligation  secured  by  the 
property  ordered  to  be  sold.^^ 

154.  Sale  Vests  Encumbered  Property  in  Pur- 
chaser. 

The  sale  vests  in  the  purchaser,^^  or,  where 

ten  paper,  signed  and  delivered  by  one  person  to 
another,  transferring  the  title  to,  or  creating  a  lien 
on,  property,  or  giving  a  right  to  a  debt  or  a  duty: 
Hoag  V.  Howard,  55  Cal.  564;  Foorman  v.  Wallace, 
75  Cal.  552,  555,  556,  17  Pac.  680. 

64  Central  Pacific  E.  R.  Co.  v.  Creed,  70  Cal. 
497,  500,  11  Pac.  772;  Reynolds  v.  London  etc. 
Ins.  Co.,  128  Cal.  16,  19,  20,  21,  79  Am.  St.  Rep.  17, 
60  Pac.  467. 

Contra,  National  Bank  v.  Union  Ins.  Co.,  88  Cal. 
497,  508,  509,  22  Am.  St.  Rep.  324,  26  Pac.  509,  over- 
ruled in  Reynolds  v.  London  etc.  Ins.  Co.,  above. 

65  Sale  Vests  Property  in  Purchaser.— In  case  of 
sale  of  movable  property,  see  Code  of  Civil  Procedure, 
sections  698  and  699,  last  sentence  in  each  providing: 
''Such  certificate  conveys  to  the  purchaser  all  the 
right  which  the  debtor  had  in  such  property  on  the 
day  the  execution  or  attachment  was  levied.'* 

In  case  of  immovable  property,  see  Code  of  Civil 
Procedure,  section  700,  in  part,  providing:  ''Upon 
a  sale  of  real  propierty,  the  purchaser  is  substituted 
and  acquires  all  the  right,  title,  interest,  and  claim 
of  the  judgment  debtor  thereto;  and  when  the  estate 
is  less  than  a  leasehold  of  two  years*  unexpired  term, 
the  sale  is  absolute.  In  all  other  cases,  the  property 
Liens— 18 


274  THE  FORECLOSUHE  ACTION.  §  154 

redemption  is  allowable^  in  a  redemptioner  who 
redeems  from  him,  such  interest  in  the  property 
sold  as  belonged  to  all  parties  whose  rights  in 

is  subject  to  redemption/^  Practice  Act,  section  229, 
as  amended  May  15,  1862,  provided  substantially  the 
same. 

The  purchaser  comes  in,  so  far  as  title  is  concerned, 
as  successor  by  operation  of  law  of  the  person  whose 
title  is  sold,  and  not  by  independent  title:  Le  Eoy  v. 
Kogers,  30  Cal.  229,  235,  89  Am.  Dec.  88. 

Thus  prior  to  the  entry  of  a  foreclosure  judgment, 
the  mortgagor  holds  the  title  to  the  mortgaged  prop- 
erty subject  to  the  lien  of  the  mortgage,  and  after 
the  judgment  is  entered  he  holds  it  subject  to  the 
lien  of  the  judgment;  but  after  the  sale  he  has  only 
the  right  of  redemption,  while  the  purchaser  has  the 
entire  beneficial  interest  in  the  prop'erty,  subject  to 
be  defeated  by  a  redemption  from  the  sale:  Eeynolds 
V.  London  etc.  Ins.  Co.,  128  Cal.  16,  20,  79  Am.  St. 
Eep.  17,  60  Pac.  467. 

Historical.— Tra^etiee  Act,  229  (now  Code  Civ. 
Proc,  sec.  700),  as  enacted  1851,  and  until  the 
amendment  of  May  15,  1862,  in  part,  provided: 
'^Upon  a  sale  of  real  property,  when  the  estate  is 
less  than  a  leasehold  of  two  years'  unexpired  term, 
the  sale  shall  be  absolute.  In  all  other  cases,  the 
real  property  shall  be  subject  to  redemption,  as  pro- 
vided in  this  chapter.'' 

McMillan  v.  Eichards,  9  Cal.  365,  70  Am.  Dec.  655, 
was  decided  while  this  provision  was  in  force;  and 
the  court  holds:  ''The  estate  remains  in  the  mort- 
gagor until  a  consummation  of  the  sale  by  convey- 
ance" (p.  412).  ''The  title  remains  in  the  mort- 
gagor until  conveyance  executed.  Until  then  the 
purchaser  has  no  .legal  estate  in  the  premises,  but 
only  a  right  to  an  estate  which  might  be  perfected 
by  conveyance"   (p.  415). 

Other  cases,  many  of  them  decided  after  the 
amendment  of  1862,  say  that  the  title  passes  upon 
the  consummation  of  the  sale  by  the   sheriff's   deed, 


§    154  SALE   OF   PROPERTY.  275 

and  that  meanwhile  the  purchaser  has  a  mere  lien: 
Knight  V.  Fair,  9  Cal.  117;  Montgomery  v.  Tutt,  11 
Cal.  190,  192;  People  v.  Mayhew,  26  Cal.  65'o,  660; 
Baber  v.  McLellan,  30  Cal.  135;  Page  v.  Eogers,  31 
Cal.  293,  300;  Swain  v.  Stockton  Sav.  etc.  Soc,  78 
Cal.  600,  604,  12  Am.  St.  Eep.  118,  21  Pac.  365;  Leon- 
ard V.  Flvnn,  89  Cal.  535,  '540,'  23  Am.  St.  Eep.  500, 
26   Pac.    i097. 

Likewise  in  Pacific  Mut.  Life  Ins.  Co.  v.  Beck 
(Cal.),  35  Pac.  169,  170B,  it  is  said  that  the  pur- 
chaser at  foreclosure  sale  has  the  rights  of  an  owner 
only  when  he  becomes  entitled  to  a  deed  (a  state- 
ment  subject  to   important  qualifications). 

In  accordance  with  this  view,  it  was  said  in  Mc- 
Millan V.  Eichards,  9  Cal.  365,  415,  70  Am.  Dec.  655, 
note,  that  redemption  could  be  made  at  any  time 
before  title  passed  by  the  conveyance. 

In  other  cases,  some  recent,  as  Foorman  v.  Wal- 
lace, 75  Cal.  552,  556,  17  Pac.  680,  fhe  court  takes  an 
intermediate  view  and  holds  that  the  owner  of  the 
property  sold  retains  the  mere  dry  legal  title,  as  dis- 
tinguished from  the  equitable  title. 

In  Pollard  v.  Harlow,  138  Cal.  390,  71  Pac.  454,  the 
court  for  the  first  time  clearly  pioints  out  the  change 
in  the  law  wrought  by  the  amendment  of  1863.  The 
court  says:  ''The  case  of  Haskell  v.  Manlove,  14  Cal. 
54,  and  the  previous  case  of  Knight  v.  Fair,  9  Cal. 
117,  and  McMillan  v.  Eichards,  9  Cal.  412,  70  Am. 
Dec.  65'5,  note,  involved  the  construction  of  section 
229  of  the  Practice  Act,  prior  to  the  amendment  of 
April  27,  1863  [May  15,  1862],  which  materially 
changed  the  law,  and  has"  been  carried  into  the  codes. 
The  case  of  Page  v.  Eogers,  31  Cal.  301  et  seq.,  was 
subsequent  to  the  amendment,  but  the  transactions 
involved  were  of  prior  date  thereto,  and  what  is 
said  by  the  court  must  be  regarded  as  applying  to 
the  case  before  it;  and  the  remark  will  apply  to  the 
case  of  McMinn  v.  O'Connor,  there  cited.  In  later 
cases,  the  court,  following  Haskell  v.  Manlove,  and 
ether  cases  under  the  old  law,  sometimes  refer  to  the 
title  of  the  purchaser  as  'equitable,'  but  in  none  of 
them    was    the    question    involved    or    considered,    or 


276  THE    FORECLOSURE    ACTION.  §    154 

the  change  of  the  law  by  the  amendment  of  1863 
remarked  upon:  Simpson  v.  Castle,  52  Cal.  649,  and 
Eobinson  v.  Thornton  [102  Cal.  680,  34  Pac.  120]. 
Nor  do  we  think  that  under  the  law  as  amended,  the 
title  of  the  purchaser  can  be  so  regarded. 

^'The  language  of  section  700,  Code  of  Civil  Pro- 
cedure, is  that  upon  the  sale  of  the  property  'the 
purchaser  is  substituted  to  and  acquires  all  the  right, 
title,  interest,  and  claim  of  the  judgment  debtor 
thereto;  which  is  to  say,  unequivocally,  that  he 
acquires  the  legal,  as  well  as  the  equitable,  title. 
The  only  qualifications  are  that  (when  not  a  lease- 
hold of  less  than  two  years'  unexpired  term),  the 
property  shall  be  'subject  to  redemption';  that  a 
deed  shall  be  subsequently  given  (Code  Civ.  Proc, 
sec.  703),  and  that  pending  the  time  for  redemption 
the  possession  shall  remain  with  the  defendant:  Code 
Civ.  Proc,  sec.  706.  But  no  one  of  these  qualifica- 
tions is  inconsistent  with  the  vesting  of  the  legal 
title  in  the  purchaser.  With  regard  to  the  first,  the 
case  is  simply  the  familiar  one  of  a  legal  title, 
defeasible  upon  the  happening  of  a  condition  subse- 
quent; and  as  to  the  second,  the  deed  gives  'to  the 
purchaser  no  new  title  to  the  land  purchased  by  him, 
but  [is]  merely  evidence  that  the  title  has  become 
absolute':  Eobinson  v.  Thornton  [102  Cal.  680,  34  Pac. 
120].  Nor  is  the  continued  possession  of  the  lan^l 
by  the  judgment  debtor  any  more  incompatible  with 
tiie  existence  of  the  legal  title  in  another  than  in 
the  ordinary  case  of   a  tenant   and  his  landlord. 

"We  therefore  have  but  little  doubt  that,  under 
the  provisions  of  the  code  as  they  now  ex,ist,  the 
purchaser  of  real  estate  at  execution  sale  acquires  the 
legal  title  to  the  land,  subject  to  defeasance  by  the 
happening  of  the  condition  subsequent.  But  with- 
out passing  definitely  on  this  point,-  it  will  be  suffi- 
cient to  hold " 

On  a  petition  for  rehearing  in  bank,  Shaw,  J.,  said, 
February  24,  1903:  "In  denying  a  rehearing  in  this 
ease  I  desire  to  say  that  that  part  of  the  opinion 
to  the  effect  that  the  purchaser  of  land  at  sheriff's 
sale    or    commissioner's    sale    acquires   the   legal   title 


§    154  SALE   OF   PROPERTY.  277 

respect  thereto  were  duly  litigated  in  the  fore- 
closure action  and  ordered  to  he  sold  hy  the  fore- 
closure judgment^^^  together  with  every  appur- 

to  the  land,  must  be  taken  coupled  with  the  qualifica- 
tions stated  in  the  immediate  context.  It  is  enough, 
for  the  purposes  of  the  decision  of  the  case,  to  say 
that  such  purchaser  acquires  a  qualified  title  which 
is  sufiicient  to,  and  does,  carry  with  it  the  right  to 
redeem  from  another  sale.  To  hold  thus  does  not 
make  it  necessary  to  also  hold  that  the  sale  devests 
the  judgment  creditor  of  his  right  to  redeem  from 
another  sale.     The  right  may  exist  in  both.'' 

60  Vests  in  Purchaser  Rights  of  All  Parties 
Whose  Rights  Were  Litigated  and  Ordered  to  be 
Sold. — The  rights  of  subsequent  purchasers  or  en- 
cumbrancers of  the  mortgaged  property,  made  par- 
ties in  the  foreclosure  action,  are  cut  off  by  the 
judicial  sale  of  the  property:  Shores  v.  Scott  Eiver 
Co.,  21  Cal.  135;  Grattan  v.  Wiggins,  23  Cal.  16,  35. 

The  judgment  and  all  proceedings  in  an  action  to 
foreclose  a  mortgage  are  conclusive  against  a  trans- 
feree of  the  property  not  of  record,  such  transferee 
not  being  a  necessarv  party:  Breed] ove  v.  Norwich 
Union  Fire  Ins.  Co.,  'l24  Cal.  164,  166,  56  Pac.  770. 
See,  also,  Daniels  v.  Henderson,  49  Cal.  242,  248. 

The  sale  does  not  affect  the  rights  of  necessary 
parties  not  joined  in  the  action:  See  sec.  109,  above. 

Where  the  issue  is  raised  by  a  foreclosure  com- 
plaint that  the  interest  or  right  which  certain  par- 
ties to  the  action  claim  is  subsequent  to  and  subject  to 
the  encumbrance  to  foreclose  which  the  action  is 
brought,  if  the  persons  so  impleaded  fail  to  appear 
and  set  up  their  interests,  whatever  interest  they 
have  which  is  in  fact  subsequent  to  the  encumbrance 
litigated  will  be  foreclosed  by  the  judgment:  Poett  v. 
Stearns,  28  Cal.  226;  Anthony  v.  Nye,  30  Cal.  401; 
Himmelraann  v.  Spanagel,  39  Cal.  389,  391;  Sichler 
V.  Look,  93  Cal.  600,  608,  609,  29  Pac.  220. 

^'It  has  been  stated  in  several  cases  that  the 
effect  of  a  sale  under  a  judgment  in  foreclosure  is  to 


278  THE    FORECLOSURE    ACTION.  §    154 

tenance  of  such  interest,^'^  subject,  however, 
where  redemption  is  allowable,  to  the  right  of 
possessions^  of  such  property  during  the  period 
of  redemption  by  the  person  entitled  to  posses- 
transfer  to  the  purchaser  the  title  of  the  mortgagor 
as  it  existed  at  the  date  of  the  mortgage,  and  that 
in  an  action  for  its  foreclosure  the  rights  of  defend- 
ants which  were  acquired  subsequent  to  its  date 
are  extinguished  by  such  sale These  expres- 
sions in  reference  to  the  effect  of  a  sale  under  fore- 
closure were,  however,  but  the  statement  of  a  gen- 
eral principle  in  which  only  the  ordinary  facts  and 
the  usual  conduct  of  the  parties  were  to  be  con- 
sidered, but  are  inapplicable  in  the  consideration  of 
an  unusual  state  of  facts  or  conduct,  as  where  the 
mortgagee  fails  to  record  his  mortgage  until  after 
a  third  person  has  acquired  an  interest  in  the  land. 
It  would  be  a  harsh  rule  of  procedure  to  hold  that 
the  foreclosure  of  a  mortgage  which  the  statute  had 
declared  to  be  void  would  extinguish  the  interest  of 
such  third  pierson'^:  Cadv  v.  Purser,  131  Cal.  552,  559, 
82?.  Am.  St.  Rep.  391,  63  Pac.  844. 

07  With  Appurtenances  Thereof:  Hungarian  Hill 
etc.  Co.  V.  Moses,  58  Cal.  168,  174;  Clyne  v.  Benicia 
Water  Co.,  100  Cal.  310,  34  Pac.  714. 

Compare  Farmer  v.  Ukiah  Water  Co.,  56  Cal.  11; 
Dixon  V.  Schermeier,  110  Cal.  582,  585,  586,  42  Pac. 
1091. 

So  an  amount  of  water  conducted  to  property  in  a 
pipe  or  channel  is  transferred  by  the  sale:  Clyne  v. 
Benicia  Water  Co.,  100  Cal.  310,  34  Pac.  714. 

But  where  the  purchaser  of  mortgaged  premises 
at  foreclosure  sale  disclaims  to  the  mortgagor  any 
interest  in  certain  nursery  stock  on  the  premises,  the 
mortgagor  may,  after  the  expiration  of  the  period 
of  redemption,  enforce  his  right  tO  remove  the 
nursery  stock:  Wallace  v.  Dodd,  136  Cal.  210,  68  Pac. 
693. 

68  Eight  of  Possession  not  Changed:  See  sec.  167 
below. 


§    154  SALE   OF   PROPERTY.  279 

sion  before  the  sale,  and  subject  also  in  such  case 
to  be  defeated  by  a  redemption.^^ 

155.  Sale    Extinguishes    Rights  of  Subordinate 
Encumbrancers  Therein. 

'<  The  sale  extinguishes  the  rights  of  every  sub- 
ordinate encumbrancer  in  the  property  affected 
by  the  encumbrance  which  was  foreclosed;  sav- 
ing, to  such  encumbrancer,  when  a  necessary  party 
but  not  duly  joined,  the  right  to  refund  the  pur- 
chaser his  purchase  money  with  interest  and  nec- 
essary expenditures  at  any  time  before  his  en- 
cumbrance is  extinguished  by  lapse  of  time  and 
to  thereupon  be  subrogated  to  the  rights  of  such 
purchaser.''^ 

156.  Sale  does    not  Affect    Paramount    Claims 
Thereto. 

The  sale  does  not  affect  rights  in  the  encum- 
bered property  held  by  persons  claiming  title  ad- 

69  Where  Redemption  Allowable  Title  Subject  to 
be  Defeated.— Where  redemption  is  allowable,  the 
title  passes  to  the  purchaser,  but  the  sale  is  a  con- 
ditional one,  which  may  be  defeated  by  the  payment 
of  a  certain  sum  by  certain  designated  persons  within 
a  certain  limited  time:  Page  v.  Eogers,  31  Cal.  293, 
301;  Central  Pacific  R  E.  Co.  v.  Creed,  70  Cal.  497, 
500,  11  Pac.  772;  Tilley  v.  Bonney,  123  Cal..  118,  124, 
55  Pac.  798;  Breedlove  v.  Norwich  Union  Fire  Ins. 
Co.,  124  Cal.  164,  166,  56  Pac.  770;  Eeynolds  v.  Lon- 
don etc.  Ins.  Co.,  128  Cal.  16,  20,  21,  79  Am.  St. 
Eep.  17,  60  Pac.  467. 

70  See  sec.  110,  and  notes,  above. 


280  THE    FORECLOSURE    ACTION.  §    156 

verse''^  or  an  interest  paramoimt'^^  to  that  of  the 
owner  of  the  interest  subject  to  the  encumbrance 
in  controversy  in  the  action,  in  which  the 
sale    was    ordered,    unless    their    claims    were 

71  Interest  of  Adverse   Claimant  not  Affected  by 

Sale. — A  foreclosure  sale  made  in  an  action  to  fore- 
close a  mortgage  does  not  affect  an  adverse  claimant 
of  the  mortgaged  property.  It  merely  has  the  effect 
of  transferring  the  interest  of  the  mortgagor  to  the 
jmrchaser— a  transfer  with  which  the  adverse  claim- 
ant  is   not   concerned. 

As  against  a  judgment  creditor  of  the  adverse 
claimant,  the  effect  of  the  foreclosure  is  simply  to 
transfer  the  title  of  the  mortgagor  to  the  purchaser 
as  of  the  date  of  the  mortgage:  Eamsbottom  v. 
Bailey,  124  Cal.  259,  262,  50  Pac.  1036.  See,  also, 
sec.  99  and  notes,  above. 

73  Paramount  Interest  not  Affected  by  Sale.— 
If  the  title  of  a  party  defendant  in  a  foreclosure 
action  is  a  paramount  one,  it  will  not  be  affected  by 
a  foreclosure,  whether  he  appears  or  not:  Murray  v. 
Etchepare,  129  Cal.  318,  321,  61  Pac.  930. 

A  sale  of  mortgaged  premises  under  a  judgment 
entered  against  a  party  made  a  party  because  claim- 
ing some  interest  or  right  in  respect  to  the  mortgaged 
premises,  which  is  subsequent  to  and  subject  to  the 
mortgage  to  foreclose  which  the  action  was  brought, 
will  be  limited  in  its  effect  to  the  rights  acquired 
therein  by  such  claimant  subsequent  to  the  mortgage, 
irrespective  of  the  character  of  the  averment.  If 
the  claimant  has  any  interest  in  the  mortgaged  prem- 
ises paramount  to  the  mortgage  it  will  not  be  affected 
bv  the  judgment  or  the  sale  thereunder:  Sichler  v. 
Look,  93  Cal.  600,  609,  29  Pac.  220. 

A  familiar  example  of  a  paramount  interest  is  one 
transferred  by  a  mortgagor  of  the  property  before 
the  execution  of  the  mortgage  by  him. 

Where  the  averment  is  made  by  a  foreclosure  com- 
plaint that  the  interest  or  right  which  certain  parties 


§    156  SALE  OF  PROPERTY.  281 

with  the  consent  of  the  parties  and  of  the 
court  litigated  and  adjudicated  in  the  foreclos- 
ure action  and  found  to  be  covered  by  the  en- 
cumbrance foreclosed;''^  nor  are  the  rights  of  any- 
superior  encumbrancer  in  respect  to  the  prop- 
erty affected^  except  where  such  encumbrancer 
was  properly  made  a  party  in  the  action  and  his 
rights  adjudicated  in  order  that  the  obligation 

to  the  action  claim  is  subsequent  and  subject  to  the 
encumbrance  to  foreclose  which  the  action  is  brought, 
and  such  parties  defendant  do  not  defend,  any  prior 
interest  which  may  be  held  by  them  is  not  affected 
by  the  judgment:  Beronio  v.  Ventura  Co.  Lumber  Co., 
129  Cal.  232,  238,  79  Am.  St.  Eep..ll8,  61  Pac.  958. 

Illustrations. — A  surviving  wife  owns  an  un- 
divided half  interest  in  a  probate  homestead,  and 
each  minor  child  has  a  proportionate  undivided  share 
of  the  other  half,  subject  to  the  right  to  occupy  the 
homestead  by  the  widow  during  her  life  and  by  each 
child  during  minority.  So,  where  a  surviving  wife 
mortgages  her  interest,  in  case  of  foreclosure  the 
purchaser  will  obtain  the  property  subject  to  the  right 
of  occupancy  in  the  minor  children:  Hoppe  v.  Foun- 
tain, 104  Cab  94,  101,  37  Pac.  894;  Hodge  v.  Norton, 
133  Cal.  99,  65  Pac.  123. 

Or  if  a  child  who  has  reached  majority  mortgages 
his  interest,  and  the  mortgage  is  foreclosed,  the  pur- 
chaser takes  subject  to  the  right  of  occupancy  by 
the  wife  during  her  life,  and  by  any  minor  children: 
Moore  v.  Hoffman,  125  Cal.  90,  73  Am.  St.  Eep.  27,  57 
Pac.    769. 

The  mortgage  is  a  waiver  by  the  mortgagor  of  the 
right  of  occupancy,  but  cannot-  terminate  the  rights 
of  the  other  parties:  Hodge  v.  Norton,  133  Cal.  99, 
101,  65  Pac.  123. 

73  Unless  the  Claim  was  Litigated  and  Adjudi- 
cated.—See  a  discussion  of  this  point  under  section 
99,  and  notes  above. 


282  THE    FORECLOSURE    ACTION.  §    156 

secured  by  his  enenmbrance  might  be  liquidated 
from  the  proceeds  of  the  sale,  in  which  case  his 
rights  are  determined  by  the  sale.''^ 

157.  Effect  of  Purchase  by  One  Person  Inter- 
ested in  Secured  Obligation  at  Request  of 
Another. 

Where  a  person  who  owns  some  interest  in 
or  right  to  an  obligation  secured  by  an  encum- 
brance causes  the  encumbered  property  to  be 
sold  in  satisfaction  of  his  demand,  and  at  the  in- 
stance of  another  person  also  holding  some  right 
in  respect  to  the  secured  obligation  purchases 
the  encumbered  property  at  the  sale  made  to 
liquidate  the  encumbrance,  as  between  him  and 
the  person  at  whose  instance  he  purchased  th'3 
property,  the  purchase  is  not  absolute,  and  he 
is  not  liable  to  the  latter  person  for  the  propor- 
tion of  the  purchase  price  due  him,  but  he  holds 
the  legal  title  to  the  property  as  trustee  for  the 

74  Eights  of  Superior  Encumbrancer,  How  Af- 
fected.—In  MeComb  v.  Spangler,  71  Cal.  418,  424,  12 
Pac.  347,  the  court  says:  ''The  decree  can  have  no 
effect  upon  the  rights  of  persons  having  priority, 
whether  they  are  made  parties  to  the  action  or  not. 
....  In  the  exceptional  cases  where  prior  mort- 
gagees are  made  parties,  this  is  done  that  the  court 
may  order  a  sale  of  the  whole  estate,  and  thus  make 
a  complete  title  in  the  purchaser.  In  such  cases  the 
complaint  may  be  treated  as  in  the  nature  of  a  bill 
to  foreclose  and  to  redeem  from  the  prior  mortgage." 

As  to  when  a  prior  encumbrancer  is  a  proper  party 
in  a  foreclosure  action,  see  section  106  above. 


§    157  SALE   OF   PROPERTY.  283 

latter  person^  who  is  entitled  to  have  the  trust 
property  converted  into  money  and  the  proceeds 
ratably  proportioned;''^  but  nnder  other  circum- 
stances^ except  in  case  of  frauds  a  sale  to  such 
a  person  is  absoluteJ^ 

S'uMivision  8.     Title  of  Purchaser  of  Immovable 
Property. 

158.  Purchaser  Entitled  to  Deed  When  Title  Ab- 
solute. 
When  the  title  of  the  purchaser  of  immovable 
property  or  of  his  successor  in  interest  by  as- 
signment or  by  operation  of  law  becomes  abso- 
lute/'' the  person  in  whom  the  title  has  thus  be- 

75  This  IS  true  where  one  of  two  persons  jointly 
interested  in  an  obligation  secured  by  an  encum- 
brance at  the  request  of  the  other  person  purchases 
the  property  at  the  foreclosure  sale  thereof  in  satis- 
faction of  such  secured  obligation:  Hardin  v.  Dickey, 
123  Cal.  513,  515,  516,  56  Pac.  258. 

Where  a  mortgagee  pledges  the  note  secured  by 
his  mortgage,  and  the  pledgee,  at  the  request  of  the 
mortgagee,  purchases  the  land  at  the  foreclosure  sale 
thereof,  the  pledgee  becomes  the  trustee  of  the  land, 
and  entitled  to  hold  the  legal  title  thereto  until  the 
pledgor  satisfies  the  obligation  .owing  him,  or  causes 
the  land  to  be  sold  under  judicial  process  and  the 
proceeds  applied  to  the  satisfaction  of  the  pledgee's 
interest  in  the  secured  demand:  Hoult  v.  Eamsbottom^ 
127  Cal.  171,  59  Pac.  587. 

76  Kelly  V.  Matlock,  85  Cal.  122,  129,  24  Pac.  642. 

77  As  to  when  title  becomes  absolute,  see  section 
183  below. 

But    where*  a   valid   redemption   is   made   from   the 


fc 


284  THE    FORECLOSUKE     ACTION.  §    158 

come  absolute''^  is  entitled  to  receive  a  deed''^ 
thereof  from  the  officer  making  the  sale,  or 
where  such  officer  is  dead,  absent  from  the  state, 
or  in  any  wise  disqualified,  from  the  person  who 
succeeds  him  in  office.^^  The  execution  of  the 
deed  confers  no  new  title  to  the  property  upon 

purchaser,  the  sheriff  has  no  power  to  execute  a  con- 
veyance to  the  purchaser:  Hershey  v.  Dennis,  53  Cal. 
77,^  80. 

78  The  Person  in  Whom  the  Title  Has  Become 
Absolute  is  Entitled  to  the  Deed.— Thus,  a  deed  given 
to  the  purchaser  after  he  assigns  the  certificate  of 
sale  is  void  as  between  the  parties:  Green  v.  Clark, 
31  Cal.  591,  594,  595;  Ward  v.  Dougherty,  75  Cal.  240, 
244,  245,  7  Am.  St.  Eep.  151,  17  Pac.  193. 

79  Is  Entitled  to  Receive  Deed.— Code  of  Civil 
Procedure,  section  703,  fourth  sentence,  provides: 
''If  no  redempition  be  made  within  twelve  months 
after  the  sale,  the  purchaser,  or  his  assignee,  is  en- 
titled to  a  conveyance;  or  if  so  redeemed,  whenever 
...  .  the  time  for  redemption  has  expired,  the  last 
redemptioner,  or  his  assignee,  is  entitled  to  a  sheriff  ^s 
deed.'' 

80  Sheriff's  Successor  may  Execute  Deed.— Stats. 
1858,  p.  95,  c.  121,  sees.   1  and  3  provide: 

Sec.  1.  ''Where  lands  have  been  or  may  hereafter  bo 
sold  by  a  sheriff,  or  other  authorized  officer,  for  taxes, 
or  under  an  execution  or  order  of  sale,  and  the  pur- 
chaser or  his  assigns  may  be  entitled  to  a  deed,  and 
the  sheriff,  or  other  .officer,  who  made  the  sale,  is 
dead  or  absent  from  the  state,  or  in  any  wise  dis 
qualified,  it  shall  be  lawful  for  the  successor  of  said 
sheriff,  or  other  officer,  to  make  such  deed  to  such 
purchaser,  his  assignee  or  assignees,  in  the  same  man- 
ner and  with  the  same  effect,  as  if  made  by  the 
officer  making  such  sale.'' 

Sec.  3.  "Such  deeds,  so  made  as  aforesaid,  shall 
have  the  same  force  and  effect  as  evidence  as  if  made 
by  the  officer  making  such  sale." 


§    158  SALE   OF    PROPERTY.  285 

the  recipient  thereof^  but  is  merely  evidence  that 
the  title  has  become  absoliite.^^ 

159.  Deed  Prematurely  Made  Void. 

A  deed  made  by  the  officer  before  the  sale  has 
become  absolute  in  consequence  of  the  expira- 
tion of  the  period  of  redemption  is  void.^^ 

160.  Confers  Eight  of  Possession. 

From  the  time  the  officer^s  deed  is  given^  the 
recipient  thereof  is  entitled  to  the  possession  of 
.  the  property  described  therein.^^  Thus  the 
statute  of  limitations  on  a  possessory  action  for 
the  property  commences  to  run  against  the  re- 
cipient of  the  deed  from  the  time  of  the  delivery 
of  the  deed  to  him.^^ 

81  Deed  Merely  Evidence:  Eobinson  v.  Thornton, 
302  Cal.  67'o,  680,  34  Pac.  120;  Duff  v.  Eandall,  116 
Cal.  226,  230,  58  Am.  St.  Eep.  158,  48  Pac.  66;  Breed- 
love  V.  Norwich  Union  Fire  Ins.  Co.,  128  Cal.  16,  20, 
79  Am.  St.  Eep  17,  60  Pac.  437;  Pollard  v.  Harlow, 
138  Cal.  390,  71  Pac.  454. 

82  Gross  V.  Fowler,  21  Cal.  392;  Bernal  v.  Gleim, 
33  Cal.  668,  675;  Moore  v.  Martin,  38  Cal.  428,  438; 
Hall  V.  Yoell,  45  Cal.  584,  588;  Perham  v.  Kuper,  61 
Cal.  331;  Phillips  v.  Hagart,  113  Cal.  552,  557,  54 
Am.  St.  Eep.  369,  45  Pac.  843. 

The  sheriff  has  no  power  to  execute  it  before  then, 
'  and  it  is  void,  not  voidable:  Gross  v.  Fowler,  21  Cal. 
392. 

83  Kldd  V.  Teeple,  22  Cal.  255;  Leonard  v.  Flynn, 
89  Cal.  535,  542,  23  Am.  St.  Eep.  500,  26  Pac.  1097; 
McDonald  v.  McCoy,  121  Cal.  55,  73,  53  Pac.  421. 

84  Jefferson  v.  Wendt,  51  Cal.  537;  Leonard  v. 
Flynn,  89  Cal.  535,  542,  23  Am.  St.  Eep.  500,  26  Pac. 
1097. 


286  THE  FORECLOSURE  ACTION.  §  161 

161.     Writ  of  Assistance  Issuable  Against  Parties 
to  Action.^^ 

As  against  the  parties  to  a  foreclosure  action 
whose  rights  were  foreclosed  by  the  judgment 
rendered  therein  and  other  persons  bound  there- 
by,^^  but  not  as  against  third  parties^^''  at  any 
time  after  having  obtained  the  officer^s  deed,  the 
recipient  thereof  may,  after  the  presentation  of 
the  deed  to  the  occupant,  the  making  of  a  de- 

85  If  a  writ  of  assistance  is  improperly  issued 
or  executed,  the  court  can,  on  summary  motion,  set 
aside  the  writ  or  service  thereof,  and  restore  the 
possession  of  the  property:  Skinner  v.  Beatty,  16  Cal. 
156. 

86  That  the  writ  is  issuable  against  parties  to  the 
action  and  those  bound  thereby,  see  Frisbie  v.  Fo- 
garty,  34  Cal.  11.  See,  also,  Montgomery  v.  Mid- 
dlemiss,  21  Cal.  103,  107,  81  Am.  Dec.  146,  as  cited 
under  note  88,  below. 

87  Writ  cannot  be  Issued  Against  Stranger  to 
Action. — On  a  motion  for  a  writ  of  assistance,  ques- 
tions of  equitable  cognizance  between  strangers  to 
the  foreclosure  action,  who  are  in  possession  of  the 
property  involved,  and  the  applicant  for  the  writ 
cannot  be  litigated:  Henderson  v.  McTucker,  45  Cal. 
647;  Daniels  v.  Henderson,  49  Cal.  242,  247  j  Enos  v. 
Cook,   65  Cal.  175,   178,  3  Pac.  632. 

Illustrations.— A.  writ  cannot  issue  against  a  neces- 
sary party  not  joined  as  such  in  the  foreclosure  ac- 
tion: Burton  V.  Lies,  21  Cal.  87,  92;  Steinbach  v. 
Leese,  27  Cal.  295. 

Where  a  partner  mortgages  his  interest  in  part- 
nership property,  and  a  receiver  of  the  partnership 
in  posse;5sion  of  the  property  was  not  joined  as  a 
praty  in  the  foreclosure  action,  a  writ  of  assistance 
cannot  issue  against  him:  Autenreith  v.  Hassenauer, 
43  Cal.  356. 


k 


§    161  SALE   OF   PROPERTY.  287 

mancl  for  the  possession  of  the  property  which 
was  sold  under  the  writ  of  sale,  and  a  refusal  to 
surrender  the  possession  of  the  property,^^  with- 

Where  a  mortgagor  declares  a  homestead  on  the 
mortgaged  property,  his  wife  is  a  necessary  party  in 
the  foreclosure  action,  and  the  court  will  not  grant 
a  writ  of  assistance  even  against  the  husband  alone, 
as  it  would  be  against  the  policy  of  the  law  to  aid 
in  separating  the  family,  and  to  remove  the  husband, 
leaving  the  wife  on  the  premises,  and  subject  him  to 
punishment  as  for  a  contempt  if  he  should  return  to 
visit  her  or  supply  her  with  food:  Hefner  v.  Urton, 
71  Cal.  479,  12  Pac.  486. 

Where  after  the  execution  of  a  mortgage  by  a 
husband  the  wife  declares  a  homestead  upon  the  mort- 
gaged property,  and  after  the  husband  ^s  death  an  ac- 
tion is  brought  to  foreclose  the  mortgage,  in  which  the 
surviving  wife  is  not  made  a  party  in  her  individual 
capacity,  but  merely  in  her  representative  capacity  as 
executrix,  a  writ  of  assistance  cannot  issue  against 
her  individually:  Stockton  Bldg.  etc.  Assn.  v.  Chalmers, 
75  Cal.  135,  7  Am.  St.  Eep.  173,  17  Pac.  229. 

Where  the  property  affected  by  an  encumbrance  is 
in  the  possession  of  an  adverse  claimant,  the  foreclos- 
ure judgment  cannot  order  the  purchaser  to  be  put 
into  possession,  as  the  right  to  the  possession  must  be 
litigated  with  the  adverse  claimant  in  a  separate  pro- 
ceeding: San  Francisco  v.  Lawton,  21  Cal.  589. 

88  Must  First  Present  Deed,  Demand  Possession,  and 
be  Refused  the  Same.— ^^  All  that  is  requisite  to  obtain 
the  writ,  as  against  the  parties  and  those  claiming 
with  notice  under  them  after  the  commencement  of 
the  action,  is  to  furnish  to  the  court  proper  evidence 
of  the  presentation  of  the  deed  to  them,  and  a  de- 
mand of  the  possession,  and  their  refusal  to  sur- 
render'':  Montgomery  v.  Middlemiss,  21  Cal.  103,  107, 
81  Am.  Dec.  146.  Also  Horn  v.  Volcano  Water  Co., 
18  Cal.  141;  Montgomery  v.  Byers,  21  Cal.  107;  Cali- 
fornia etc.  Sav.  Bank  v.  Graves,  129  Cal.  649,  651,  62 
Pac.  259. 

In  Sichler  v.  Look,  93  Cal.  600,  610,  29  Pac.  220,  the 


288  THE  FORECLOSURE  ACTION.  §  161 

out  other  preliminary,^^  obtain  a  writ  of  as- 
sistance to  place  himself  in  possession.  This  is 
not,  however,  an  exclusive  remedy  in  cases  where 
it  is  applicable,  but  the  person  entitled  to  pos- 

court  says:  *^For  the  purpose  of  procuring  a  writ  of 
assistance  without  delay,  in  case  it  may  be  required, 
it  is  expedient  to  include  a  provision  [in  the  fore- 
closure judgment]  that  it  may  issue  without  further 
notice,  as  this  is  but  a  part  of  the  execution  of  a 
judgment   for   foreclosure.  ^ ' 

Historical. — In  certain  early  cases  it  was  held  that 
unless  the  foreclosure  judgment  contained  a  direction 
to  deliver  possession,  a  preliminary  order  for  such  de- 
livery must  be  made  before  the  writ  of  assistance 
could  issue:  See  Montgomery  v.  Tutt,  11  Cal.  190; 
Skinner  v.  Beatty,  16  Cal.  156.  But  in  Montgomery 
V.  Middlemiss,  21  Cal.  103,  106,  107,  81  Am.  Dec.  146, 
the  court  says:  ''It  is  urged  by  the  respondent,  in 
support  of  the  order  refusing  the  writ  of  assistance, 
that  the  decree  did  not  contain  any  direction  to  de- 
liver the  possession  [of  the  encumbered  property]  to 
the  purchaser,  and  that  no  preliminary  order  for  such 

delivery  was  made  by  the  court We  have  come 

to  the  conclusion  that  the  preliminary  order  may  be 
omitted  even  where  no  direction  for  the  delivery  of 
possession  is  contained  in  the  decree.  The  legal  effect 
of   the    decree   is   the    same   without    the    direction." 

Evidence  upon  Which  Writ  may  6e  Issued.— Bvidenee 
of  the  facts  requisite  to  the  issuance  of  a  writ  of  as- 
sistance can  properly  be  furnished  by  affidavit:  Cali- 
fornia etc.  Sav.  Bank  v.  Graves,  129  Cal.  649,  651,  62 
Pac.  259. 

But  it  is  not  sufficient  for  the  applicant  for  the  writ 
to  produce  the  sheriff  ^s  deed  alone,  but  he  must  pro- 
duce the  judgment  and  writ  also,  they  being  essential 
to  a  valid  deed  (section  162  below) :  People  v.  Doe,  31 
Cal.  220. 

89  Without  Other  Preliminary:  See  Montgomery  v. 
Middlemiss,  as  cited  in  previous  note,  third  paragraph. 


§    161  SALE   OF   PROPERTY.  289 

session  may  resort  to  an  independent  possessory 
action.^® 

162.     Muniments  of  Title  of  Purchaser  at  Judi- 
cial Sale. 
The^^  title  of  the  purchaser  at  foreelosnre  sale 
is  founded  upon 

00  Not  Exclusive  Remedy:  Dickey  v.  Gibson,  121 
Cal.  276,  279,  53  Pac.  704. 

^'The  remedy  by  writ  of  assistance  is  merely  cumu- 
lative, and  does  not,  if  a  failure  to  use  it  occurs,  pre- 
clude the  plaintiff  [purchaser  at  the  foreclosure  sale] 
from  bringing  an  action  in  ejectmenf :  Trope  v. 
Kerns   (Cal.),  20  Pac.  82,  83. 

01  Title  of  Purchaser  Founded  upon  Certain  Papers. 

^'The  title  of  a  purchaser  at  a  sale  of  real  prop- 
erty on  execution  rests  upon  the  judgment,  execution, 
sale,  and  sheriff  ^s  deed.  Eegularly  the  deed  should 
recite  the  recovery  of  the  judgment,  the  name  of  the 
judgment  creditor  or  creditors,  and  of  the  judgment 
debtor  or  debtors,  the  issuing  of  execution  on  the 
judgment,  and  the  levy  and  sale  thereunder.  The 
judgment  and  execution  go  to  the  sheriff's  power  to 
sell,  and  to  his  power  to  recite  a  sale,  and  to  his 
power  to  give  a  deed  also,  and  therefore  the  recitals 
are  not  admissible  to  prove  the  sheriff's  authority 
to  sell  or  his  authority  to  recite  a  sale.  To  hold  other- 
wise would  be  to  reason  in  a  circle.  The  power  to 
sell,  to  recite,  and  to  deed,  having  its  origin  in  the 
judgment  and  execution,  must  be  proved  by  a  produc- 
tion of  both  under  the  rule  of  best  evidence;  but 
when  the  power  has  been  so  proved,  the  sheriff  be- 
comes, so  to  speak,  the  accredited  historian  of  the  acts 
under  it.  He  may  narrate  his  proceedings  on  the  back 
of  the  execution  and  return  it  into  court,  and,  with 
or  without  that,  he  may  issue  a  certificate  to  the 
purchaser,  and  both  the  certificate  and  return,  if  made, 
would,  within  the  limits  of  the  authority  delegated 
to  him,  be  evidence  against  all  persons  of  the  facts 

Liens— 19 


290  THE    FORECLOSURE    ACTION.  §    162 

(1)   a  foreclosure  judgment  in  full  force  at  the 
time  of  the  sale^^^ 

stated  or  recited  therein.  As  already  remarked,  it  is 
also  the, official  duty  of  the  sheriff  to  make  a  like 
statement  or  recital  in  his  deed,  and  it  follows  that 
a  recital  so  made  must  be  entitled  to  the  same  effect 
as  an  instrument  of  evidence  as  all  the  authorities 
concede  to  be  due  to  the  official  return  on  the  execution 
if  one  be  made'':  Hihn  v.  Peck,  30  Cal.  280,  287,  288. 

*  *  The  power  of  the  sheriff  to  make  the  deed  pri- 
marily depends  upon  a  valid  judgment  and  execution, 
and  that  the  execution  and  judgment  are  void  can  al- 
ways be  shown  by  the  debtor  in  defending  against  an 
action  for  possession.  It  has  been  held  that  a  recital 
of  those  matters  in  the  deed  is  not  even  evidence  of 
the  fact  of  their  existence,  and  that  their  production 
in  evidence  is  absolutely  necessary  to  support  the 
deed,  or  no  title  is  shown'':  Phillips  v.  Hagart,  113 
Cal.  552,  556,  54  Am.  St.  Eep.  369,  45  Pac.  843. 

The  purchaser  *^is  only  required  to  show  a  sale,  and 
the  authority  of  the  officer  to  mak-e  it;  the  judgment 
and  execution  prove  the  latter,  and  the  deed  the 
former.  He  is  bound  to  see  that  there  is  a  judgment 
which  is  not  void,  and  an  execution  which  is  regular 
upon  its  face":  Blood  v.  Light,  38  Cal.  649,  653,  654, 
99  Am.  Dec.  441. 

In  sales  by  sheriffs  it  is  only  necessary  to  prove 
their  power  to  sell  by  producing  the  judgment  and 
execution:  Sim  son  v.  Eckstein,  22  Cal.  580,  590. 

03  Judgment  must  be  in  Full  Force  at  Time  of 
Sale.— One  who  deraigns  title  to  property  through  a 
sale  under  an  execution  must  show,  not  only  the  exe- 
cution and  the  sale,  but  also  a  valid  judgment  in  sup- 
port of  the  execution.  Unless  there  is  a  valid  judg- 
ment in  existence,  neither  the  plaintiff  himself  nor 
the  sheriff  has  any  authority  to  deprive  the  defendant 
of  his  property.  Even  though  there  was  a  judgment 
in  existence  at  the  time  the  writ  was  issued,  yet,  if  it 
has  been  vacated  or  satisfied  before  any  sale  is  made 
under  the  execution,  the  power  to  make  the  sale  has 
also  been   destroyed.     A  different  rule  obtains  when 


I 


§    162  SALE   OF   PROPERTY.  291 

(2)  a  writ  of  sale  directed  to  the  officer  mak- 
ing the  sale,  this  being  his  authority  essen- 
tial to  a  valid  sale,^^  and 

(3)  a  deed  made  by  the  proper  officer  and  recit- 
ing the  recovery  of  the  judgment,  the  name  of 
every  judgment  debtor,  of  every  judgment 
creditor,  the  issuing  of  the  writ  of  sale,  and 
the  sale  thereunder. 

Whenever  these  papers  are  regular  on  their  face, 
the  title  of  the  purchaser  cannot  be  overthrown 
by  collateral  attack  upon  them.®* 

the  judgment  is  vacated  or  appealed  from  after  a  sale 
of  property  under  its  authority.  In  such  a  case  the 
bona  fide  purchaser  is  not  affected  even  by  a  reversal 
of  the  judgment:  Bullard  v.  McArdle,  98  Cal.  355,  357, 
358,  35  Am.  St.  Eep.  176,  33  Pac.  193. 

A  party  in  ejectment  relying  on  a  sheriff  ^s  deed 
must  introduce  not  only  the  deed,  but  the  judgment 
and  execution  by  virtue  of  which  the  property  was 
sold.  The  sheriff  ^s  deed  is  not  admissible  in  evidence 
without  first  introducing  the  judgment  which  is  tne 
authority  for  the  sheriff  to  sell.  An  execution,  without 
a  judgment,  gives  the  sheriff  no  authority  to  sell: 
Schuyler  v.  Broughton,  65  Cal.  252,  253,  3  Pac.  870. 

93  Writ  of  Sale  Prerequisite  to  Valid  Sale. 

*'The  order  of  sale  ....  is  as  essential  to  a  recov- 
ery as  the  decree  or  the  sheriff ^s  deed;  and  the  re- 
cital in  the  deed  is  as  incompetent  proof  of  the  order 
of  sale  as  of  the  decree '':  Heyman  v.  Babcock,  30  Cal. 
367,   370. 

^'The  party  relying  on  a  sheriff  ^s  deed  must  produce 
not  only  the  judgment  and  the  sheriff's  deed,  but  also 
the  execution  under  which  the  property  was  sold'': 
Quirk  V.  Falk,  47  Cal.  453,  455. 

94  When  These  Papers  Regular  Sale  cannot  be 
Collaterally   Attacked:  Mayo   v.   Foley,   40   Cal.    281; 


292  THE  FORECLOSURE  ACTION.  §  163 

Subdivision  9.     Proceeds  of  Sale, 

163.     Application  of  Proceeds  of  Sale. 

The  proceeds  of  the  sale  of  the  encumbered 
property  must  be  applied 

(1)  to  the  payment  of  the  costs  of  court  and 
expenses  of  sale,^^ 

(2)  to  the  satisfaction  in  the  order  directed  by 
the  court  of  any  secured  and  judicially  estab- 
lished obligations,^^  and 

(3)  any  surplus  remaining  must  be  paid  to  the 
person  whose  property  was  sold  under  order 
of  the  court,  unless  otherwise  directed  by  the 
court.^^ 

Eeeve  v.  Kennedy,  43  Cal.  649;  Kelley  v.  Desmond,  63 
Cal.  517. 

It  is  the  policy  of  the  law  to  uphold  judicial  sales 
when  collaterally  attacked;  and  if  the  officer  has  au- 
thority to  sell,  the  sale  will  be  upheld,  notwithstanding 
any  irregularity  in  the  exercise  of  his  power  by  him: 
Blood  V.  Light,  38  Cal.  649,  654,  655,  99  Am.  Dec.  441; 
Hibberd  v.  Smith,  67  Cal.  547,  565,  566,  56  Am.  St. 
Eep.   726,  4  Pac.  473,   8  Pac.  46. 

95  Code  of  Civil  Procedure,  section  726,  in  part, 
provides:  '*In  such  action  the  court  .may,  by  its 
judgment,  direct  a  sale  of  the  encumbered  property 
(or  so  much  thereof  as  may  be  necessary),  and  the 
application  of  the  proceeds  of  the  sale  to  the  payment 
of  the  costs  of  court,  and  the  expenses  of  the  sale, 
and  the  amount  due  plaintiff,  including,  where  the 
mortgage  provides  for  the  payment  of  attorneys^  fees, 
such  sum  for  such  fees  as  the  court  shall  find  reason- 
able, not  exceeding  the  amount  named  in  the  mort- 
gage."    As  amended,  in  effect  February  26,   1901. 

96  Disposition  of  Surplus.— Code  of  Civil  Procedure, 
section  727,  provides:  *^If  there  be  surplus  money  re- 


§    163  SALE  OF   PROPERTY.  293 

Where  a  receiver  is  properly  appointed  in  the 
foreclosure  action^  expenses  incurred  by  him  for 
work  and  materials  essential  to  the  operation 
and  preservation  of  the  encumbered  property 
must  be  liquidated  before  the  proceeds  of  the 
sale  are  applied  to  the  satisfaction  of  the  secured 
obligations.^'' 

164.     When  too  Much  Paid   Encumbrancer,  Ac- 
tion for  Eecovery  Sometimes  Maintainable. 

Where,  after  the  commencement  of  a  fore- 
closure action,  certain  payments  were  duly  made 
in  liquidation  of  the  secured  obligation,  but  the 
encumbrancer  took  a  default  judgment  and  failed 
to  credit  such  payments,  the  person  whose  prop- 

maining  after  the  payment  of  the  amount  due  on  the 
mortgage,  lien,  or  encumbrance,  with  costs,  the  court 
may  cause  the  same  to  be  paid  to  the  person  entitled 
to  it,  and  in  the  meantime  may  direct  it  to  be  deposited 
in  court. ' ' 

See,  also,  Code  of  Civil  Procedure,  section  691,  in 
part,  providing:  ^^Any  excess  in  the  proceeds  over  the 
judgment  and  accruing  costs  must  be  returned  to  the 
judgment  debtor,  unless  otherwise  directed  by  the 
judgment    or    order    of    the    court.'' 

Where  a  mortgagee  foreclosed  his  mortgage  in  an 
action  in  which  a  receiver  was  appointed,  and  pur- 
chased the  mortgaged  property  for  the  full  amount  of 
the  secured  obligation  and  costs,  he  is  not  entitled  to 
the  moneys  in  the  receiver's  possession,  but  they  be- 
long to  the  mortgagor:  Pacific  Mutual  Life  Ins.  Co.  v. 
Beck  (Cal.),  35  Pac.  169,  170A. 

97  Atlantic  Trust  Co.  v.  Woodbridge  Canal  etc. 
Co.,  86  Fed.  (C.  C.)  975.  But  claims  for  services 
rendered  to  the  receiver  in  the  construction  of  an  ad- 


294  THE  FORECLOSURE  ACTION.    •      §  164 

erty  was  sold  may  thereafter  maintain  an  action 
against  the  encumbrancer  to  recover  back  the 
amount  so  paid  but  not  credited.^^ 

dition  to  the  irrigation  system  against  which  the 
mortgage  which  was  being  foreclosed  subsisted,  the  ad- 
dition never  being  completed,  are  not  so  preferred. 

98  Maddux  v.    County  Bank,  129  Cal.  665,  79  Am. 
St.  Kep.  143,  62  Pac.  264. 


§    165  DEFICIENCY    JUDGMENT.  295 


AETICLE  7. 

•  THE   DEFICIENCY   JUDGMENT. 

165.     Personal   judgment   to   be   docketed   in   case   of 
deficiency. 

165.     Personal  Judgment  to  be  Docketed  in  Case 
of  Deficiency.^ 

When  the  sheriff^s,  commissioner's,  or  elisor's 
report  shows  that  the  proceeds  of  the  sale  are 
insufficient    to  satisfy    the  secured    demand,  or 

1  Code  of  Civil  Procedure,  section  726,  in  part, 
provides:  ''If  it  appear  from  the  sheriff's  return,  or 
from  the  commissioner's  report,  that  the  proceeds 
are  insufficient,  and  a  balance  still  remains  due, 
judgment  must  then  be  docketed  by  the  clerk  in  the 
manner  provided  in  this  code  for  such  balance  against 
the  defendant  or  defendants  personally  liable  for  such' 
debt,  and  it  becomes  a  lien  upon  the  real  estate  of 
such  judgment  debtor,  as  in  other  cases  in  which 
execution  may  be  issued. ' '  As  amended,  in  effect  Feb- 
ruary 26,   1901. 

Code  of  Civil  Procedure,  section  1194,  last  clause, 
relating  to  actions  for  the  foreclosure  of  mechanics' 
liens,  provides:  ''Whenever,  in  the  sale  of  property 
subject  to  the  lien,  there  is  a  deficiency  of  proceeds, 
judgment  may  then  be  docketed  for  the  deficiency  in 
like  manner  and  with  like  effect  as  in  actions  for  the 
foreclosure  of  mortgages.'' 

A  judgment  providing  that  "if  the  amount  derived 
from  the  sale  of  the  said  property  be  not  sufficient  to 
pay  each  of  the  plaintiffs  in  full,  then  upon  the  com- 
ing in  of  the  return  of  the  sheriff  of  said  county  on 


296  THE    FORECLOSURE    ACTION.  §    165 

upon  a  direction  of  the  court  in  case  the  encum- 
bered property  is  found  by  proper  proof  to  be 
valueless,^  a  judgment  for  the  amount  still  re- 

the  said  sale  the  clerk  docket  the  judgment  for  such 
deficiency  against  the  defendants'^  is  in  conformity 
with  this  provision,  and  does  not  provide  for  a  per- 
sonal judgment  except  in  case  of  deficiency:  Hines  v. 
Miller,  126  Cal.  683,  59  Pac.  142.  See,  also,  Painter 
V.  Painter,  98  Cal.  625,  626,  627,  33  Pac.  483. 

Before  the  amount  of  the  deficiency  is  ascertained, 
the  deficiency  judgment  is  a  mere  contingent  provi- 
sion:  Chapin  v.  Broder,  16  Cal.  403,  422. 

A  deficiency  judgment,  when  docketed,  cannot  be  con- 
sidered a  new  and  independent  judgment:  Bowers  v. 
Crary,  30  Cal.  621,  624. 

''A  docketed  deficiency  judgment  has,  no  doubt,  un- 
der our  code,  a  somewhat  peculiar  character.  It  is  not 
expressly  made  part  of  the  judgment-roll.  And  as  held 
m  Bowers  v.  Crary,  30  Cal.  622,  it  cannot  be  considered 
an  entirely  new  and  independent  judgment.  But  it 
differs  from  the  docketing  of  an  ordinary  money  judg- 
ment in  this,  that  it  makes  definite  and  certain  what, 
in  the  decree  of  foreclosure,  was  a  mere  contingent 
provision  (Chapin  v.  Broder,  16  Cal.  423);  while  in 
other  cases  the  docketing  has  only  the  effect  of  estab- 
lishing a  lien  for  an  amount  already  ascertained  and 
declared  in  the  judgment'':  Leviston  v.  Henninger, 
77  Cal.  461,  463,  19  Pac.  834. 

Historical,— 'Prsieiice  Act,  sec.  246,  as  enacted  1851, 
provided:  '^In  an  action  for  the  foreclosure  or  satis- 
faction of  mortgage  of  real  property,  or  the  satisfac- 
tion  of  a  lien  or  encumbrance  upon  property,  real  or 
personal,  the  court  shall  have  power  by  its  judgment 
to  direct  a  sale  of  the  property,  or  any  part  of  it; 
the  application  of  the  proceeds  to  the  payment  of 
the  amount  due  on  the  mortgage,  lien,  or  encumbrance, 
with  costs,  and  execution  for  the  balance." 

By  an  amendment  of  April  28,  1860,  this  section 
was  remodeled,  and  the  provision  as  to  the  deficiency 


§    165  DEFICIENCY    JUDGMENT.  297 

judgment,  as  modified  by  the  amendment  of  May  8, 
1S61,  made  to  read:  ^^If  it  shall  appear  from  the 
sherijff^s  return  that  there  is  a  deficiency  of  such 
proceeds,  and  a  balance  still  due  to  the  plaintiff, 
the  judgment  shall  then  be  docketed  for  such  balance 
\-  61n  1-  against  the  defendant,  or  defendants,  per- 
sonally liable  for  the  debt  -|  n61  \  ,  and  shall,  from 
the  time  of  such  docketing,  be  a  lien  upon  the  real 
estate  of  the  judgment  debtor,  and  an  execution  may 
thereupon  be  issued  ,  by  the  clerk  of  the  court, 
\-  61n  \-  in  like  manner  and  form  ■{  n61  -j  ,  as  upon 
other  judgments  [  61f  )■  to  collect  such  balance,  or 
deficiency,  from  the  property  of  the  judgment  debtor 
^f61-j.'' 

Afterward  this  sentence  was  somewhat  modified, 
but  not  in  material  respects,  and  became  a  portion  of 
section  726  of  the  Code  of  Civil  Procedure.  It  was 
finally  modified  in  1901,  to  read   as  above  set  forth. 

2  When  Encumbered  Property  Valueless.— In  Toby 
V.  Oregon  Pac.  E.  E.  Co.,  98  Cal.  490,  495,  33  Pac.  550, 
the  court  thought  that  where  the  encumbered  property 
had  been  destroyed,  as,  for  instance,  a  mortgaged 
steamship  lost  by  perils  of  the  sea,  the  court  could 
order  a  deficiency  judgment  to  be  levied  without  go- 
ing through  the  useless  form  of  ordering  a  sale  and 
awaiting  the  return  of  the  sheriff.  ''It  is  true  that 
the  statute  provides  for  docketing  a  personal  judgment 
for  the  balance  shown  to  be  due  by  the  return  of  the 
sheriff.  Doubtless  this  language  is  used  because  it  is 
the  usual  manner  by  which  the  application  of  the  pri- 
mary fund  and  a  deficit  remaining  is  ascertained,  but, 
atter  all,  it  is  the  existence  of  these  facts  which  en- 
title the  plaintiff  to  a  personal  judgment  against  the 
defendant,  and  where  they  exist  and  can  only  rea- 
sonably be  ascertained  by  other  means,  they  are  not  to 
be  ignored  because  made  apparent  in  a  different  way. ' ' 

And  in  Eedlands  Hotel  Assn.  v.  Eichards,  125  Cal. 
569,  571,  572,  58  Pac.  152,  the  court  said  that  ''under 
the  equitable  construction  thus  given  to  the  statute, 
it  may  be  that  the  court,  upon  proper  proof  that 
plaintiff's  mortgage  was  valueless  because  the  prop- 
erty was  insufficient  to  pay  and  discharge  the  prior 
mortgage,  could  have  found  that  fact  and  directed  a 


298  THE    FORECLOSURE    ACTION.  §    165 

maining  due  and  unsatisfied  must  then^  be 
docketed  by  the  clerk  in  the  manner  provided  by 
law  against  each  defendant  named  in  the  judg- 
ment as  personally  liable  therefor ;  which  amount 
thereupon  becomes  from  the  time  of  the  docket- 
ing,^ as  in  other  cases  in  which  execution  may 

deficiency  or  personal  judgment  against  the  defend- 
ants, without  selling  the  mortgaged  property;  but  it 
must  be  apparent  from  the  reasoning  of  that  case  that 
the  commissioner  had  no  such  power.'' 

3  The  deficiency  judgment  cannot  be  docketed  un- 
til it  is  ascertained  by  the  oflS.cer's  report  that  a 
balance  is  due:  Cormerais  v.  Genella,  22  Cal.  116, 
125-127;  Hunt  v.  Dohrs,  39  Cal.  304. 

Where  an  action  is  brought  merely  to  foreclose  a 
mechanic's  lien,  although  the  owner  is  personally  lia- 
ble, a  personal  judgment  is  only  obtainable  when  the 
liened  property  is  no  longer  available  for  the  satisfac- 
tion of  the  secured  demand:  Central  Lumber  etc.  Co. 
V.  Center,  107  Cal.  193,  197,  198,  40  Pac.  334. 

Historical.— It  would  seem  that  under  the  law  as 
it  existed  before  the  amendment  of  1860  to  Practice 
Act,  246  (see  note  1,  above),  the  deficiency  could  not 
be  docketed  without  the  further  action  of  the  court, 
except  where  there  was  a  personal  judgment  formally 
entered  as  well  as  a  foreclosure  judgment  :  See  Eollins 
V.  Forbes,  10  Cal.  299,  and  Rowland  v.  Leiby,  14  Cal. 
156. 

4  Becomes  Lien  Merely  from  Time  of  Docketing.— 
The  deficiency  judgment  does  not  become  a  lien  until 
the  amount  thereof  is  ascertained  and  fixed  by  the 
sale  of  the  property,  nor  until  it  is  docketed,  and  then 
only  for  the  deficiency:  Culver  v.  Rogers,  28  Cal.  520, 
526;  Boyd  v.  Desmond,  79  Cal.  250,  257,  21  Pac.  755; 
Carpenter  v.  Lewis,  119  Cal.  18,  22,  50  Pac.  925. 

Historical.— Before  the  amendment  of  April  28, 
1860,  to  Practice  Act,  section  246,  the  deficiency  judg- 
ment could  be  docketed  at  the  time  of  the  rendition 
of  the  foreclosure  action.     Nevertheless,  where  an  or- 


§    165  DEFICIENCY    JUDGMENT.  299 

issue,  a  lien^  against  the  immovable  property  of 
such  judgment  debtor.  A  docketed  deficiency 
judgment  does  not  constitute  a  lien  against  the 
property  which  was  sold  unless  it  was  purchased 

dinary  foreclosure  judgment  was  rendered,  and  pro- 
vision for  the  issuance  of  an  execution  in  case  the 
proceeds  of  the  sale  of  the  encumbered  property  were 
insufficient  to  satisfy  the  secured  obligation,  although 
the  judgment  was  docketed  at  the  time  of  the  rendi- 
tion thereof,  the  judgment  lien  does  not  attach  until 
the  amount  of  the  deficiency  is  ascertained.  Jb'or  before 
then,  the  deficiency  judgment  is  a  mere  contingent 
provision:  Chapin  v.  Broder,  16  Cal.  403,  422;  Hibberd 
V.  Smith,  50  Cal.  511,  51§,  519.  See,  also,  Englund  v. 
Lewis,   25   Cal.    337,    357. 

5  Judgment  Lien:     See  sections  623-636,  below. 

The  statute  of  limitations  on  the  judgment  lien 
which  accrues  upon  the  docketing  of  the  deficiency 
judgment  begins  to  run  from  the  time  of  the  accrual: 
Chapin  v.  Broder,  16  Cal.  403,  423;  Hibberd  v.  Smith, 
50  Cal.  511,  519. 

Historical.— Under  Practice  Act,  section  209  (Code 
Civ.  Proc,  sec.  681),  an  execution  could  be  issued  on  a 
judgment  at  any  time  within  five  years  of  the  entry 
thereof  only,  and  under  Practice  Act,  section  204  (but 
compare  Code  Civ.  Proc,  sec.  671,  as  amended  1895), 
the  judgment  lien  expired  in  two  years.  So  where  a 
foreclosure  judgment  was  rendered  in  favor  of  a  mort- 
gagee, and  the  mortgaged  property  was  subsequently 
sold  and  a  deficiency  judgment  docketed  against  the 
person  personally  liable  on  the  secured  obligation,  the 
mortgagee  cannot,  more  than  five  years  after  the  ren- 
dition of  the  foreclosure  judgment,  and  more  than  two 
years  after  the  accrual  of  the  judgment  lien,  but  less 
than  five  years  after  the  docketing  of  the  deficiency 
judgment,  cause  execution  to  issue  on  the  unsatisfied 
deficiency,  for  the  five  years  within  which  execution 
may  issue  runs  from  the  rendition  of  judgment,  and 
not  from  the  docketing  of  the  deficiency:  Bowers  v. 
Crary,  30  Cal.  622. 


300  THE    FORECLOSURE    ACTION.  §    165 

or  redeemed  hj  a  person  against  whom  personal 
judgment  was  docketed,  in  which  case  the  judg- 
ment constitutes  a  lien  against  such  property.® 

<5  Deficiency  Judgment  Usually  does  not  Constitute 
Lien  Against  Property  Sold.— '^  In  case  of  a  redemp- 
tion by  the  judgment  debtor  or  mortgagor,  the  effect 
of  the  sale  is  extinguished,  and  he  is  restored  to  his 
estate  in  the  land,  which  then,  for  the  first  time,  be- 
comes subject  to  the  lien  of  the  unsatisfied  portion  of 
the  judgment  The  lien  attaches  then  because  the  ef- 
fect of  the  sale  has  been  extinguished,  and  the  mort- 
gagor or  judgment  debtor  is  the  owner  of  the  estate, 
as  though  no  sale  nad  been  made. 

'^But  if  he  had  conveyed  his  interest  in  the  land 
before  redemption,  and  his  grantee  had  redeemed,  no 
interest  remained  m  the  mortgagor  or  judgment  debtor 
on  which  the  lien  could  operate,  unless  it  be  on  the 
theory  that  the  unsatisfied  portion  of  the  judgment 
was  a  lien  on  the  land  before  redemption,  and  that  the 
grantee  of  the  mortgagor  or  judgment  debtor  took  his 
conveyance  subject  to  that  lien — a  theory  which  finds 
no  support  in  the  statute.'' 

Thus,  the  successor  in  interest,  upon  redeeming, 
takes  the  title  free  from  any  judgment  lien  for  the 
deficiency:  Simpson  v.  Castle,  52  Cal.  644,  per  Crockett, 
Rhodes,  and  Mies,  JJ.;  McKinstry,  J.,  and  Wallace, 
C.  J.,  dissenting. 

A  judgment  docketed  for  a  deficiency,  after  the  sale 
of  mortgaged  premises  upon  a  foreclosure  judgment,  is 
not  a  lien  against  the  premises  sold,  if  they  are  pur- 
chased by  any  person  other  than  the  mortgagor:  Black 
v.  Gerichten,' 58  Cal.  56,  58. 

Historical.— In  Simpson  v.  Castle,  52  Cal.  644,  the 
early  decisions,  and  the  alterations  which  the  Practice 
Act  underwent  in  respect  to  this  matter,  are  extensive- 
ly commented  upon. 

Practice  Act,  section  231,  as  enacted  1851,  in  stating 
the  payments  prerequisite  to  redemption,  provided 
that  ^^if  the  purchaser  be  also  a  creditor,  having  a 
lien  prior  to  that  of  the  redemptioner,  the  amount  of 


I 


§    165  DEFICIETS^CY    JUDGMENT.  301 

such  lien,  with  interest/'  must  be  paid  by  the  pro- 
posed redemptioner. 

Keferring  to  the  statutory  provision,  the  court,  in 
Simpson  v.  Castle,  said: 

^^In  construing  this  clause,  it  was  held  in  Van  Dyke 
V.  Herman,  3  Cal.  295,  Knight  v.  Fair,  9  Cal.  117,  and 
McMillan  v.  Eichards,  9  Gal.  [365],  413  [70  Am.  Dec. 
655,  note],  that  if  the  real  estate  which  is  subject  to  a 
judgment  lien  be  sold  under  an  execution  on  a  judg- 
ment, to  a  judgment  creditor  for  a  sum  less  than  the 
whole  amount  of  the  judgment,  he  still  continued  to 
be  a  *  creditor  having  a  lien'  for  the  unsatisfied  portion 
of  the  juagment  upon  the  property  sold  under  the  exe- 
cution; and  that  neither  the  judgment  debtor  [n]or  a 
redemptioner  with  a  subsequent  lien  could  redeem 
without  paying  the  judgment  ....   [p.   646], 

^^  McMillan  v.  Eichards  was  a  very  important  case. 
....  At  the  earliest  opportunity  thereafter  the  legis- 
lature modified  the  rule  established  in  that  case,  by 
enacting  that  ^  after  the  sale  of  any  real  estate,  tne 
judgment  under  which  such  sale  was  had  shall  cease 
to  be  a  lien  on  such  real  estate':  Stats.  1859,  p.  139. 
....  But  this  section  was  again  amended  at  the  next 
succeeding  session,  by  substituting  for  the  words 
above  quoted  a  provision  to  the  effect  that,  in  order 
to  effect  a  redemption  *if  the  purchaser  be  also  a 
creditor  having  a  lien  prior  to  that  of  the  redemptioner 
other  than  the  judgment  under  which  such  purchase 
was  made,'  the  amount  of  such  lien,  with  interest, 
shall  also  be  paid:  Stats.  1860,  p.  302.  At  the  same 
time  section  232  was  amended,  and,  as  amended,  pro- 
vides that  in  redeeming  from  a  redemptioner,  and  in 
the  payment  of  prior  liens  held  by  him,  Hhe  judgment 
under  which  the  property  was  sold  need  not  be  paid 
as  a  lien.'  This  continued  to  be  the  law  until  the 
codes  took  effect  in  1873,  when  sections  231  and  232 
of  the  Practice  Act,  as  amended  in  1860,  were  incorpor- 
ated into  the  Code  of  Civil  Procedure  as  sections  702 
and  703   [p.  647]. 

^^From  this  history  of  the  decisions  and  legislation 
on  the  point  under  discussion,  it  is  manifest  that  the 
amendment  of  1859  unequivocally  abrogated  the  rule 
laid   down  in  McMillan  v.   Eichards,   and  the   earlier 


302  THE    FORECLOSURE    ACTION.  §    165 

cases;  and  we  think  it  is  equally  clear  that  the  amend- 
ment of  1860  (afterward  incorporated  into  the  code) 
was  only  intended  to  modify  the  rule  prescribed  by 
the  amendment  of  1859,  and  not  to  restore  that  an- 
nounced in  McMillan  v.  Kichards  ....  [pp.  647,  648]. 

* '  It  was  probably  foreseen  that  under  the  broad 
language  of  the  amendment  of  1859  it  might  be  claimed 
that  even  though  the  property  was  redeemed  by  the 
judgment  debtor,  it  would  not  thereafter  be  subject 
to  the  lien  of  the  unsatisfied  portion  of  the  judgment. 
To  obviate  this  result,  the  amendment  of  1860,  instead 
of  retaining  the  provision  that  the  lien  of  the  judg- 
ment should  cease  absolutely  after  the  sale,  modified 
the  rule  ....   [p.  648]. 

'*The  clause  excusing  the  payment  of  the  judgment 
for  the  deficiency,  on  redeeming,  is  equivalent  to  an 
explicit  declaration  that  during  the  time  for  redemp- 
tion the  unsatisfied  portion  of  the  judgment  is  not  a 
hen  on  the  land  sold  under  the  judgment.  The  stat- 
ute, however,  declares  that  if  the  judgment  debtor  re- 
deems, the  effect  of  the  sale  is  terminated,  and  he  is 
restored  to  his  estate  as  though  there  had  been  no 
sale.  From  that  time  the  lien  of  the  unsatisfied  por- 
tion of  the  judgment  would  doubtless  attach  in  the 
same  manner  as  though  no  sale  had  taken  place  ^'  [p. 
649]. 


BEDEMPTION    FBOM    SALE.  303 


AETICLE  8. 

EEDEMPTION  FEOM  SALE. 

SuMivision  1.    What  Property  Redeemahle. 

166.  Certain  interests  in  immovable  property  redeem- 

able. 

Subdivision   2.  Use    and    Control    of   Property   During 
Time  of  Redemption, 

167.  Eight  of  possession  not  changed  during  time  of 

redemption. 

168.  Purchaser   entitled  to  rents  or  value  of  use  of 

property. 

169.  Waste  to  be  restrained — What  deemed  wastg. 

170.  Penalty  for  impairing  freehold. 

Subdivision  3.    The  Redemption, 

171.  Persons  entitled  to  redeem. 

172.  Evidence  of  redemptioner's  right  to  redeem. 

173.  Conditions  of  redemption  from  purchaser. 

174.  Conditions  of  redemption  from  redemptioner. 

175.  Eents  and  profits  received  to  be  credited  on  re- 

demption money. 

176.  Payments,  how  made. 

177.  Notice  of  redemption  must  be  given  by  redemp- 

tioner. 

178.  Purchaser  or  redemptioner    who    has    redeemed 

must,  on  demand,  state  rents  and  profits. 

179.  Person  who  by  mistake  fails  in  attempt  to  re- 

deem may  complete  redemption. 

180.  Upon   redemption   by    owner,    certificate    of   re- 

demption must  be  issued. 


304  THE    FORECLOSURE    ACTION. 

Subdivision   4-     Effect   of   Redemption. 

181.  Effect  of  redemption  by  redemptioner. 

182.  Effect  of  redemption  by  person  who  owned  inter- 

est sold. 

Subdivision  5.    Expiration  of  Time  of  Redemption. 

183.  Title  becomes  absolute  upon  expiration  of  time 

of  redemption. 

Points  of  Constitutional  Law  Concerning  Statutes  of  Re- 
demption. 

The  enactment  of  laws  creating  a  right  of  redemp- 
tion from  judicial  sales  or  altering  the  incidents  of  the 
right  has  given  rise  to  the  question  whether  or  not  the 
obligation  of  contracts  is  impaired  by  .the  application 
of  such  laws  to  sales  made  in  satisfaction  of  contract 
encumbrances  created,  or  to  redemptions  from  sales 
made,  before  their  passage.  For  it  is  urged  that  such 
an  application  brings  these  laws  into  conflict  with  the 
provision  of  article  1,  section  10,  of  the  United  States 
constitution,  that  *  ^  no  state  shall  ....  pass  any  .... 
law  impairing  the  obligation  of  contracts.'' 

The  first  group  of  cases  concerns  the  establishment 
of  a  right  of  redemption  where  none  previously  ex- 
isted. 

The  United  States  supreme  court  first  considered  this 
question  in  Bronson  v.  Kinzie,  1  How.  (42  U.  S.)  311, 
320,  11  Law  ed.  143.  In  that  case  a  mortgage  had  been 
made  under  the  laws  of  Illinois.  At  the  time  the  mort- 
gage was  executed,  the  law  was  such  that  upon  a 
breach  of  the  condition  of  the  mortgage  the  title  to  the 
mortgaged  property  vested  in  the  mortgagee  in  trust, 
and  that  thereafter,  at  the  instance  of  either  mortgagor 
or  mortgagee,  the  property  might  be  subjected  to  sale 
in  satisfaction  of  the  secured  obligation.  This  sale  was 
absolute.     But  in  the  case  in  question  before  the  sale  of 


REDEMPTION    FROM    SALE.  305 

the  property,  the  law  was  altered  so  that  all  foreclos- 
ure sales  of  property  were  subject  to  redemption  for  a 
period  of  fifteen  months.  The  supreme  court  held  (p. 
320)  that  this  law,  as  applied  to  mortgages  created 
before  its  enactment,  was  unconstitutional,  saying: 

''This  law  gives  to  the  mortgagor,  and  to  the  judg- 
ment creditor  [meaning  a  creditor  who  was  entitled  to 
redeem],  an  equitable  estate  in  the  premises,  which 
neither  of  them  would  have  been  entitled  to  under 
the  original  contract;  and  these  new  interests  are  di- 
rectly and  materially  in  conflict  with  those  which  the 
mortgagee  acquired  when  the  mortgage  was  made.  ^ ' 

In  Howard  v.  Bugbee,  24  How.  (65  U.  S.)  461,  16 
Law  ed.  753,  on  a  similar  state  of  facts,  the  court  in 
1860  affirmed  this  conclusion  without  dissent.  Yet  it 
is  evident  that  a  decision  of  the  constitutional  ques- 
tion was  not  necessary  in  Bronson  v.  Kinzie,  1  How. 
(42  U.  S.)  311,  11  Law  ed.  143,  for  while  Mr.  Justice 
McLean  dissented  from  the  conclusion  of  the  court  on 
this  point  (p.  322),  he  concurred  in  the  judgment  ren- 
dered (p.  332).  Moreover,  in  the  subsequent  case  of 
McCracken  v.  Hayward,  2  How.  (43  U.  S.)  608,  11 
Law  ed.  606,  where  a  different  constitutional  point, 
involved  in  the  Bronson  case  also,  was  under  consid- 
eration, Mr.  Justice  Catron,  who  was  a  member  of 
the  court  at  the  time  the  Bronson  case  was  decided, 
said  (pp.  617,  618):  ''I  have  formed  no  opinion, 
whether  the  statute  of  Illinois  is  constitutional  or 
otherwise,"  thereby  showing'  that  while,  like  Mr. 
Justice  McLean,  he  concurred  in  the  judgment  in  the 
Bronson  case,  he  did  not  base  his  concurrence  on  an 
approval  of  the  views  expressed  in  the  opinion  of  the 
court. 

In  view  of  these  circumstances  Mr.  Justice  Heyden- 
feldt,  of  the  California  supreme  court,  in  delivering  a 
Liens— 20 


306  THE    FORECLOSURE    ACTION. 

dissenting  opinion  in  Thorne  v.  The  City  of  San  Fran- 
cisco, 4  Cal.  127,  156,  which  was  subsequently  adopted 
in  1869,  in  Moore  v.  Martin,  38  Cal.  428,  ^39,  as  an 
authoritative  statement  of  the  law,  says  in  respect  to 
the  Bronson  and  McCracken  cases: 

"It  is  very  certain  that  the  court  was  not  unani- 
mous; for  in  the  first  case  is  the  dissenting  opinion  of 
Judge  McLean,  and  in  the  second,  Judge  Catron  de- 
clines to  give  any  opinion  on  that  point. 

''It  is  also  certain  that  the  decisions  of  both  those 
cases  might  well  have  been  made  in  the  same  way, 
without  any  reference  to  the  constitutionality  of  the 
Illinois  laws. 

''I  am,  therefore,  inclined  strongly  to  the  view  that 
what  the  judges  said  upon  that  question  is  extrajudi- 
cial  

"The  same  judgment  would  have  been  given  if  the 
court  had  held  the  opposite  doctrine  on  the  constitu- 
tional question,  and  therefore,  as  far  as  that  question 
is  concerned,  there  is  no  judicial  opinion,  and  upon  it 
the  court  should  have  been  silent." 

This  constitutional  question  was  brought  to  the  at- 
tention of  the  California  courts  soon  after  a  right  of 
redemption  was  first  established  by  the  enactment  of 
the  Practice  Act  of  1851.  In  Thorne  v.  The  City  of  San 
Francisco,  4  Cal.  127,  wherein  the  decision  was  based 
on  the  ground  that  the  act  of  1851  was  not  retro- 
active, and  if  retroactive,  that  there  was  no  legal  re- 
demption (p.  154),  Mr.  Justice  Wells,  thought  that  the 
act  was  unconstitutional  as  applied  retroactively. 
But  in  Moore  v.  Martin,  38  Cal.  428,  438,  439,  the  court 
held  that  a  sale  made  in  satisfaction  of  a  judgment 
which  had  been  rendered,  and  was  an  existing  contract 
at  the  time  the  act  of  1851  took  effect  (although  ren- 
dered after  its  passage),  was  subject  to  redemption. 
The  court  said: 


REDEMPTION    FROM    SALE.  307 

''We  do  not  consider  it  necessary  to  discuss  this  con- 
stitutional question.  We  are  saved  that  labor  by  the 
very  able  dissenting  opinion  of  Justice  Heydenfeldt, 
delivered  in  the  case  of  Thorne  v.  The  City  of  San 
Francisco  (4  Cal.  154).  We  agree  with  him  that  the 
legislature  had  power  to  provide  that  all  judicial  sales 
of  real  estate  thereafter  to  be  made,  whether  upon 
judgments  then  existing  or  upon  judgments  thereafter 
to  be  obtained  upon  contracts  then  existing,  should  be 
made  subject  to  redemption,  without  violating  either 
the  federal  or  state  constitution.  Besides,  we  regard 
the  case  of  Tuolumne  Eedemption  Co.  (15  Cal.  515) 
as  overruling  the  case  of  Thorne  v.  The  City  of  San 
Francisco  (4  Cal.  127). '' 

In  the  opinion  referred  to  Mr.  Justice  Heydenfeldt 
had  said: 

'^The  power  of  the  legislature,  it  has  been  decided 
by  this  court,  is  only  limited  by  express  constitutional 

restrictions Following  this   rule,   I   do   not   see 

what  is  to  prevent  it  from  limiting,  modifying  or  de- 
laying the  remedy,  even  admitting  the  doctrine  that 
it  cannot  so  alter  the  remedy  as  to  impair  the  right 
[p.  157]. 

''It  is  said  that  if  you  admit  the  power  to  provide 
a  redemption  in  six  months  [where  none  had  previously 
existed],  then  the  power  exists  to  extend  it  forever. 
It  is  sufficient  answer  to  this,  that  every  act  must  be 
construed  according  to  its  own  provisions,  and  their 
effects  ....  [p.  157]. 

"How  is  it  that  a  right  in  the  judgment  debtor  to 
redeem  the  land  within  six  months  can  injuriously  af- 
fect the  creditor?  The  only  answer  given  is,  that  the 
land  will  not  fetch  as  much  money.  But  suppose  the 
land  of  the  debtor  is  ten  times  the  value  of  the  debt 
to  be  paid,  is  it  presumable  that  the  power  of  redemp- 


'308  THE    FORECLOSURE    ACTION. 

tion  will  prevent  its  selling  for  the  amount  of  the 
debt?  I  know  no  doctrine  of  the  law  which  assumes 
that  every  debtor,  or  any  debtor,  has  only  enough  land 
to  pay  a  particular  debt  when  sold  absolutely.  And 
it  seems  to  me,  if  a  creditor  complains  that  a  law  im- 
pairs his  right  under  a  contract,  he  must  show  the 
facts  which  go  to  prove  the  truth  of  his  complaint, 
[p.  158]. 

''Nor  do  I  consider  it  by  any  means  certain  that 
property  would  sell  for  less  money  because  of  the 
right  to  redeem;  and  this,  as  a  fact,  in  order  to  allow 
it  to  affect  the  validity  of  the  law,  ought  to  be  affirma- 
tively shown  by  the  record Under  the  liberal 

provisions  of  our  statute  in  favor  of  the  purchaser,  1 
should  come  to  the  conclusion  that  such  strong  induce- 
ments are  there  held  out,  and  such  a  premium  offered, 
as  would  make  the  property  bring  fully  as  much  money 

as  if   there  was  no    provision  for   redemption 

It  was  urged  at  the  argument  that  was  there  were  here 
rapid  fluctuations  in  the  price  of  property;  that  the 
object  of  purchasers  is  speculation;  that  frequently 
in  a  short  time  land  doubles  in  value,  and  for  that 
reason  the  right  of  redemption  will  prevent  a  benefi- 
cial sale.  But  it  is  sufficient  answer  to  this,  that  while 
the  law  tolerates  and  protects  all  contracts  which  are 
fairly  made,  it  has  no  special  regard  for  what  are 
called  speculations It  has  but  one  basis  to  regu- 
late its  view  of  the  acquisition  of  property,  and  that 
is  the  'quid  pro  quo'  ''  (pp.  158,  159). 

In  Tuolumne  Kedemption  Co.  v.  Sedgwick,  15  Cal. 
515,  also  cited  in  Moore  v.  Martin  above,  the  court 
pointed  out  that  the  contract  of  indebtedness  was  one 
thing,  and  the  matter  of  redemption  another,  the  lat- 
ter relating  to  the  means  provided  by  law  for  its  en- 
forcement,  but  in  the   statement  made  in   denying  a 


REDEMPTION    FROM    SALE.  309 

motion  for  a  rehearing  expressly  withheld  a  decision 
upon  this  question. 

The  second  group  of  cases  concern  the  alteration  of 
the  conditions  of  redemption.  The  first  point  of  in- 
quiry relates  to  the  applicability  of  such  alterations 
to  redemptions  from  sales  made  in  satisfaction  of 
judgments  rendered  before  the  alterations  took  effect. 

In  Thresher  v.  Atchinson,  117  Cal.  73,  59  Am.  St. 
Rep.  159,  48  Pac.  1020,  the  question  was  involved 
whether  the  rights  of  a  purchaser  at  a  judicial  sale 
made  before  May  26,  1895,  at  which  time  the  amount 
to  be  added  to  the  purchase  price  as  prerequisite  to  a 
redemption  was  reduced  from  two  per  cent  per  month 
to  one  per  cent  by  an  amendment  to  the  California 
Code  of  Civil  Procedure,  were  affected  by  the  amend- 
ment. The  court  held  that  the  conditions  of  redemp- 
tion and  the  time  within  which  redemption  could  be 
made  are  terms  in  the  contract  of  purchase  at  the  ju- 
dicial sale,  and  that  thus  the  amount  of  redemption 
money  required  in  case  of  redemptions  from  sales 
made  before  the  amended  law  took  effect  could  not 
constitutionally  be  reduced,  nor  the  period  of  redemp- 
tion lengthened  by  the  alteration. 

In  other  cases  the  applicability  of  such  alterations 
to  redemptioners  was  involved.  In  Tuolumne  Redemp- 
tion Co.  V.  Sedgwick,  15  Cal.  515,  the  controversy  con- 
cerned a  change  made  in  the  redemption  law  after  a 
judgment  foreclosing  a  mortgage  had  been  rendered, 
but  before  the  sale  thereunder  had  been  made,  whereby 
a  subsequent  redemption  was  permitted  on  much  more 
favorable  terms  than  theretofore.  The  court  held  that 
while  this  alteration  prejudiced  the  rights  which  would 
otherwise  have  accrued  to  the  first  redemptioner,  yet 
that  at  the  time  of  the  statutory  alteration  he  had  no 
vested  rights  in  the  premises,  and  thus  no  right  guar- 


310  THE    FORECLOSURE    ACTION. 

anteed  to  him  by  the  federal  constitution  was  im- 
paired by  makinjo^  this  alteration  applicable  to  a  re- 
demption from  him. 

In  Teralta  Land  etc.  Co.  v.  Shaffer,  116  Cal.  518, 
58  Am.  St.  Eep.  194,  48  Pac.  613,  the  court,  however, 
held  that  if  the  sale  was  made  before  the  alteration  of 
the  conditions  of  redemption  to  the  prejudice  of  an 
authorized  redemptioner,  the  altered  conditions  could 
not  constitutionally  be  made  applicable  to  a  redemp- 
tion by  him.  In  this  case,  the  provisions  of  section 
3817  of  the  Political  Code  were  involved,  which  pm)- 
vided  before  the  amendment  of  March  28,  1895,  that 
where  land  had  been  sold  to  the  state  for  delinquent 
taxes  a  redemption  might  be  made  by  a  qualified  per- 
son upon  the  payment  of  all  taxes  due  thereon,  to- 
gether with  twenty-five  per  cent  in  addition  thereto. 
By  the  amendment  the  additional  amount  required  to 
be  paid  was  graduated  according  to  the  length  of  time 
which  had  elapsed  since  the  sale  from  a  minimum  of 
ten  per  cent  to  a  maximum  of  one  hundred  per  cent. 
In  this  case  this  alteration  much  increased  the  burden 
of  a  redemptioner  if  it  could  be  constitutionally  ap- 
plied to  him.     The  court    said: 

'^What  the  state  could  sell  under  the  tax  sale  was 
limited  by  what  the  purchaser  could  purchase,  and 
that  was  the  right  to  have  th«  title  subject  to  the 
owner  ^s  right  to  redeem  upon  the  payment  of  a  given 
sum  of  money  at  any  time  before  the  state  parted  with 
its  interest  in  the  property.  This  right  of  redemption 
became  a  condition  of  the  contrac-t  of  purchase,  and 
could  not,  in  reason  or  justice,  be  ignored  or  changed 
by  a  subsequent  statute  any  more  than  the  sale  itself. 
It  was  an  essential  element  of  the  contract  of  sale, 
and  not  a  mere  naked  right  to  be  changed  or  abridged 
as  a  mere  matter  of  public  policy.  Though  intimately 
connected  with  the  remedy,  it  was  not  a  part  of  the 


REDEMPTION    FROM    SALE.  311 

remedy,  but  a  substantive  right  preserved  to  the  re- 
demptioner,  and  equally  sacred  with  those  acquired 
by  the  purchaser,  which  latter  rights  it  limited.  It 
was  a  right  of  property  remaining  in  the  former  owner 
after  the  exhaustion  of  the  remedy  by  sale,  and  the 
statute  which,  passed  after  the  sale,  seeks  to  impair 
this  right  by  adding  new  burdens  to  its  exercise,  is 
violative  of  constitutional  guaranties. ' ' 

Thus  a  redemptioner  as  such  cannot  complain  of  al- 
terations in  the  law  of  redemption  made  before  the 
sale,  but  neither  purchaser  nor  redemptioner  can  be 
affected  injuriously  by  alterations  made  after  the  sale. 

The  further  question  now  arises  whether  such  altera- 
tions can  constitutionally  apply  to  sales  made  after 
they  took  effect  in  satisfaction  of  contract  encum- 
brances created  before  that  time. 

The  amendment  to  the  California  Code  of  Civil  Pro- 
cedure which  reduced  the  amount  to  be  added  to  the 
purchase  price  as  prerequisite  to  redemption  was  above 
noted. 

In  Connecticut  Mutual  Life  Ins.  Co.  v.  Cushman,  108 
U.  S.  51,  2  Sup.  Ct.  Eep.  236,  27  Law  ed.  648,  decided 
in  1882,  a  statute  of  Illinois  which  made  a  precisely 
similar  reduction  in  the  percentage  was  held  to  be 
applicable  to  the  redemption  of  property  from  sales 
made  after  it  took  effect  in  satisfaction  of  contract 
encumbrances  created  before  its  passage.  The  court 
said: 

*^The  statute  in  force  when  the  mortgage  was  exe- 
cuted, prescribing  the  rate  of  interest  which  the 
amount  paid  or  bid  by  the  purchaser  should  bear,  as 
between  him  and  the  party  seeking  to  redeem,  had  no 
relation  to  the  obligation  of  the  contract  between  the 
mortgagor  and  the  mortgagee.  The  mortgagor  might, 
perhaps,  have   claimed  his  statutory  right  to  redeem 


312  THE    FORECLOSURE    ACTION. 

could  not  be  burdened  by  an  increased  rate  of  interest 
beyond  that  prescribed  by  statute  at  the  time  he  exe- 
cuted his  mortgage.  But,  as  to  the  mortgagee,  the 
obligation  of  the  contract  was  fully  met  when  he  re- 
ceived what  the  mortgage  and  statute  in  force  when 
the  mortgage  was  executed  entitled  it  to  demand. 
The  rights  of  the  purchaser  at  the  decretal  sale,  if  one 
was  had,  were  not  of  the  essence  of  the  mortgage  con- 
tract, but  depended  wholly  upon  the  law  in  force  when 
the  sale  occurred^'  (p.  64). 

''But  it  is  insisted  that  the  value  of  the  mortgage 
contract  was  impaired  by  a  subsequent  law  reducing 
the  interest  to  be  paid  to  a  purchaser  at  a  decretal 
sale;  this  upon  the  assumption  that  the  probability  of 
the  debt  being  satisfied  by  the  decretal  sale  of  the 
property  was  lessened  by  reducing  the  interest  which 
any  purchaser  could  realize  on  his  bid  in  the  event  of 
redemption [But]  we  have  seen  that  no  reduc- 
tion of  the  rate  of  interest,  as  between  the  purchaser 
of  mortgaged  property  at  decretal  sale  and  the  party 
entitled  to  redeem,  affected,  or  could  possibly  affect, 
the  right  of  the  insurance  company  [mortgagee]  to 
receive,  or  the  duty  of  the  mortgagor  to  pay,  the  en- 
tire mortgage  debt,  with  interest  as  stipulated  in  the 
mortgage  up  to  the  decree  of  sale.  And  the  result  of 
the  sale  in  this  case  shows  that  the  company,  as  a 
mortgagor  [mortgagee?],  has  received  all  that  it  was 
entitled  to  demand  ^^  (pp.  65,  66). 

In  Hooker  v.  Burr  (Cal.),  70  Pac.  137,  663,  778, 
781B,  782A,  where  a  mortgage  was  made  before  the 
passage  of  this  amendment  to  the  California  code  and 
the  foreclosure  sale  after  it  took  effect,  the  court,  on 
the  authority  of  the  above  case,  held  that  a  person 
who  wished  to  redeem  from  such  sale  was  required  to 
pay  only  the  reduced  percentage,  and  stated  that  this 
had  always  been  the  law  in  California  since  the  de- 


BEDEMPTION    FROM    SALE.  313 

cision  of  Tuolumne  Eedemption  Co.  v.  Sedgwick,  15 
Cal.  515. 

By  a  further  amendment  to  the  California  code 
which  took  effect  February  26,  1897,  the  period  of  re- 
demption was  enlarged  from  six  to  twelve  months. 

The  question  whether  or  not  this  amendment  could 
constitutionally  apply  to  sales  made  after  it  took  ef- 
fect in  satisfaction  of  contract  encumbrances  created 
before  its  enactment  was  somewhat  confused  by  the 
decision  in  Barnitz  v.  Beverly,  163  U.  S.  118,  16  Sup. 
Ct.  Eep.  1042,  41  Law  ed.  93,  decided  in  1895. 

By  the  Kansas  statute  redemption  had  been  per- 
mitted for  a  limited  period,  but  the  purchaser  had 
been  entitled  to  the  rents  and  profits  and  the  posses- 
sion during  the  time  of  redemption.  In  the  Barnitz 
case  an  amendment  to  this  statute  which 

(1)  enlarged  the  period  of  redemption  to  eighteen 
months, 

(2)  authorized  the  person  entitled  to  possession  had 
there  been  no  sale  to  hold  the  possession  during  the 
time  of  redemption, 

(3)  entitled  the  person  entitled  to  the  rents  and  profits 
had  there  been  no  sale  to  receive  the  same  (except 
such  as  were  required  for  necessary  repairs  or  to 
prevent  waste)   during  such  period,  and 

(4)  in  case  of  a  redemption  of  the  property  by  the 
encumbrancer  or  judgment  debtor,  exempted  the 
property  from  further  liability  for  any  of  the  ob- 
ligations upon  which  it  was  sold, 

was  involved,  and  the  court  held  that  the  statute,  so 
far  as  designated  to  affect  sales  in  satisfaction  of  con- 
tract encumbrances  created  before  its  enactment, 
was  unconstitutional. 

The  court,  indeed,  on  page  129,  says:  **We  hold 
that    a   statute   which    authorizes   the   redemption    of 


314  THE    FORECLOSURE    ACTION. 

property  sold  upon  foreclosure  of  a  mortgage,  where 
no  right  of  redemption  previously  existed,  or  which 
extends  the  period  of  redemption  beyond  the  time 
formerly  allowed,  cannot  constitutionally  apply  to  a 
sale  under  a  mortgage  executed  before  its  passage/' 

But,  speaking  more  specifically  of  the  act  under 
consideration,  the  court  says: 

* '  The  act  carves  out  for  the  mortgagor  or  the  owner 
of  the  mortgaged  property  an  estate  of  several  months 
more  than  was  obtainable  under  the  former  law,  with 
full  right  of  possession,  and  without  paying  rent  or 
accounting  for  profits  in  the  meantime.  What  is  sold 
[at  the  foreclosure  sale]  under  this  act  is  not  the 
estate  ....  described  in  the  mortgage,  ....  but  a 
remainder— an  estate  subject  to  the  possession,  for 
eighteen  months,  of  another  person  who  is  under  no 
obligation  to  pay  rent  or  to  account  for  profits ' ' 
(p.  130). 

"The  twenty-third  section  of  the  act  should  not 
be*  overlooked,  providing  that  real  estate  once  sold 
upon  order  of  sale,  special  execution  or  general  exe- 
cution, shall  not  again  be  liable  for  sale  for  any  bal- 
ance due  upon  the  judgment  or  decree  under  which 
the  same  is  sold,  or  any  judgment  or  lien  inferior 
thereto,  and  under  which  the  holder  of  such  lien  had 
a  right  to  redeem '*  (p.  130). 

''This  law  ....  in  express  terms  declares  that  this 
real  estate  shall  not  again  be  liable  for  sale  for  any 
balance  due  upon  the  judgment  or  decreee  under 
which  the  same  is  sold.  This  cannot  be  held  to  mean 
merely  that  the  land  is  sold  free  from  existing  liens, 
for  such  would  be  the  legal  effect  of  the  sale  at 
any  rate.  It  plainly  means  that  the  balance  of  the 
debt  shall  not  be  paid  out  of  the  lands,  even  if  and 
when  they  become  the  property  of  the  debtor 


BEDEMPTION    FROM    SALE.  315 

What  we  are  now  considering  is,  whether  the  change 
of  remedy  was  detrimental  to  such  a  degree  as  to 
amount  to  the  impairment  of  the  plaintiff's  right; 
and  as  this  record  discloses  that  the  sale  left  a  por- 
tion of  the  plaintiff's  judgment  unpaid,  it  may  be 
fairly  argued  that  this  provision  of  the  act  does  de- 
prive the  plaintiff  of  a  right  inherent  in  her  con- 
tract'' (p.  130). 

^^When  we  are  asked  to  put  this  case  within  the 
rule  of  those  cases  in  which  we  have  held  it  compe- 
tent for  the  states  to  change  the  form  of  the  remedy, 
or  to  modify  it  otherwise  as  they  may  see  fit,  pro- 
vided  no  substantial  right  secured  by  the  contract  is 
thereby  impaired,  we  are  bound  to  consider  the  en- 
tire scheme  of  the  new  statute,  and  to  have  regard 
to  its  probable  effect  on  the  rights  of  the  parties" 
(p.  131). 

When  the  statement  made  by  the  court  in  the  open- 
ing paragraph  above  is  taken  in  connection  with  tne 
subsequent  quotations,  it  is  apparent  that  other  fea- 
tures of  the  statute,  such  as  the  provisions  entitling 
the  former  owner  to  the  rents  and  profits  of  the 
property  during  the  time  of  redemption  and  exempt- 
ing it  from  execution  for  a  deficiency  in  case  of  re- 
demption, largely  influenced  the  judgment  of  the 
court.  Moreover,  the  court  said  that  the  case  of 
Connecticut  Mutual  Life  Ins.  Co.  v.  Cushman,  108  U.  S. 
51,  2  Sup.  Ct.  Eep.  236,  27  Law  ed.  648,  quoted  above, 
*'does  not  collide  with  the  previous  or  subsequent 
cases.  There  the  statute  did  not  lessen  the  duty  of 
the  mortgagor  to  pay  what  he  had  contracted  to  pay, 
nor  affect  the  time  of  payment,  nor  affect  any  remedy 
which  the  mortgagee  had  by  existing  law  for  the 
enforcement  of  his  contract"  (pp.  128,  129).  Thus 
the  most  that  the  Barnitz  case  can  be  said  to  hold 
is   that    the    entire    scheme    of    the    amended    Kansas 


316  THE    FORECLOSURE    ACTION. 

act  was  such  as  to  conflict  with  constitutional  guar- 
anties when  applied  to  sales  made  after  it  took  effect, 
but  in  satisfaction  of  contract  encumbrances  created 
before  its  passage.  The  general  expressions  in  the 
opening  paragraph  above  were  materially  modified 
by  their  context,  and  this  case  cannot  be  said  to 
hold  that  a  mere  lengthening  of  the  time  of  re- 
demption would  in  itself  be  obnoxious  to  the  con- 
stitution, especially  as  such  a  construction  might  col- 
lide with  the  principle  of  the  Connecticut  Life  Ins. 
Co.   case  which  was   expressly   approved. 

But  notwithstanding  these  considerations,  it  is  clear 
that  this  case  has  been  interpreted  by  the  California 
supreme  court,  and  to  some  extent  by  the  bar,  to 
hold  the  above-mentioned  amendment  of  February 
26,  1897,  in  conflict  with  the  United  States  constitu- 
tion so  far  as  designed  to  apply  to  sales  made  after 
it  took  effect  in  satisfaction  of  contract  encumbrances 
created  before  such  time.  Thus  in  Benson  v.  Bunt- 
ing, 127  Cal.  532,  534,  78  Am.  St.  Eep.  81,  59  Pac. 
991,  the  parties  to  the  action  conceded  the  unconstitu- 
tionality, while  in  Savings  Bank  of  San  Diego  v.  Bar- 
rett, 126  Cal.  413,  417,  58  Pac.  914,  and  Malone  v. 
Boy,  134  Cal.  344,  66  Pac.  313,  the  court  reached  the 
same  conclusion  almost  without  discussion,  principally 
on  the  authority  of  the  Barnitz  case. 

In  Haynes  v.  Tredway,  133  Cal.  400,  402,  403,  65 
Pac.  892,  however,  the  court  considered  the  matter  at 
some  length,  and  said: 

**It  may  be  said  that  the  agreement  of  the  mort- 
gagor was,  that  the  purchaser  at  the  sale  should  have 
the  title  to  the  property,  subject  to  a  right  of  posses- 
sion thereafter  in  the  mortgagor  for  six  months 

It  is  thus  patent  upon  its  face  that  a  statute  extend- 
ing  the   right    of   possession   in   the   mortgagor   to   a 


REDEMPTION    FROM    SALE.  317 

period  of  twelve  months  is  a  substantial  impairment 
of  the  obligation  of  a  contract  limiting  the  right 
of  possession  to  six  months.  The  mortgagee's  security- 
is  the  interest  of  the  mortgagor  in  the  property,  less 
the  equitable  interest  reserved  to  the  mortgagor  by 
the  statute  of  redemption.  The  greater  the  reserved 
interest  in  the  mortgagor,  the  less  the  security.  If 
the  interest  of  the  mortgagor  in  the  form  of  the  right 
of  redemption  may  be  extended  from  a  six  months' 
interest  to  a  twelve  months'  interest  after  the  con- 
tract between  the  parties  has  been  executed,  then 
it  may  be  extended  from  a  six  months'  interest  to  a 
five  or  ten  years'  interest,  and  thus  the  security  of 
the  mortgagee  absolutely  wiped  out," 
Thus  the  California  cases  hold 

(1)  that  the  application  of  laws  creating  a  right  of 
redemption  where  none  previously  existed  to  sales 
made  after  their  enactment,  but  in  satisfaction  of 
contract  encumbrances  created  before  their  passage, 
is  constitutional, 

(2)  that   such   an   application   of   laws   reducing   the 

percentage  to  be  paid  in  case  of  a  redemption  is 
constitutional,  but 

(3)  that  such  an  application  of  laws  lengthening  the 
time  within  which  a  redemp«tion  is  authorized  is  un- 
constitutional, and 

(4)  that  while  a  redemptioner,  as  such,  has  no  valid 
ground  of  complaint  against  a  law  which  alters  the 
conditions  of  redemption  from  a  sale  yet  to  be 
made  upon  a  judgment  or  contract  encumbrance 
existing  at  the  time  of  the  alteration,  yet  as  against 
neither  purchaser  nor  redemptioner  can  the  condi- 
tions of  redemption  of  any  property  be  altered  by 
a  law  which  takes  effect  after  the  sale  of  the  prop- 
erty has  been  made. 


318  THE    FORECLOSURE    ACTION. 

That  the  conclusions  reached  on  the  first  and  third 
points  are  in  conflict  with  each  other  is  clear,  and 
whether  the  conclusions  on  the  second  and  third  points 
are    consistent   may  well   be   doubted. 

But  if  the  conclusions  on  the  second  and  third 
points  are  not  consistent,  the  difficulty  would  seem 
to  come  from  a  misinterpretation  of  the  Barnitz  case, 
for  the  United  States  supreme  court  has  declared 
that  the  Barnitz  and  the  Connecticut  Life  Ins.  Co» 
cases  do  not  collide  with  each  other,  and  the  Califor- 
nia supreme  court,  in  Hooker  v.  Burr  (Cal.),  70  Pac. 
137,  663,  778,  781B,  said  that  this  determination  was 
''absolutely  binding^'  upon  the  state  court,  and  that 
the  same  conclusion  was  reached  in  the  Connecticut 
Life  Ins.  Co.  case  as  was  expressed  by  the  state  court 
in  1860.  In  Hooker  v.  Burr,  the  court  (pp.  781By 
782A)  also  attempted  to  differentiate  the  Connecticut 
Life  Ins.  Co.  and  the  Barnitz  cases,  and  said,  appar- 
ently in  view  of  the  fact  that  in  the  former  case  suffi- 
cient proceeds  were  realized  at  the  foreclosure  sale 
of  the  mortgaged  property  to  satisfy  the  secured  ob- 
ligation, notwithstanding  the  sale  was  made  subject 
to  the  altered  condition  of  redemption,  while  in  the 
latter  the  proceeds  of  the  sale  were  insufficient  and 
the  court  had  thought  that  from  that  fact  it  might 
''be  fairly  argued  that  the  provision  of  the  [amended] 
act  does  deprive  the  plaintiff  [mortgagee]  of  a  right 
inherent  in  her  contract,''  as  follows: 

"The  essential  distinction  seems  to  be  that  if  the 
party  complaining  of  the  operation  of  the  law  is 
himself  not  injured  by  it— if  the  obligations  of  his 
contract  are  not  impaired — he  cannot  be  heard  to 
complain,  nor  will  the  law  be  held,  as  to  him,  to 
violate  any  of  his  rights.'' 


§  166  REDEMPTION  FROM  SALE.  319 

Subdivisian  1.     What  Property  Redeemable, 

166.     Certain  Interests  in    Immovable    Property 
Redeemable. 

Every  interest  in  immovable  property,  amount- 
ing to  not  less  than  a  leasehold  of  two  years^  un- 
expired term,  which  has  been  sold  at  foreclosure 
sale  is  redeemable  from  the  sale  for  the  period 
and  in  the  mode  hereinafter  set  f orth.^ 

1  What  Property  Redeemable.— Code  of  Civil  Pro- 
cedure, section  700,  as  enacted  1872,  in  part:  "Upon 
a  sale  of  real  property,  the  purchaser  is  substituted 
to  and  acquires  all  the  right,  title,  interest,  and  claim 
of  the  judgment  debtor  thereto;  and  when  the  estate 
is  less  than  a  leasehold  of  two  years'  unexpired  term, 
the  sale  is  absolute.  In  all  other  cases,  the  property 
is  subject  to  redemption  as  provided  in  this  chapter/' 

This  section  of  the  Code  of  Civil  Procedure  (Prac- 
tice Act)  and  those  which  follow,  relative  to  redemp- 
tions from  forced  sales,  are  sufficiently  comprehensive 
to  include  in  their  design  sales  of  immovable  prop- 
erty under  judgments  foreclosing  encumbrances. 
"The  decisions  as  to  the  estate  of  the  judgment 
debtor  after  sale  become,  therefore,  authorities  for 
determining  the  estate  of  the  mortgagor  after  sale 
under  a  judgment  of  foreclosure'':  McMillan  v.  Eich- 
ards,  9  Cal.  365,  412,  70  Am.  Dec.  655;  Kent  v.  Laffan, 
2  Cal.  595;  Guy  v.  Middleton,  5  Cal.  173;  Harlan  v. 
Smith,  6  Cal.  173;  Gross  v.  Fowler,  21  Cal.  392. 

"We  are  of  opinion  that  there  is  error  in  the  judg- 
ment in  the  direction  for  the  sale  of  the  property 
without  the  right  of  redemption.  The  right  to  re- 
deem is  given  by  statute,  and  the  defendant  [trustor] 
cannot  be  deprived  of  it  by  the  court.  It  makes  no 
difference  that  the  security  here  involved  is  a  deed 
of  trust.  It  was  held  at  an  early  day  in  Kent  v. 
Laffan,  2  Cal.  595,  and  ever  since,  that  the  statutory 
redemption   applied  to   a   sale    on    foreclosure    of    a 


320  THE    FORECLOSURE    ACTIOI^.  §    167 

Subdivision  2.     Use  and  Control  of  Property  Dur- 
ing Time  of  Redemption, 

167.     Right  of  Possession   not   Changed   During 
Time  of  Redemption.^ 

During  the  period  of  redemption  and  until  the 
execution  of  a  valid  deed*^  to  the  person  in  whom 
the  title  has  become  absolute,  the  person  who 
would  have  been  entitled  to  the  possession  of  the 
property  had  there  been  no  judicial  sale  con- 
tinues to  be  entitled  to  the  possession  thereof. 

mortgage.  If  it  applies  to  a  mortgage,  it  as  weU  ap- 
plies to  a  deed  of  trust.  Both  are  securities  only. 
The  difference  is  only  in  form.  In  one  case  the  mort- 
gagee is  the  trustee,  in  the  other  a  third  person": 
Levy  V.  Burkle   (Cal.),  14  Pac.  564. 

Thus  it  is  error  for  the  court  to  direct  the  sheriff 
immediately  upon  the  foreclosure  sale  to  execute 
a  deed  to  the  purchaser,  and  that  upon  the  produc- 
tion  of  the  deed  the  purchaser  shall  have  possession 
of  the  property:  Harlan  v.  Smith,  6  Cal.  173. 

Where,  however,  in  case  of  a  foreclosure  of  a  trust 
deed  in  the  nature  of  a  mortgage,  the  commissioner 
appointed  to  make  the  sale  was  given  such  instruc- 
tions, and  the  trustor  failed  to  appeal  from  such  judg- 
ment or  the  order  confirming  the  commissioner's  acts, 
but  afterward  appealed  from  the  order  granting  the 
purchaser  a  writ  of  assistance,  the  court  refused  to 
interfere  with  the  judgment  or  order  of  confirmation: 
Odd  FeUows'  etc.  JtJank  v.  Harrigan, -53  Cal.  229. 

Query:  "Is  there  a  right  of  redemption  from  a  sale 
by  a  mortgagee  imder  a  power  of  sale?''  Cormerais 
V.  GeneUa,  22  Cal.  116,  124,  125. 

2  Right  of  Possession  not  Changed:  Guy  v.  Middle- 
ton,  5  Cal.  392;  West  v.  Conant,  100  Cal.  231,  233, 
34  Pac.  705. 


§  168  REDEMPTION  FROM  SALE.  321 

168.    Purchaser  Entitled  to  Rents  or  Value  of  Use 
of  Property.- 

The^  purchaser  of  the  property  from  the  time 
of  sale  until  a  redemption^  and  a  redemptioner 

*'The  statute  of  this  state,  allowing  a  redemption 
yjf  real  property  sold  at  judicial  sales,  plainly  con- 
templates that  the  possession  shall  not  change  to  the 
purchaser  until  the  expiration  of  the  time  pre- 
scribed as  a  limit  to  the  redemption.  Section  235  of 
Compiled  Laws,  page  563  [compare  Code  Civ.  Proc, 
sec.  706,  section  169,  below],  provides  that,  'until  the 
expiration  of  the  time  allowed  for  redemption,  the 
court  may  restrain  the  commission  of  waste  on  the 
property';  and,  also,  under  the  same  section,  *but  it 
shall  not  be  deemed  waste  for  the  person  in  possession 
of  the  property  at  the  time  of  the  sale,  or  entitled 
to  possession  afterward,  during  the  period  allowed 
for  redemption  to  continue  to  use  it  in  the  same  man- 
ner in  which  it  was  previously  used.'  This  section 
most  clearly  contemplates  an  adverse  possession  to 
the  purchaser  until  the  time  has  expired  for  redemp- 
tion. The  succeeding  section  of  the  act  [Code  Civ. 
Proc,  sec.  707,  first  sentence],  allowing  to  the  pur- 
chaser the  value  of  the  use  and  occupation,  affords 
the  only  remedv  he  is  entitled  to'':  Guy  v.  Middle- 
ton,   5   Cal.   392*; 

3  Is  Entitled  to  Possession  Until  Execution  of  Valid 
Deed:  Sands  v.  Pfeiffer,  10  Cal.  258,  265;  Bernal  v. 
Gleim,   33   Cal.  668,   676. 

4  Code  of  Civil  Procedure,  section  707,  first  sen- 
tence (Practice  Act,  section  236),  provides:  ''The  pur- 
chaser, from  the  time  of  the  sale  until  a  redemption, 
and  a  redemptioner,  from  the  time  of  his  redemption 
until  another  redemption,  is  entitled  to  receive,  from 
the  tenant  in  possession,  the  rents  of  the  property 
sold,  or  the  value  of  the  use  and  occupation  thereof." 

Historical. —Before  the  enactment  of  the  codes,  the 
court  held  that   although   the  revenue  laws  provided 
for  the  collection  of  certain  taxes  by  a  suit,  and  that 
Liens — 21 


322  THE    FORECLOSURE    ACTION.  §    168 

from  the  time  of  his  redemption  until  another 
redemption,  is  entitled  to  receive  from  the  per- 
son entitled  to  the  possession,^  unless  the  in- 
terest of  such  person  in  the  property  is  para- 
such  provisions  of  the  Practice  Act  as  are  necessary 
to  give  effect  to  the  revenue  system  are  applicable 
to  such  suits,  yet  the  above  provision  of  the  Practice 
Act  is  not  applicable  to  sales  made  to  satisfy  a  judg- 
ment in  such  a  tax  suit:  Mayo  v.  Woods,  31  Cal.  269. 

But  now  that  the  revenue  laws  are  principally  em- 
bodied in  the  Political  Code,  and  the  four  codes  are 
construed  together  as  one  law,  this  reasoning  would 
not  seem  to  hold. 

5  The  Person  Entitled  to  the  Possession.— The  code 
language  is  ''the  tenant  in  possession,''  a  phrase 
which  was  construed  by  the  court  in  Harris  v.  Rey- 
nolds, 13  Cal.  514,  517,  518,  73  Am.  Dec.  600,  as  fol- 
lows: ''The  phrase  'tenant  in  possession'  is  a  generic 
term,  intended  to  designate  the  class  of  persons  from 
whom  the  purchaser  was  to  receive  the  rents.  The 
language  is  not  that,  when  a  tenant  of  the  debtor  is 
in  possession,  the  tenant  shall  pay  the  purchaser,  or 
that  the  debtor,  when  in  possession,  shall  not;  but 
the  phraseology  designed,  evidently,  to  fix  a  general 
right,  applying  in  all  cases  of  tenancy,  for  none  are 
excluded.  ....  The  owner  in  fee  in  possession  is  no 
less,  in  legal  contemplation,  a  tenant,  than  the  man 
who  occupies  under  him.  The  definition  of  tenant  is: 
'One  that  holds  or  possesses  land  or  tenements  by 
any  kind  of  title,  either  in  fee,  for  life,  years,  or  at 
will.'  ....  The  concluding  words  of  the  section  of 
the  statute  we  are  considering  lend  some  strength  to 
the  construction  we  give;  for,  after  providing  for  the 
recovery  of  the  rents  of  the  property  sold,  the  words 
'or  the  value  of  the  use  and  occupation'  are  added, 
these  latter  words  applying  to,  and  covering,  the 
case   of   the  possession   of   the   debtor." 

The  Person  Entitled  to  the  Possession  is  the  Person 
LiaUe. 

In  a  proper  case  he  is  liable  although  he  paid  the 
rent  in  advance.     Thus  where  a  lessee  of  mortgaged 


§  168  EEDEMPTION  FROM  SALE.  323 

property  with  notice  of  the  mortgage  paid  the  rent  in 
advance,  and  the  property  was  sold  at  foreclosure 
sale  before  the  expiration  of  the  term  for  which  the 
property  was  leased,  the  purchaser  may  require  the 
lessee  to  pay  the  rent  to  him  from  the  time  of  pur- 
chase over  again.  '^The  lessor,  to  whose  title  plain- 
tiff [the  purchaser]  has  succeeded,  was  not  entitled 
to  the  rent  accruing,  or  to  the  value  of  the  use  and 
occupation  of  the  property,  subsequent  to  the  sale 
under  the  judgment  of  foreclosure,  unless  such  lessor 
effected  a  redemption  from  the  sale;  and  the  pay- 
ment of  rent  for  the  period  extending  beyond  the 
date  of  such  sale  was  made  by  defendant  [the  lessee] 
at  his  peril.  This  necessarily  follows  from  the  well- 
established  rule  that  a  subsequent  grant  or  lease  of 
mortgaged  premises  is  subject  to  the  prior  mortgage, 
if  the  purchaser  or  lessee  had  either  actual  or  con- 
structive notice  of  such  mortgage.  If  the  law  were 
otherwise,  it  would  be  in  the  power  of  the  mortgagor 
to  materially  diminish  the  value  of  the  mortgaged 
property  as  security  for  the  debt  for  which  the  mort- 
gage was  given,  by  simply  leasing  it  for  a  long  period 
and  collecting  the  rent  in  advance,  or  by  leasing  it 
for  such  period  for  a  nominal  sum^^:  Harris  v.  Fos- 
ter, 97  Cal.  292,  295,  33  Am.  St.  Eep.  187,  32  Pac.  246. 

Where  the  lessee  in  possession  of  the  sold  property 
paid  certain  rent  to  the*  owner  of  the  estate  before 
the  sale,  the  purchaser  may  nevertheless  recover  the 
rent  from  him:   McDevitt  v.  Sullivan,  8  Cal.  592. 

It  is  not  the  Actual  Possessor  of  the  Property  Who  is 
Lia&Ze.— "Where  a  tenant  of  the  sold  property  was  enti- 
tled to  the  possession,  but  an  agent  of  the  tenant  had 
the  actual  management  of  the  property,  the  possession 
of  the  agent  is  the  possession  of  the  tenant,  and  the  rem- 
edy of  the  purchaser  is  confined  to  the  tenant,  al- 
though the-  proceeds  of  the  property  went  into  the 
hands  of  the  agent.  ^^The  statute  only  gives  a 
remedy  against  the  tenant  in  possession;  the  right  to 
recover  rests  upon  the  statute;  and  the  tenant  in 
possession  is  the  only  person  against  whom  the  right 
exists'':   Shores  v.  Scott  Eiver  Co.,  21  Cal.  135. 

Actions  Have  Been  Sustained  Against  the  Following 
Persons  as  Persons  LiaUe  for  the  Bent  or  the  Value 


324  THE    FORECLOSUKE    ACTION.  §    168 

mount  to  the  interest  sold  and  nothing  is  owing 
by  him  to  the  owner  of  the  interest  sold,^  the 
proportionate  amount  of  the  rents  earned''  by 
the  property  during  such  period  or  the  value  of 

of  the  Use:  A  judgment  debtor:  Harris  v.  Eeynolds, 
13  Cal.  514,  73  Am.  Dec.  600.  A  mortgagee  in  posses- 
sion under  a  judgment  debtor:  Knight  v.  Truett,  18 
Cal.  113.  A  lessee  of  a  mortgagor:  McDevitt  v.  Sul- 
livan, 8  Cal.  592;  Harris  v.  Foster,  97  Cal.  292,  33 
Am.  St.  Rep.  187,  32  Pac.  246.  A  lessee  who  holds 
over  after  the  expiration  of  his  lease:  Harris  v.  Fos- 
ter, 97  Cal.  292,  296,  33  Am.  St.  Rep.  187,  32  Pac. 
246.  Administrator  of  estate  of  judgment  debtor: 
Walls  V.  Walker,  37  Cal.  424,  431,  432,  99  Am.  Dec. 
290,  note.  The  successor  in  interest  of  a  trustee  m 
possession  under  a  trust  deed  from  a  mortgagor: 
Walker  v.  McCusker,  71  Cal.  594,  12  Pac.  723. 

e  Unless  Interest  Paramount  to  Interest  Sold  and 
Nothing  Owing  Owner  of  Interest  Sold,— \v^here  prop- 
erty was  sold  under  a  judgment  lien  against  the 
owner,  and  was  in  the  possession  of  a  tenant  under 
a  valid  lease  made  before  the  lien  attached  to  the 
property,  and  the  tenant  paid  his  rent  in  advance 
and  his  term  had  not  expired  at  the  time  of  the  sale, 
the  tenant  would  not  be  again  liable  to  the  purchaser 
for  the  rent  (his  estate  being  superior  to  the  interest 
sold) :  Webster  v.  Cook,  38  Cal.  423,  425. 

7  Purchaser  is  Entitled  to  Proportionate  Amount 
of  Rent  Earned. — ^^The  ma^^erial  question  is  not. 
When  does  the  rent  become  due  and  payable?  but  it 
is.  What  amount  of  rent  has  the  property  earned  sub- 
sequent to  the  purchase,  and  prior  to  the  redemption? 
By  virtue  of  the  statute,  if  the  property  is  not  rented 
the  purchaser  may  sue  for  the  value  of  the  use  and 
occupation;  and  the  value  of  the  use  and  occupation 
would  be  such  value  for  the  time  the  purchaser  held 
under  the  certificate  of  sale.  And,  likewise,  a  re- 
covery for  rent  would  necessarily  be  limited  to  the 
amount  earned  for  that  time. 

*'In  the  case  at  bar,  where  the  rent  is  an  annual 
rent,  .the  purchasers  at  the  fore^closure  sales  are  en- 


§    168  REDEMPTIOI^    FROM    SALE.  325 

titled  to  an  amount  of  rent  in  proportion  as  the  time 
intervening  between  their  purchases  and  the  expira- 
tion of  the  year  term  bears  to  one  year.  (Providing, 
of  course,  the  six  months^  term  of  redemption  had 
not   expired  in  the  meantime.) 

^^The  contention  that  rent  payable  by  the  year  is 
indivisible  is  unsound.  Undoubtedly,  the  statute 
could  provide  for  a  division  of  it.  It  must  be  borne 
in  mind  that  the  whole  matter  of  redemption  is  purely 
statutory,  and  the  statute  seems  to  contemplate  a  pro- 
portionate division  of  the  rents.  It  was  intended  by 
this  statute  to  give  the  purchaser  at  the  sale  the 
fruits  of  the  land  produced  while  he  held  the  certifi- 
cate of  purchase — only  this  and  nothing  more.  To 
support  a  construction  which  would  give  the  pur- 
chaser at  the  sale— perchance  for  a  single  day— the 
rents  of  property  under  a  lease  for  years,  for  the 
sole  reason  that  rents  for  the  entire  period  happen  to 
become  due  and  payable  upon  that  day,  would  seem 
to  wander  far  from  the  intention  of  the  legislature 
in    enacting   the    statute 

^^We  cannot  bring  ourselves  to  hold  that  if  the 
mortgagor  himself  is  in  the  possession  he  is  liable 
only  for  the  value  of  the  use  and  occupation  after 
the  sale,  while  if  the  tenant  under  the  mortgagor  is 
in  possession,  all  rents  owing  by  the  tenant  for  an 
unlimited  period  in  the  past,  and  which  happen  to 
become  due  while  the  certificate  is  held  by  the  pur- 
chaser at  the  sale  are  his  property' ':  Clarke  v.  Cobb, 
121  Cal.  595,  599,  600,  54  Pac.  74,  in  bank,  Harrison, 
J.,  dissenting. 

Historical.— In  Harris  v.  Foster,  97  Cal.  292,  33 
Am.  St.  Eep.  187,  32  Pac.  246,  where  the  property 
was  in  the  possession  of  a  lessee  of  the  mortgagor 
who  had  paid  the  rent  in  advance  for  his  whole  term 
at  the  commencement,  and  where  only  a  portion  of 
the  term  of  the  lease  existed  after  the  sale  of  the 
property  at  judicial  sale,  the  purchaser  was  neverthe- 
less permitted  to  recover  rent  for  the  whole  term  of 
lease   (the  above  question  not  being  raised). 

In  McDevitt  v.  Sullivan,  8  Cal.  592,  the  court  held 
that  the  purchaser  of  an  interest  in  leased  property 
at  foreclosure  sale  was  entitled  to  the  proportionate 


326  THE    FORECLOSURE    ACTION.  §    168 

the  use  and  occupation  thereof,  and  may,  ex- 
cept when  the  property  has  been  redeemed  from 
him,^  maintain  an  action  for  the  recovery  there- 
of^ against  the  person  so  in  possession  or  to  whom 

part  of  the  rents  from  the  time  of  his  purchase,  not- 
withstanding they  had  been  partly  paid  to  an  ad- 
verse party. 

s  Except  When  the  Property  Has  Been  Redeemed 
from  Him. — See  section  175  below,  which  contem- 
plates that  in  case  of  a  redemption  the  rents  or  the 
value  of  the  use  and  occupation  shall  belong  to  the 
person  who  redeems,  such  person  being  allowed  a  re- 
bate merely  for  those  which  the  person  redeemed  from 
had  actually  received. 

Historical.— FTSidtiae  Act,  sec.  236,  did  not  contain 
the  provisions  of  the  Code  of  Civil  Procedure,  section 
707  (see  section  175  below),  that  the  rents  and  profits 
of  the  sold  property  which  were  actually  received 
by  the  purchaser  were  to  be  a  credit  on  the  redemp- 
tion money,  but  apparently  contemplated  that  the 
rents  and  profits  between  the  time  of  sale  and  a  re- 
demp-^ioner  were  to  go  to  the  purchaser  in  addition 
to  the  redemption  money  and  notwithstanding  the 
redemption. 

So  where  the  sold  property  was  in  the  possession  of 
the  judgment  debtor  and  was  subsequently  redeemed 
by  him,  the  purchaser  may  recover  the  value  of  the 
use  and  occupation  thereof  during  such  time  from 
such  person:  Harris  v.  Eeynolds,  13  Cal.  514,  73  Am. 
Dec.  600. 

Where  the  property  was  occupied  by  a  number  of 
tenants,  who  after  the  sale  and  before  the  redemp- 
tion by  the  judgment  debtor  paid  the  judgment  debtor 
certain  rent,  the  purchaser  may,  after  the  redemption, 
maintain  an  action  to  recover  such  rents  from  the 
judgment  debtor:  Kline  v.  Chase,  17  Cal.  596. 
9  May  Maintain  Action  for  Recovery. 
The  action  may  be  commenced  whenever  the  rent 
is  due.  ^^  Before  the  time  of  redemption  expired,  the 
purchaser  was  entitled  to  collect  the  rents.  ....  And 


§    168  REDEMPTION    FROM    SALE.  327 

the  rents  have  been  paid/^  but  a  receiver  can- 
not be  appointed  in  such  action.^^  The  person 
in  possession  of  the  property  is  prima  facie  liable 
for  the  payment  of  such  amounts  to  the  pur- 
chaser or  redemptioner  who  has  redeemed.^^ 

169.    Waste  to  be  Eestrained — ^What    DeemeS 
Waste. 

Until  the  expiration  of  the  time  allowed  for 
redemption   the  court  may  restrain  the  commis- 

after  the  time  expired,  he  would  have  the  same 
righf :  McDevitt  v.  Sullivan,  8  Cal.  592,  597. 

A  plurality  of  actions  is  permissible.  Where  the 
sold  property  was  in  tne  possession  of  a  tenant  of 
the  judgment  debtor  at  a  monthly  rental  of  one  hun- 
dred dollars,  the  tenant  was  responsible  to  the  pur- 
chaser for  the  rents  in  the  same  way  he  would  have 
been  to  the  judgment  debtor  had  no  sale  been  made, 
and  consequently  the  purchaser  could  sue  for  the  rent 
as  often  as  it  fell  due  under  the  terms  of  the  lease 
existing  when  he  became  purchaser:  iteynolds  v. 
Lathrop,  7  Cal.  43. 

10  It  is  generally  said  that  the  action  must  be 
brought  against  the  person  entitled  to  the  possession. 
In  Kline  v.  Chase,  17  Cal.  596,  however,  where  the 
lessee  had  paid  the  rent  to  the  owner  of  the  fee,  the 
action  was  permitted  to  be  brought  directly  against 
the  owner  of  the  fee. 

11  Receiver  cannot  be  Appointed.— ^^  It  is  true  the 
statute  provides  that  the  purchaser,  from  the  time  of 
sale  until  redemption,  is  entitled  to  receive  from  the 
tenant  in  possession  the  rents  of  the  property  sold, 
or  the  value  of  the  use  and  occupation  thereof,  but 
this  is  no  warrant  for  the  appointment  of  a  receiver 
to  oust  the  judgment  debtor  from  his  possession,  and 
take  from  him  the  crops  which  have  been  produced 
through  his  labor ^':  West  v.  Conant,  100  Cal.  231, 
34  Pac.  705. 

12  Webster  v.  Cook,  38  Cal.  423. 


328  THE    FORECLOSURE    ACTION.  §    169 

sion  of  waste  on  the  property^  by  order  granted 
with  or  without  notice^  on  the  application  of  the 
purchaser  or  of  the  judgment  creditor.  But  it  h 
not  waste  for  the  person  in  possession  of  the 
property  at  the  time  of  the  sale^  or  entitled  to 
possession  afterward,  during  the  period  allowed 
for  redemption,  to  continue  to  use  the  property 
in  the  same  manner  in  which  it  was  previously 
used;  or  to  use  in  the  ordinary  course  of  hus- 
bandry; or  to  make  the  necessary  repairs  of  build- 
ings thereon;  or  to  use  wood  or  timber  on  the 
property  therefor,  or  for  the  repair  of  fences,  or 
for  fuel  in  his  family,  while  he  occupies  the  prop- 
erty.^^ 

170.     Penalty  for  Impairing^  Freehold. 

Every  mortgagor  of  immovable  property  who, 
with  intent  to  injure  or  defraud  the  purchaser 
of  such  property  at  the  judicial  sale  thereof,  his 
representatives  or  assigns,  removes  from  such 
property  or  otherwise  disposes  of,  or  permits  to 
be  so  removed  or  otherwise  disposed  of,  any 
house,  barn,  windmill,  or  water-tank  upon  or 
affixed  to  such  premises  as  an  improvement  there- 
is  Code  Civ.  Proc,  sec.  706. 

Thus  the  judgment  debtor  possesses  the  right  to 
the  use  and  possession  of  the  premises  until  the  exe- 
cution of  the  deed  to  the  purchaser,  but  possesses  no 
right  to  despoil  the  property  of  the  fixtures:  Sands  v. 
Pfeiffer,  10  Cal.  258,  265. 


§    170  REDEMPTION    FROM    SALE.  329 

OB,  without  the  written  consent  of  such  pur- 
chaser, his  representatives  or  assigns,  is  guilty 
of  larceny  and  shall  he  punished  accordingly.^^ 

Subdivision  3.     The  Redemption. 

171.     Persons  Entitled  to  Redeem.^^ 

Subject  to  the  conditions  hereinafter  provided, 
the  person  who  owned  the  property  interest  sold 

14  See  Pen.  Code,  sec.  502%,  new  section,  in  effect 
March  26,  1895. 

15  Persons  Entitled  to  Redeem,  in  General.— Code 
of  Civil  Procedure,  section  701  (Practice  Act,  section 
230),  provides:  '^ Property  sold  subject  to  redemption, 
as  provided  in  the  last  section,  or  any  part  sold  sepa- 
rately, may  be  redeemed  in  the  manner  hereinafter 
provided  by  the  following  persons,  or  their  successors 
in  interest: 

(1)  the  judgment  debtor,  or  his  successor  in  interest, 
in  the  whole  or  any  part  of  the  property; 

(2)  a  creditor  having  a  lien  by  judgment  or  mortgage 
on  the  propert}^  sold,  or  on  some  share  or  part  there- 
of, subsequent  to  that  on  which  the  property  was 
.sold.  The  persons  mentioned  in  the  second  subdivi- 
sion of  this  section  are,  in  this  chapter,  termed  re- 
demptioners. ' ' 

**  Judgment  debtors  and  their  successors  in  inter- 
est do  not  come  within  the  class  termed  *redemp- 
tioners,  ^  and,  therefore,  are  not  required  to  follow  the 
demands  of  section  705  [for  example,  see  section  172, 
below]  in  making  a  redemption.  While  the  successor 
in  interest  of  the  judgment  debtor  is  only  mentioned 
in  section  701,  and  the  succeeding  sections  refer  to  the 
judgment  debtor  and  redemptioners  alone,  still  that 
fact  is  not  material.  The  statute  declares  that  suc- 
cessors in  interest  have  the  right  to  redeem,  and  fur- 

^  ther  declares  in   effect  that  they  are  not  to  be  con- 
sidered   redemptioners    as    the    word    is    there    used. 


330  THE    FORECLOSURE    ACTION.  §    17 1 

at  the  foreclosure  sale  or  any  part  thereof/^  or 
his  successor  in  interest  in  the  whole  or  any  parr 
of  the  property/'''  or  any  redemptioner,  or  the 

Under  such  conditions  successors  in  interest  stand  in 
the  place  of  judgment  debtors,  and  when  the  statute 
uses  the  term  ^judgment  debtors/  as  contradistin- 
guished from  'redemptioners/  the  words  should  be  con- 
strued broad  enough  to  include  successors  in  interest 
of  judgment  debtors.  That  such  was  the  intention  of 
the  legislative  mind  there  can  be  no  question,  and 
that  the  successor  in  interest  of  the  judgment  debtor 
possesses  the  rights  given  by  the  statute  to  the  judg- 
ment debtor,  rather  than  those  of  the  redemptioner, 
there  is  likewise  no  question' ':  Phillips  v.  Hagart, 
113  Cal.  552,  555,  54  Am.  St.  Eep.  369,  45  Pac.  843. 

16  Person  Who  Owned  Interest  Sold  may  Redeem.— 
(The  code  language  is  '^  judgment  debtor, '^  but  that 
is  not  wholly  appropriate  in  case  of  foreclosure  sales.) 

The  judgment  debtor  as  such  may  redeem  without 
regard  to  whether  or  not  he  has  a  successor  in  interest 
in  the  property:  Yoakum  v.  Bower,  51  Cal.  539;  South- 
ern California  Lumber  Co.  v.  McDowell,  105  Cal.  99, 
101,  38  Pac.   627. 

Persons    not    Entitled    to    Redeem  —Ilhistrations. 

The  mayor  of  a  city,  when  not  clothed  with  au- 
thority by  the  legislative  power,  is  not  qualified  to 
redeem  sold  property  of  the  city  on  its  behalf,  even 
though  he  presents  the  redemption  money  to  it: 
Thorne  .v.  San  Francisco,  4  Cal.  127,  145-147,  154,  per 
Wells,  J.,  and  Murray,  C.  J.;  Heydenfeldt,  J.,  dissent- 
ing (pp.  169-171). 

A  taxpayer  as  such  is  not  qualified  to  redeem  the 
property  of  the  city  in  which  he  pays  his  taxes  from 
the  sale  thereof,  although  he  himself  advances  the 
money  for  the  redemption:  Thorne  v.  San  Francisco, 
4  Cal.  127,  149,  150. 

17  Who  may  Redeem  as  Successor  in  Interest, 
Where  a  mortgagor  declares  a  homestead  upon  mort- 
gaged property,  his  wife  becomes  his  successor  in  in- 
terest, and  in  case  of  the  foreclosure  sale  of  the  prop- 


§  171  REDEMPTION  FROM  SALE.  331 

erty  is  entitled  to  redeem:  Hefner  v.  Urton,  71  Cal. 
479,  12  Pac.  486;  Watts  v.  Gallagher,  97  Cal.  47,  51,  31 
Pac.  626. 

The  purchaser  of  immovable  property  at  execution 
sale,  whatever  is  the  nature  of  his  title,  legal  or 
equitable,  becomes  from  the  date  of  the  purchase  a 
**  successor  in  interest  ^^  of  the  judgment  debtor,  *'for 
by  the  provisions  of  section  700  of  the  Code  of  Civil 
Procedure  it  is  ...  .  provided  that  *upon  a  sale  of 
real  property,  the  purchaser  is  substituted  to  and  ac- 
quires all  the  right,  title,  interest,  and  claim  of  the 
judgment  debtor  thereto^;  which  is  to  say,  unequivo- 
cally, that  he  becomes  the  successor  in  interest  of  the 
judgment  debtor;  nor  is  the  language  used  susceptible 
of  a  different  construction.  Any  other  construction 
of  the  act  would  lead  to  the  absurd  result  that  by  pur- 
chasing at  an  execution  sale  the  purchaser  would  lose 
the  right  to  redeem  altogether  [which  in  this  case  he 
theretofore  had  as  a  judgment  lienor],  for  ....  his 
judgment  is  satisfied  and  his  lien  thus  extinguished '': 
Pollard  V.  Harlow,  138  Cal.  390,  71  Pac.  454. 

In  denying  a  petition  for  rehearing,  Shaw,  J.,  Feb- 
ruary 24,  1903,  however,  points  out  that  it  is  sufficient 
for  the  purposes  of  the  case  to  hold  that  the  purchaser 
may  redeem  without  holding  that  the  right  of  the 
judgment  lienor  was  ended,  and  evidently  doubts  the 
latter  proposition. 

The  successor  in  interest  of  a  cotenant  of  a  re- 
mainder in  fee,  where  the  entire  estate  in  the  prop- 
erty was  sold,  is  authorized  to  redeem  the  property 
as  a  successor  in  interest:  Warner  Bros.  Co.  v.  Freud, 
Cal.,  March  19,  1903. 

The  successor  in  interest  of  a  cotenant  of  the  land 
which  was  sold  is  a  qualified  redemptioner:  Calkins  v. 
Steinbach,  66  Cal.   117,  119,  120,  4  Pac.  1103. 

Where,  after  the  sale  of  property  under  execution  or 
a  foreclosure  judgment,  the  judgment  debtor  or  mort- 
gagor conveys  the  property,  the  grantee  *' becomes  his 
successor  in  interest,  and  as  such  entitled  to  redeem 
within  the  statutory  time'^  Simpson  v.  Castle,  52  Cal. 
644,  649. 

A  trustee  in  bankruptcy  may  redeem  as  a  succes- 
sor in  interest:  In  re  Novak,  111  Fed.  (D.  C.)  161. 


332  THE    FORECLOSURE    ACTION.  §    171 

assigns*^  or  duly  qualified  agent^^  of  any  one  of 
them,  is  entitled  to  redeem  the  property  in  its 
entirety,^^  or  in  the  same  subdivisions  in  which 

Where  a  partnership  mortgaged  its  property,  and 
after  the  death  of  one  partner  the  mortgage  was  fore- 
closed, an  heir  of  the  deceased  partner  before  the 
partnership  has  been  wound  up  is  not  entitled  to  re- 
deem, nor  is  an  assignee  of  a  judgment  creditor  of 
such  heir  at  law:  McGorray  v.  O'Connor,  79  Fed. 
(C.  C.)  861,  864,  87  Fed.  (C.  C.  A.)  586,  589. 

For  where  property  and  the  title  thereto  is  vested 
in  a  partnership,  upon  the  death  of  a  partner,  the 
surviving  partner  had  *Hhe  absolute  right  of  pos- 
session, and  the  power  to  control  the  property  until 
the  affairs  of  the  partnership  were  wound  up.  It  is 
still  in  his  hands  as  such  surviving  partner.  No  right 
of  redemption  has  descended  to  the  heirs  of  the  de- 
ceased partner:  McGorray  v.  O'Connor,  87  Fed.  586, 
589,  31  C.  C.  A.  114. 

18  Assign  may  Redeem.— The  judgment  debtor  may 
assign  his  right  of  redemption  to  a  third  party,  who 
may  thereupon  redeem,  notwithstanding  the  transfer 
of  a  portion  of  the  property  to  a  successor  in  inter- 
est: Southern  California  Lumber  Co.  v.  McDowell,  105 
Cal.    99,    102,    38    Pac.    627. 

19  Duly  Qualified  Agent  may  Redeem.— A  redemp- 
tion may  be  made  by  the  authorized  agent  of  a  quali- 
fied redemptioner  when  it  affirmatively  appears  to  the 
sheriff  that  he  is  acting  for  such  redemptioner  and 
the  redemption  money  is  paid  in  behalf  of  the  re- 
demptioner: Hooker  v.  Burr,  137  Cal.  663,  70  Pac.  778. 

20  Such  Person  may  Redeem  in  Entirety.— Where 
property  was  sold  under  a  judgment  against  the  two 
tenants  in  common  of  the  property,  a  subsequent 
judgment  creditor  having  a  lien  against  the  undivided 
interests  to  one  of  the  cotenants  may  redeem  the 
whole  property:  Eldridge  v.  Wright,  55  Cal.  531,  per 
Thornton,  J.,  Morrison,  C.  J.,  McKinstry,  McKee,  and 
Eoss,  JJ.;   Sharpstein  and  Myrick,  JJ.,  dissenting. 


§  171  REDEMPTION  FROM  SALE.  333 

it  was  solcl.^*  Every^^  creditor  holding  a  judg- 
ment lien  or  mortgage  against  the  property  sold 
or  against  any  share  or  part  thereof^  subordinate 

21  May  Redeem  in  Divisions  in  Which  Sold.— Where 
the  sale  of  a  piece  of  land  divided  in  known  parcels 
could  not  be  effected  in  parcels,  and  thereupon  the 
sheriff  sold  the  whole  land  in  two  parts  to  two  dif- 
ferent purchasers,  any  redemption  must  be  made  ac- 
cording to  the  parts  in  which  it  was  sold:  Hibernia 
Sav.  etc.  Soc.  v.  Behnke,  121  Cal.  339,  341,  53  Pac. 
812. 

22  Redemption  Defined.— This  definition  of  a  re- 
demptioner  is  found  in  the  second  subdivision  of 
code,  section  701  (see  note  15,  above).  Eef erring  to 
it,  the  court,  in  Eldridge  v.  Wright,  55  Cal.  531,  535, 
says:  ^'This  subdivision,  in  our  judgm.ent,  defines  the 
class  of  persons  who  have  a  right  to  exercise  the 
privilege  of  redemption.  It  does  not  in  any  way  limit 
or  define  the  extent  of  the  right.  Such  extent  will 
be  found  in  the  other  provisions  of  the  statute.'' 

In  view  of  the  language  of  the  Code  of  Civil  Pro- 
cedure, section  705,  first  subdivision  (compare  section 
172,  below,  first  subdivision),  however,  it  seems  that 
any  encumbrancer  (any  encumbrancer  of  record,  at 
any  rate)  may  redeem,  for  in  enumerating  the  records 
which  the  redemptioner  must  produce,  that  subdivision 
states  that  [where  the  redemption  is  made  from  a 
judgment  lien]  the  redemptioner  must  produce  **a 
copy  of  the  docket  of  the  judgment,''  while  if  the 
redemptioner  redeems  "upon  a  mortgage  or  other 
lien,  a  note  of  the  record  thereof"  must  be  produced, 
thereby  clearly  implying  that  not  onlv  holders  of 
judgment  liens  and  mortgages,  but  also  the  holders  of 
other  recorded  liens,  may  become  redemptioners. 

Persons  Who  are  not  Redemptioners  —Illustrations, 
Where  mortgaged  property  is  sold  at  foreclosure  to 
a  third  party,  a  judgment  creditor  having  a  lieu 
against  the  property  of  the  mortgagor  by  virtue  of  the 
docketed  deficiency  judgment  arising  from  the  mort- 
gage sale  is  not  authorized  to  redeem  from  the  pur- 
chaser at  the  sale:  Hershey  v.  Dennis,  53  Cal.  77. 


334  THE    FORECLOSURE    ACTION.  §    171 

to  the  encumbrance  to  enforce  which  the  prop- 
erty was  sold,^^  is  a  redemptioner.  Whether  or 
not  a  person  who  -seeks  to  redeem  is  authorized 

A  person  recovering  a  judgment  in  one  county,  a 
transcript  of  which  was  never  filed  in  another  county 
so  as  to  become  a  lien  against  the  immovable  prop- 
erty of  the  judgment  debtor  therein,  cannot  be  a 
qualified  redemptioner  of  the  property  of  such  debtor 
in  such  latter  county:  Perkins  v.  Center,  35  Cal.  713, 
722. 

A  purchaser  of  property  at  an  execution  sale  upon  a 
subordinate  encumbrance  is  not  a  redemptioner  as 
such:  Pollard  v.  Harlow,  138  Cal.  390,  71  Pac.  454. 
But  see  note  17,  above. 

Redemptioner  ^s  Right  to  Redeem  not  Lost  hy  Judg- 
inent  Debtor ^s  Death.— Code  of  Civil  Procedure,  sec- 
tion 1505,  last  sentence,  provides:  *'A  judgment  cred- 
itor having  a  judgment  which  was  rendered  against 
the  testator  or  intestate  in  his  lifetime  may  redeem 
any  real  estate  of  the  decedent  from  any  sale  un- 
der foreclosure  or  execution,  in  like  manner  and  with 
like  effect  as  if  the  judgment  debtor  were  still  living. ' ' 

23  Must  be  Subordinate  to  Encumbrance  to  Enforce 
Which  the  Property  was  Sold.— (The  code  language 
is  ^^  subsequent  to  that  on  which  the  property  was 
sold.^0 

Where  an  inferior  encumbrancer,  who  was  made  a 
party  defendant  in  an  action  to  foreclose  a  superior 
encumbrance  against  the  same  property,  merely  asked 
for  the  api)lication  of  any  surplus  proceeds  arising  at 
the  foreclosure  sale  to  the  reduction  of  the  obligation 
secured  by  his  encumbrance,  his  encumbrance  is  sub- 
ordinate to  that  on  which  the  property  was  sold,  al- 
though a  portion  of  the  proceeds  of  the  sale  were  ap- 
plied in  reduction  of  the  obligation  secured  by  his  en- 
cumbrance, and  he  is  a  qualified  redemptioner:  Frink 
V.  Murphy,  21  Gal.  108,  112,  113,  81  Am.  Dec.  149. 

But  where  the  inferior  encumbrancer  by  a  cross- 
complaint  or  otherwise  affirmatively  seeks  the  fore- 
closure of  his  mortgage  in  the  foreclosure  action,  the 


§  171  EEDEMPTIOIN^  FROM  SALE.  335 

to  make  a  redemption  is  a  question  which  con- 
cerns the  purchaser  of  the  property  and  the  per- 
sons anthorized  to  redeem  and  may  be  contested 
by  any  one  of  them,^^  bnt  a  redemption  which 

property  is  sold  to  enforce  his  encumbrance  as  well 
as  that  of  the  plaintiff,  and  he  is  not  a  qualified  re- 
demptioner:  Black  v.  Gerichten,  58  Cal.  56;  San  Jose 
Water  Co.  v.  Lyndon,  124  Cal.  518,  57  Pac.  481.  See 
section   122,    above. 

24  Right  to  Redeem  may  be  Contested  by  Purchaser 
or  Person  Authorized  to  Redeem.— The  purchaser,  or 
a  redemptioner  who  redeems,  may  attack  the  right  of 
a  person  to  redeem  the  property,  and  when  such  per- 
son claims  under  a  judgment  lien  may  collaterally  at- 
tack such  judgment,  because  he  cannot  be  deprived  of 
his  interest  in  the  property  without  an  opportunity  to 
be  heard:  Bennett  v.  Wilson,  122  Cal.  509,  514,  515,  68 
Am.  St.  Eep.  61,  55  Pac.  390. 

Where  a  person  who  held  no  such  relation  to  sold 
property  or  the  parties  as  authorized  him  to  redeem 
from  the  purchaser  at  the  foreclosure  sale,  but  the 
purchaser  permitted  him  to  redeem  as  a  redemptioner, 
and  afterward  the  redemptioner  assigned  his  certifi- 
cate of  redemption  back  to  the  purchaser,  the  judg- 
ment debtor  who  had  owned  the  property  or  his 
grantee  could  redeem  the  property  from  the  pur 
chaser  thereafterward  upon  paying  the  purchaser 
the  amount  of  his  bid  with  costs,  etc.,  as  the  redemp- 
tion by  the  purported  redemptioner  was  without  valid- 
ity as  to  the  judgment  debtor,  and  the  purchaser  ac- 
quired no  right  by  reason  of  the  assignment  to  him  of 
the  certificate  of  redemption:  Hershey  v.  Dennis,  53 
Cal.  77. 

In  Bagley  v.  Ward,  27  Cal.  369,  371,  an  action  for 
the  recovery  of  the  possession  of  immovable  property, 
the  court  held  that  where  a  redemptioner  from  an  exe- 
cution sale  under  a  purported  judgment  lien  did  not  in 
fact  have  a  valid  lien,  the  deed  executed  by  the  sheriff 
to  such  redemptioner  when  his  title  became  absolute 
was  executed  without  authoritv  of  law  and  was  void. 


336  THE    FORECLOSURE    ACTION.  §    171 

is  acquiesced  in  by  all  such  persons  cannot  he 
afterward  attacked.^^ 

172.     Evidence   of   Eedemptioner's  Right  to  Re- 
deem. 

A  redemptioner^^  who  seeks  to  redeem  must 
produce  to  the  officer  or  person  from  whom  ho 
seeks  to  redeem: 

25  **  Whether  a  person  seeking  to  redeem  from 
a  sheriif's  sale  is  authorized  to  make  such  redemp- 
tion is  a  question  which  concerns  him  and  the  pur- 
chaser alone.  If  the  purchaser  is  willing  to  con- 
sider him  as  a  redemptioner,  and  accepts  the  redemp- 
tion money  paid  by  him,  he  cannot  thereafter  question 
the  effect  of  such  redemption' ':  White  v.  Costigan,  134 
Oal.  33,  37,  66  Pac.  78. 

An  assignee  of  the  purchaser  after  the  redemption 
was  made  is  equally  bound  with  the  purchaser:  White 
V.  Costigan,  134  Cal.  33,  38,  66  Pac.  78. 

Where  the  purchaser  does  not  object  to  a  certain  per- 
son's redeeming  the  whole  property,  the  effect  of  the 
transaction  is  to  vest  in  the  person  so  redeeming 
whatever  right  the  purchaser  had  acquired.  So  where 
the  sheriff  receives  the  money  and  executes  a  deed  to 
a  person  who  seeks  to  redeem,  and  the  purchaser,  by 
receiving  the  money  and  acquiescing  in  the  conveyance 
to  the  person,  ratified  the  act  of  the  sheriff,  no  third 
person  can  attack  the  transaction:  Per  Sharpstein,  J., 
in  Eldridge  v.  Wright,  55  Cal.  531,  537. 

26  See  Code  Civ.  Proc,  sec.  705. 

This  section  does  not  apply  to  a  judgment  debtor 
seeking  to  redeem:  Yoakum  v.  Bower,  51  Cal.  539. 

Nor  to  his  successor  in  interest:  Phillips  v.  Hagart, 
113  Cal.  552,  555,  54  Am.  St.  Eep.  369,  45  Pac.  843. 
See  the  case  as  quoted  under  section  171,  note  15, 
above. 


§    172  REDEMPTION    FROM    SALE.  32f7 

(1)  [where  the  redemptioner  is  a  judgment 
lienor]^  a  copy  of  the  docket  of  the  judgment 
under  which  he  claims  a  right  to  redeem,  cer- 
tified by  the  clerk  of  the  court,  or  of  the 
county  where  the  judgment  is  docketed,^''  or 
if  he  redeemed  upon  a  mortgage  or  other  lien, 
a  note  of  the  record  thereof,  certified  by  the 
recorder; 

(2)  a  copy  of  any  assignment  necessary  to  es- 
tablish his  claim,  verified  by  the  affidavit  of 
himself,  or  of  a  subscribing  witness  thereto; 
and 

(3)  an  affidavit  by  himself  or  his  agent,  showing 
the  amount  then  actually* due  on  the  lien. 

As  between  the  immediate  parties  to  a  redemp- 
tion, the  production  of  these  papers  may  be 
waived  without  affecting  the  validity  of  the  re- 
demption.^^ 

2T  Production  of  Copy  of  Docket  Essential.—*  *  When 
the  redemption  is  attempted  to  be  effected  through 
the  sheriff,  he  has  no  authority,  either  to  receive  tne 
redemption  money  from  one  claiming  the  right  to 
redeem  under  a  judgment,  or  to  execute  a  deed  to 
him,  unless  the  redemptioner  produces  a  copy  of  the 
docket  of  his  judgment.  His  power  is  altogether  stat- 
utory, and  his  acts  are  nugatory,  unless  the  provisions 
of  the  statute  are  pursued.  The  transcript  of  the 
plaintiff  ^s  judgment,  which  was  produced  to  the  sheriff, 
is  not  the  equivalent  of  a  copy  of  the  docket  of  the 
judgment  ^^  Wilcoxson  v.  Miller,  49  Cal.  193,  194; 
Haskell  v.  Manlove,  14  Cal.  54. 

28  Bagley  v.  Ward,  37  Cal.  121,  129,  99  Am.  Dec. 
256. 

Liens— 22 


338  THE    FORECLOSURE    ACTtON.  §    173 

173.     Conditions  of  Redemption  from  Purchaser. 

The^^  person  who  owned  the  interest  sold^  or 
his  snecessor  in  interest  of  any  redemptioner, 
may,  at  any  time  within  twelve  months  after  the 
sale,  but  not  thereafterward/"^^  unless  by  the  con- 
sent of  the  purchaser  at  the  foreclosure  sale,^^ 
redeem  the  sold  property  from  the  purchaser  up- 
on paying  the  purchaser 

(1)  the  amount  of  the  purchase  price^^  witli 
one  per  cent  per  month  thereon  in  addition,^^ 
up  to  the  time  of  redemption,  together  with 

29  See  Code  of  Civil  Procedure,  section  702.  Prac- 
tice Act,  section  231,  which  was  amended  on  several 
occasions,  was  substantially  similar. 

30  Redemption  cannot  be  Made  after  Expiration  of 
Twelve  Months.— Where  a  redemptioner  fails  to  re- 
deem within  the  statutory  time,  his  right  is  cut  off. 
When  he  contests  the  validity  of  the  judgment  under 
which  the  property  was  sold,  and  commences  an  action 
for  that  purpose,  he  must  at  least  offer  to  redeem  by 
paying  the  amount  which  may  be  found  to  be  a 
valid  lien  in  order  to  preserve  his  right  of  redemption 
in  case  of  a  possible  adverse  determination  of  his  con- 
test: TiUey  v.  Bonney,  123  Cal.  118,  124,  55  Pac.  798. 

31  Time  may  be  Prolonged  by  Agreement.— Where 
the  purchaser  agrees  to  prolong  the  time  of  redemp- 
tion, and  the  judgment  debtor  relies  upon  the  assur- 
ance, notwithstanding  the  assurance  was  not  in  writ- 
ing and  was  made  without  consideration,  the  purchaser 
is  estopped  by  it  upon  the  ground  that  the  debtor  was 
lulled  into  a  false  security:  Benson  v.  Bunting,  127 
Cal.  532,  536,  78  Am.  St.  Eep.  81,  59  Pac.  991. 

33  Where  with  the  consent  of  the  ofl3.cer  appointed 
to  isell  encumbered  property  the  purchaser  raised 
his  bid  a  few  days  after  the  sale,  the  judgment 
debtor  cannot  thereafter  redeem  without  paying  the 


f    173  REOEMPTIOIS'    FROM    SALE.  339» 

(2)  the  amount  of  any  taxes  or  assessments 
which  the  purchaser  may  have  paid  thereon 
after  the  purchase,  with  interest  on  such 
amount,  and 

(3)  in  case  of  a  redemption  by  a  redemptioner,^** 
the  amount  of  any  encumbrance  owned  by  the 
purchaser,  other  than  that  under  which  the 
purchase  was  made  and  prior  to  that  of  the  re- 
demptioner,  with  interest. 

increased  amount  paid  together  with  the  proper  per- 
centages, etc.:  Weyant  v.  Murphy,  78  Cal.  278,  12 
Am.  St.  Eep.  50,  20  Pac.  568. 

33  With  One  Per  Cent  in  Addition.— The  percent- 
age here  directed  to  be  added  was  intended  to  cover 
the  whole  amount  required  under  this  item,  and  there 
is  no  pretext  for  also  adding  interest  to  the  amount 
of  the  purchase  price:  McMillan  v.  Vischer,  14  Cal. 
232,  241. 

34  In  Case  of  a  Redemption  by  a  Redemptioner  ~ 
Rationale.— *  ^  The  reason  for  the  distinction  made  be- 
tween the  judgment  debtor  and  the  redemptioner  is, 
that  if  the  latter  were  permitted  to  redeem  without 
paying  the  prior  lien  held  by  the  purchaser,  the  title 
would  pass  to  the  redemptioner  and  the  lien  of  the 
purchaser  would  be  defeated.  But  if  the  judgment 
debtor  redeem,  he  is  restored  to  his  estate,  and  the 
lien  held  by  the  purchaser  will  be  available":  Sharp 
V.  Miller,  47  Cal.  82. 

A  different  explanation  was  given  in  Knight  v. 
Fair,  9  Cal.  117,  118,  and  McMillan  v.  Eichards,  9  Cal. 
365,  413,  414,  70  Am.  Dec.  655,  cases  decided  when 
it  was  held  that  the  purchaser  did  not  obtain  the  title 
to  the  property  during  the  period  of  redemption.  See 
section  154,  note  65,  above. 

But  the  judsrment  debtor  may  redeem  without  paying 
intermediate  liens  of  the  purchaser  as  specified  in  this 
subdivision:  Campbell  v.  Oaks,  68  Cal.  222,  9  Pac. 
77. 


•340  THE    FORECLOSUKE    ACTION.  §    173 

So  long  as  the  payment  is  made  in  behalf  of 
and  with  the  consent  of  a  person  entitled  to  re- 
deem the  property,  it  is  immaterial  whence 
comes  the  money  with  which  the  redemption  is 
sought  to  be  made.^'^  Should  the  person  who 
redeems  make  any  overpayment  of  redemption 
money,  the  overplus  may  be  recovered  back  by 
him.^^ 

174.     Conditions  of   Redemption   from   Redemp- 
tioner. 

The  person  who  owned  the  interest  sold  may 
at  any  time  within  twelve  months  after  the  sale, 
or  within  sixty  days  after  a  redemption  by  a  re- 
demptioner,  and  any  subsequent  redemptioner 
may  at  any  time  within  sixty  days  after  the  last 
previous  redemption,  again  redeem  the  prop- 
erty from  the  last  previous  redemptioner  upon 
paying 

(1)  the  sum  paid  on  such  last  redemption,  with 
two  per  cent  thereon  in  addition,  together  with 

(2)  the  amount  of  any  taxes  or  assessments 
which  the  last  redemptioner  may  have  paid 
thereon  after  the  redemption  by  him,  with 
interest  on  such  amount,  and     . 

»5  Seale  v.  Doane,  17  Cal.  476. 

36  Where  the  redemptioner  makes  an  overpayment 
to  the  sheriff  of  redemption  money,  the  payment 
cannot  be  regarded  as  compulsory;  nevertheless, 
such  payment  was  not  intended  as  a  gift  to  the  of- 
ficer, and  he  has  no  title  to  it,  and  may  be  regarded 


§  174  REDEMPTION  FROM  SALE.  341 

(3)  the  amount  of  any  encumbrances  of  the  last 
redemptioner  prior  to  that  of  the  person  re- 
deeming; except  that  the  judgment  under 
which  the  property  was  sold  need  not  be 
paid.^'' 

as  the  bailee  of  the  redemptioner,  who  may  recover 
it  back  from  him:  McMillan  v.  Vischer,  14  Cal.  232, 
240,  241. 

37  Conditions  of  Redemption  from  Redemptioner.— 
Code  of  Civil  Procedure,,  section  703,  in  part  provides: 
*^If  property  be  so  redeemed  by  a  redemptioner,  an- 
other redemptioner  may,  within  sixty  days  after  the 
last  redemption,  again  redeem  it  from  the  last  re- 
demptioner on  paying  the  sum  paid  on  such  last  re- 
demption, with  two  per  cent  thereon  in  addition,  and 
the  amount  of  any  assessment  or  taxes  which  the  last 
redemptioner  may  have  paid  thereon  after  the  redemp- 
tion by  him,  with  interest  on  such  amount,  and,  in  ad- 
dition, the  amount  of  any  liens  held  by  said  last  re- 
demptioner prior  to  his  own,  with  interest;  but  the 
judgment  under  which  the  property  was  sold  need  not 
be  so  paid  as  a  lien.  The  property  may  be  again,  and 
as  often  as  a  redemptioner  is  so  disposed,  redeemed 
from  any  previous  redemptioner  within  sixty  days  af- 
ter the  last  redemption,  on  paying  the  sum  paid  on  the 
last  previous  redemption,  with  two  per  cent  thereon  in 
addition,  and  the  amounts  of  any  assessments  or  taxes 
which  the  last  previous  redemptioner  paid  after  the 
redemption  by  him,  with  interest  thereon,  and  the 
amount  of  any  liens,  other  than  the  judgment  under 
which  the  property  was  sold,  held  by  the  last  redemp- 
tioner previous  to  his  own  with  interest In  all 

cases,  the  judgment  debtor  shall  have  the  entire  period 
of  twelve  months  from  the  date  of  the  sale  to  redeem 
the  property.  If  the  judgment  debtor  redeem,  he  must 
make  the  same  payments  as  are  required  to  effect  a  re- 
demption by  a  redemptioner.'' 

Historical.— The  provisions  of  the  Practice  Act,  sec- 
tion 232,  several  times  amended,  were  in  most  re- 
spects similar  to  the  above,  except  that  the  judgment 


342  THE    FORECLOSURE    ACTION.  §    175 

175.  Rents  and  Profits  Received  to  be  Credited 

on  Redemption  Money. 

The  amount  of  any  rents  and  profits  received 
from  the  property  by  the  purchaser  or  redemp- 
tioner  who  has  redeemed,  or  assigns,  are  a  credit 
upon  the  redemption  money  to  he  paid  by  any 
person  thereafter  redeeming.^® 

176.  Payments,  How  Made.^^ 

The  payments  required  in  order  to  effect  a 
redemption  from  the  purchaser  or  redemptioner 
who  has  redeemed  may  be  made  to  the  purchaser 
or  redemptioner  respectively,  or  for  him  to  the 
officer  who  made  the  sale.  When  the  judgment 
under  which  the  sale  has  been  made  is  payable 
in  a  specified  kind  of  money  or  currency,  pay- 
ment must  be  made  in  the  same  kind  of  money 

debtor  or  person  who  owned  the  interest  sold  was 
required  to  redeem,  if  at  all,  within  sixty  days  after 
a  redemption  by  a  redemptioner:  See  Boyle  v.  Dalton, 
44  Cal.  332. 

But  ''there  is  no  such  thing  under  our  statute  as 
a  redemption  from  a  successor  in  interest  of  one  of  two 
or  more  judgment  debtors,  who  redeems  land  sold  sub- 
ject to  redemption'':  Calkins  v.  Steinbach,  66  Cal. 
117,  120,  4  Pac.  1103. 

38  Compare  Code  of  Civil  Procedure,  section  707, 
second  sentence,  first  clause. 

Historical.— No  similar  provision  was  found  in  the 
corresponding  section  of  the  Practice  Act. 

39  Code  of  Civil  Procedure,  section  704,  pro- 
vides: ''The  payments  mentioned  in  the  last  two  sec- 
tions may  be  made  to  the  purchaser  or  redemptioner, 
OP  for  him  to  the  officer  who  made  the  sale.     When 


^^    UN;  .  . 

§  176  REDEMPTION  FROM  SALE.  343 


^..,..  .- 


or  currency .^^  Where  neither  the'law-Hor^fh.o 
judgment  of  the  court,  nor  the  instructions  of 
the  purchaser  or  redemptioner  where  he  has  the, 
right  to  give  such  instructions,  require  the  offi- 
cer to  receive  a  particular  kind  of  money  or  cur- 
rency only,  the  officer  may  receive  whatever  is 
regarded  as  current  money  at  the  time  and  place, 
although  not  strictly  a  legal  tender.'*^  A  ten- 
der of  the  money  is  equivalent  to  payment. 

the  judgment  under  which  the  sale  has  been  made  is 
payable  in  a  specified  kind  of  money  or  currency,  pay- 
ments must  be  made  in  the  same  kind  of  money  or 
currency,  and  a  tender  of  the  money  is  equivalent  to 
payment. ' ' 

B'is^oricaL— Practice  Act,  section  233,  as  amended 
April  27,  1863,  provided  substantially  the  Same.  The 
original  section  omitted  the  last  sentence  to  the  words, 
'^and  a  tender  of  the  money,"  etc. 

40  Payment  Must  be  Made  in  Same  Kind  of  Money. 
Compare  the  following:  Where  the  redemption  money 
was  payable  in  gold  coin,  and  the  redemptioner,  at  the 
request  of  the  sheriif,  deposited  the  redemption  money 
in  gold  coin  in  a  bank  receiving  therefor  a  certified 
check  not  in  terms  payable  in  gold  coin,  which,  how- 
ever, was  in  fact  afterward  paid  to  the  sheriff  in  gold 
coin,  the  person  from  whom  the  redemption  was  made 
having  in  fact  received  precisely  what  he  was  entitled 
to  was  not  injured,  and  cannot  complain  that  the 
check  was  not  payable  in  gold  coin:  Hooker  v.  Burr, 
137  Cal.  663,  70  Pac.  778. 

41  In  Absence  of  Direction,  Officer  may  Receive  any 
Current  Money.— ^' We  are  satisfied  that  the  sheriff  is 
by  law  constituted  the  agent  of  the  purchaser  in  re- 
ceiving the  redemption  money,  and  that  as  such  agent, 
in  cases  where  neither  the  law  nor  the  judgment  of  the 
court  directs  him  to  receive  a  particular  kind  of  money 
only,  he  may  properly  receive  for  the  purposes  of  re- 
demption any  lawful  money,  in  the  absence  of  instruc- 


344  THE    FORECLOSURE    ACTION,  §    176 

tions  from  the  purchaser,  when  he  has  the  right  to 
give  such  instructions,  restricting  him  to  a  certain 
kind  of  money 

"As  we  have  already  remarked,  silver  money  is  not 
a  legal  tender  in  payment  of  sums  exceeding  five  dol- 
lars, but  can  it  be  questioned  that  it  is  lawful  money? 
....  If  the  silver  coins  are  not  lawful  money,  they 
could  not  be  employed  in  the  payment  of  a  debt  call- 
ing for  money,  unless  the  creditor  agreed  to  receive 
and  did  receive  them  as  lawful  money.  Treasury 
notes,  like  silver  coins,  are  not  a  legal  tender  for  all 
purposes,  but,  like  them,  constitute  lawful  money'': 
The  Court,  in  People  v.  Mayhew,  26  Cal.  655,  664,  665, 
in  denying  a  petition  for  rehearing. 

In  Hooker  v.  Burr,  137  Cal.  663,  70  Pac.  778,  for  the 
convenience  and  at  the  request  of  the  sheriff  after 
having  offered  the  redemption  money  in  gold  coin,  the 
payment  was  made  by  a  certified  check  which  was 
seasonably  cashed  in  gold  coin  and  the  actual  money 
taken  into  the  custody  of  the  sheriff. 

The  court  said:  "The  sheriff  is  made  the  agent  of 
the  purchaser  for  the  purpose  of  receiving  payment. 
It  is  true  that  his  agency  is  a  limited  agency,  and  that 
his  act  does  not  bind  the  purchaser  upon  any  matters 
outside  of  the  payment,  and  only  upon  those  when, 
in  compliance  with  the  law,  payment  in  money  suffi- 
cient in  kind  and  amount  has  been  made. 

"In  general  mercantile  and  commercial  transactions 
a  check  is,  after  all,  but  a  convenient  form  of  trans- 
ferring money,  and  operates  either  as  payment  ab- 
solute or  payment  conditional,  as  the  parties  them- 
selves intend But  in  all  such  transactions  where 

a  check  is  received  as  conditional  payment  the  pay- 
ment becomes  absolute,  and  relates  to  the  time  of  the 
delivery  of  the  check  when  its  recipient  actually  cashes 
it.'' 

The  sheriff  "is  the  agent  merely  for  the  purpose  of 
receiving  the  payment,  and  that  payment,  to  bind  his 
principal,  must  be  made  in  the  amount  and  kind  of 
money  to  which  the  principal  is  entitled.  He,  .... 
of  course,  could  refuse  the  tender  of  a  check,  but  if  in 
a  bona  fide  transaction  he  accepts  a  check  as  condi- 


§  177  REDEMPTION  FROM  SALE.  345 

177.     Notice    of   Redemption    must  be  Given  by 
Redemptioner.^^ 

Every  redemptioner^^  who  makes  a  redemp- 
tion must  give  a  written  notice  thereof  to  the 
sheriff  and  file  a  duplicate  with  the  recorder  of 
the  county^  serving  with  his  notice  the  papers 
required  to  be  produced  by  section  172  above;"*"* 

tional  payment,  and  that  check  is  regularly  paid,  his 
principal  has  suffered  no  detriment  and  the  transac- 
tion under  modern  business  methods  has  come  to 
be  regarded  as  perfectly  legitimate,  and  quite  with- 
in the   scope  of  the  agent's  authority/' 

In  Hooker  v.  Burr,  137  Cal.  663,  70  Pac.  778,  the 
statement  in  Thorne  v.  San  Francisco,  4  Cal.  127,  150, 
that  payment  upon  redemption  cannot  be  made  to  the 
sheriff  by  certified  check,  although  the  check  was  af- 
terward cashed,  the  court  saying:  **Such  pretended 
payment  was  made  by  delivering  private  checks  of 
such  individuals  to  the  sheriff.  This  was  no  payment 
under  our  laws.  The  constitution  forbids  it.  This  is 
emphatically  a  hard  money  state,''  was  overruled. 

42  Compare  Code  Civ.  Proc,  sec.  703,  in  part. 
Historical,— 'Practice    Act,    section    232,    provided: 

'^Notice  of  redemption  shall  be  given  to  the  sheriff." 

43  Every  Redemptioner.— The  portion  of  the  code 
section  prior  to  the  provision  on  which  this  section 
is  founded  relates  to  redemptioners  exclusively,  and 
not  to  the  person  who  owned  the  interest  sold  or  his 
successor  in  interest,  and  in  view  of  the  concluding 
phrase  of  this  portion  that  ^'if  such  notice  be  not 
filed,  the  property  may  be  redeemed  without  paying 
such  tax,  assessment,  or  lien,"  which  clause  can  only 
refer  to  redemptioners,  the  portion  of  the  code  on 
which  this  section  is  founded  doubtless,  too,  refers  to 
redemptioners  only. 

44  See  Code  of  Civil  Procedure,  section  705,  which 
provides:  *^A  redemptioner  must  produce  to  the  offi- 
cer or  person,  from  whom  he  seeks  to  redeem,  and 
serve  with  his  notice  to  the  sheriff ^' 


346  THE  FORECLOSURE  ACTION.  §  177 

and  must  in  like  manner  give  to  the  sheriff  and 
file  with  the  recorder  notice  of  any  taxes  or  as- 
sessments which  he  may  pay  and  of  any  encum- 
brance which  he  may  hold  or  acquire  upon  the 
redeemed  property  other  than  that  on  which  the 
redemption  was  made;  otherwise  the  property 
may  again  he  redeemed  without  paying  such  tax, 
assessment,  or  encumbrance. 

178.  Purchaser  or  Redemptioner  Who  has  Re- 
deemed must,  on  Demand,  State  Rents  and 
Profits.*^ 

Whenever  a  redemptioner  or  the  person  who 
owned  the  interest  sold  or  his  successor  in  in- 
terest,^^  before  the  expiration  of  the  time  al- 
lowed for  his  redemption,  demands  in  writing  of 
the  purchaser  or  of  a  redemptioner  who  has  re- 
deemed, or  the  assign  of  either  of  them,  a  writ- 
ten and  verified  statement  of  the  amounts  of 
any  rents  and  profits  which  may  have  been  re- 
ceived by  him,  the  period  of  redemption  is  ex- 
tended until  the  expiration  of  five  days  after  tha 
statement  is  given  by  such  person  to  the  redemp- 
tioner or  former  owner.  The  redemptioner  or 
former  owner  may  maintain  an  action  against  a 
purchaser  or  redemptioner  or  assign  who,  for  a 
period  of  one  month  after  such  demand  fails  or 
refuses  to  give  the  statement  to  compel  an  ac- 

45  See  Code   Civ.  Proc,  sec.  707,  last  half. 

46  See  section  171,  note  15^  above. 


§  178  REDEMPTION  FROM  SALE.  347 

counting  and  disclosure  of  such  rents  and  profits ; 
and  until  the  expiration  of  fifteen  days  after  the 
final  determination  of  such  action  the  right  of 
redemption  is  extended  to  such  redemptioner  or 
former  owner  or  his  successor. 

179.     Person  Who  by  Mistake  Fails  in  Attempt 
to  Redeem  may  Complete  Redemption. 

Any  person  authorized  to  redeem  the  sold 
property  who  makes  an  attempt  in  good  faith  to 
redeem  within  the  prescribed  time^  but  who, 
through  his  innocent  mistake,  fails  to  tender  a 
sufficient  amount  of  redemption  money,  may 
thereafter  perfect  the  redemption  by  making  up 
the  deficiency.^'' 

47  Mistake  in  Attempt  to  Redeem:  Pownall  v.  Hall, 
45  Cal.  187;  Kofoed  v.  Gordon,  122  Cal.  314,  324,  325,  54 
Pac.  1115;  Walsh  v.  Erwin,  115  Fed.  (G.  C.)  531,  535. 

Illustrations. — A  qualified  redemptioner  who  at- 
tempts in  good  faith  to  redeem  within  the  proper 
time,  but  is  prevented  from  perfecting  a  valid  redemp- 
tion by  an  innocent  mistake  in  respect  to  a  spurious 
note  (he  paying  as  redemption  money  a  counterfeit 
one  hundred  dollar  note  as  part  thereof),  may  be  re- 
lieved from  his  mistake  by  a  payment  of  the  one 
hundred  dollars  with  interest:  Pownall  v.  Hall,  45  Cal. 
187. 

Where  on  making  a  redemption  the  redemptioner, 
by  mistake,  fails  to  tender  a  sufficient  sum  to  cover 
a  small  amount  of  taxes  which  had  been  paid  by  the 
purchaser  at  the  judicial  sale,  but  of  which  payment 
neither  the  redemptioner  nor  the  sheriff  nor  the  agent 
of  the  purchaser  who  accepted  the  amount  knew,  and 
where  on  being  informed  of  the  deficiency  the  re- 
demptioner made  it  up,  the  redemption  is  valid: 
Kofoed  V.  Gordon,  122  Cal.  314,  324,  325,  54  Pac.  1115. 


348  THE  FORECLOSURE  ACTION.  §  180 

180.     Upon  Redemption  by  Owner,  Certificate  of 
Redemption  must  be  Issued.'*^ 

Upon  a  redemption  by  the  person  who  owned 
the  interest  sold  or  his  successor  in  interest,^^ 
the  person  to  whom  the  payment  is  made  must 
execute  and  deliver  to  him  a  certificate  of  re- 
demption, acknowledged  or  proved  before  an  offi- 
cer authorized  to  take  acknowledgments  of  con- 
Where  the  owner  of  land  which  had  been  sold  upon 
the  foreclosure  of  a  miner's  lien  thereagainst  in- 
quired of  the  sheriff  the  amount  required  for  re- 
demption, and  upon  being  informed  by  the  sheriff 
that  a  certain  sum  was  required,  paid  that  sum  to 
the  sheriff  and  received  a  certificate  of  redemption, 
and  afterward,  after  the  expiration  of  the  period  of 
redemption,  the  sheriff  discovered  that  the  amount 
which  he  had  required  the  owner  to  pay  was  too 
smaH  by  forty-seven  dollars,  and  notified  the  owner 
thereof,  who  thereupon  paid  such  sum,  but  the  pur- 
chaser at  the  judicial  sale  refused  to  accept  it,  but 
claimed  the  sale  had  become  absolute  by  reason  of  a 
failure  to  redeem  and  obtained  a  writ  of  mandate 
from  the  superior  court  to  compel  the  sheriff  to  exe- 
cute him  a  deed  of  the  property,  the  mistake  being  in- 
nocent and  corrected  as  soon  as  discovered,  equity 
will  relieve  the  owner  from  it  and  permit  him  to 
perfect  the  redemption:  Walsh  v.  Erwin,  115  Fed.  (C. 
C.)  531,  535. 

'    48  See   Code   of   Civil  Procedure,   section   703,  last 
two  sentences. 

In  order  to  validate  the  redemption,  it  is  not  neces- 
sary that  the  certificate  of  redemption  should  state 
the  capacity  in  which  the  redemption  was  made;  Pol- 
lard V.  Harlow,  138  Cal.  390,  71  Pac.  454. 

49  That  this  section  applies  as  well  in  case  of  a  re- 
demption by  the  successor  in  interest  as  by  the  person 
who  owned  the  interest  sold,  is  held  in  Calkins  v. 
Steinbach,  66  Cal.  117,  120,  121,  4  Pac.  1103. 


§    180  REDEMPTION    FROM    SALE.  349 

veyances  of  immovable  property.  This  certifi- 
cate must  be  filed  and  recorded  in  the  office  of 
the  recorder  of  the  county  in  which  the  prop- 
erty is  situate,  and  the  recorder  must  note  the 
record  thereof  in  the  margin  of  the  record  of  the 
certificate  of  sale. 

Subdivision  Jf..     Effect  of  Redemption. 

181.     Effect  of  Redemption  by  Redemptioner. 

A  redemption  by  a  redemptioner,  together 
with  the  issuance  of  a  certificate  of  re- 
demption to  him,  has  the  same  effect  as 
would  the  assignment  of  the  certificate  of 
sale  to  him,^^  and  if  the  property  is  not  again 
redeemed  from  such  redemptioner  before  the 
expiration  of  the  time  of  redemption,  he  is  there- 
upon entitled  to  a  deed  of  the  property  in  like 

50  **lt  will  be  seen,  therefore,  that  the  effect  at- 
tending a  redemption  of  property,  sold  subject  to 
redemption,  depends  upon  the  character  of  the  per- 
son making  the  redemption.  If  made  by  a  *  redemp- 
tioner^ (defined  in  the  second  subdivision  of  section 
701  of  the  statute  [see  section  171,  above]),  and  there 
be  no  further  redemption  within  the  statutory  period, 
the  redemptioner  is  entitled  to  a  deed  from  the  sheriff, 
conveying  to  him  the  interest  of  the  judgment  debtor 
therein.  But  if  made  by  the  judgment  debtor,  or 
his  successor  in  interest,  the  effect  of  the  sale  is 
terminated,  which  fact  is  made  to  appear  of  record 
by  a  certificate  of  redemption,  and  a  note  thereof  on 
the  margin  of  the  certificate  of  sale^^:  Calkins  v. 
Steinbach,  66  Cal.  117,  121,  4  Pac.  1103. 


350  THE    FORECLOSURE    ACTION.  §    181 

manner  and  with  like  effect  as  would  the  pur- 
chaser have  been  had  there  been  no  redemption.^^ 

182.  Effect  of  Redemption  by  Person  Who 
Owned  Interest  Sold.^^ 
Upon  a  redemption  of  the  property  by  any  per- 
son who  owned  an  interest  which  was  sold  at  the 
foreclosure  sale  or  by  his  successor  in  interest,^^ 
the  effect  of  the  sale  is  terminated  and  each  per- 
son who  owned  an  interest  at  the  time  of  the 
sale^  or  where  he  has  transferred  his  interest  or 
any  part  thereof,  his  successor  in  interest  to  such 
extent,  is  restored  to  his  former  interest  in  the 
property  sold.^^     Where  other  persons  than  the 

51  Abadie  v.  Lobero,  36  Cal.  390,  397;  White  v.  Cos- 
tigan,  134  Cal.  33,  38,  6Q  Pac.  78. 

52  Code  of  Civil  Procedure,  section  703,  in  part: 
'^If  the  judgment  debtor  redeem,  the  effect  of  the  sale 
is  terminated,  and  he  is  restored  to  his  estate.'' 

Historical.— The  concluding  sentence  of  Praictice 
Act,  section  232,  provided  substantially  to  the  same 
effect. 

53  Successor  in  Interest  Redeems  with  Like  Effect 
as  Person  who  Owned  the  Property.— '*  The  same  ef- 
fect must  be  held  to  attend  a  redemption  by  the  suc- 
cessor in  interest  of  the  judgment  debtor,  since  the 
right  of  redemption,  which  is  by  the  statute  given  to 
the  judgment  debtor,  is  also  given  to  his  successor  in 
interest:  Calkins  v.  Steinbach,  66  Cal.  117,  120,  4 
Pac.  1103. 

54  All  Persons  Restored  to  Estate— Person  Who 
Redeems  has  Lien. — Where  one  of  several  cotenants 
redeemed  as  a  successor  in  interest,  ''the  effect  of 
the  sale  was  terminated,  and  he  thereupon  acquired 
an  equitable  lien  upon  the  interest  of  his  cotenants  in 
the  lands,  for  their  just  proportion  of  the  money  paid 


§  182  REDEMPTION  FROM  SALE.  351 

person  who  redeemed  are  thus  restored  to  their 
estates,  the  person  who  effected  the  redemption 
has  an  equitable  lien^'*  against  their  respective 
interests  in  the  property  for  the  repayment  to 

by  him  in  effecting  the  redemption;  and  he  had  his  ac- 
tion to  recover  such  proportion,  and  a  decree  to  that 
effect  that,  in  default  of  such  payment,  the  interests 
of  the  cotenants  in  the  lands  be  foreclosed.  Those 
were  the  relative  rights  and  duties  of  the  respective 
parties'':  Calkins  v.  Steinbach,  66  Cal.  117,  120,  4  Pac. 
1103. 

Where,  before  the  final  settlement  of  the  estate  of 
a  decedent,  certain  mortgaged  property  of  the  estate 
was  sold  at  foreclosure  and  a  redemption  made  by  a 
successor  in  interest  of  a  cotenant  of  a  remainder  in 
fee  in  the  property  (the  remainder  having  been  de- 
vised to  the  cotenants  by  the  decedent),  the  effect 
of  the  redemption  ^^was  simply  to  terminate  *the  ef- 
fect of  the  sale,'  thus  restoring  the  property  to  the 
estate,  but  reviving  the  lien  of  the  mortgage  for  the 
benefit  of  the  party  redeeming."  The  person  who 
made  the  redemption  '*  acquired  no  title,  but  an 
equitable  lien  only,  by  subrogation  to  the  title  of 
the  mortgagee."  If,  then,  the  administratrix  of  the 
estate  redeems  the  property  from  the  person  who  had 
made  the  redemption,  it  is  **  still  the  lien  of  the 
original  mortgage  from  which  redemption  is  to  be 
made":  Estate  of  Freud,  131  Cal.  667,  673,  82  Am. 
St.  Eep.  407,  63  Pac.  1080. 

Where  a  cotenant  of  a  remainder  in  fee  redeems, 
the  entire  estate  in  the  land  having  been  sold,  the 
cotenant  has  an  equitable  lien  against  the  interest  of 
the  other  remaindermen  and  of  the  tenant  for  life  as 
security  for  reimbursement  for  their  respective  shares 
of  the  money  paid  to  redeem.  Such  cotenant  is  not, 
however,  substituted  to  the  full  rights  of  the  pur- 
chaser at  the  foreclosure  sale  and  entitled  to  a  deed 
without  a  resale,  but  by  his  redemption  the  foreclos- 
ure sale  was  '^set  at  large,  leaving  a  lien  in  his 
favor":  \Varner  Bros.  Co.  v.  Freud,  Cal.,  March  19, 
1903. 


352  THE  FORECLOSURE  ACTION.  §  182 

hirn  by  each  person  who  was  thus  restored  to  an 
interest  in  the  property  sold  of  his  respective 
share  of  the  redemption  money,  this  lien  being 
enforceable  as  other  liens  by  judicial  sale.^^ 

Subdivision  5.    Expiration  of  Time  of  Redemption, 

183.     Title  Becomes  Absolute  upon  Expiration  of 
Time  of  Redemption.^^ 

If  no  redemption  is  made  within  twelve 
months  after  the  sale,  the  sale  becomes  absolute 

55  Lien  to  be  Foreclosed  by  Judicial  Sale.— Where 
a  cotenant  of  a  remainder  in  fee  redeems,  he  may 
maintain  an  action  for  the  foreclosure  of  his  equitable 
lien,  in  which  action  the  judgment  should  be  that 
in  default  of  payment  by  the  other  person  inter- 
ested in  the  property  of  their  respective  shares  of  the 
redemption  money  within  a  reasonable  time  to  be 
fixed  by  the  court,  the  property  be  sold,  and  the  pro- 
ceeds, or  so  much  thereof  as  may  be  necessary,  be 
applied  to  the  payment  of  the  amount  due  the  coten- 
ant, and  the  surplus  properly  distributed:  Warner 
Bros.  Co.  V.  Freud,  Cal.,  March "^19,  1903. 

Historical.— In  Warner  Bros.  Co.  v.  Freud,  Cal., 
March  19,  1903,  the  doctrine  of  Calkins  v.  Steinbacii, 
66  Cal.  117,  121,  4  Pac.  1103,  that  'Ho  enforce  the 
relative  rights  and  obligations  of  the  respective  par- 
ties, it  is  necessary  that  this  amount  [which  the  coten- 
ant who  effected  the  redemption  can  recover  from 
his  cotenants]  be  judicially  ascertained,  a  day  fixed 
within  which  it  be  paid,  and  a  decree  to  the  effect 
that  in  default  of  such  payment,  defendant  be  for- 
ever  foreclosed  of  all  right  of  interest  in  the  lands'' 
was  repudiated,  the  court  saying:  **No  authority  was 
cited  in  support  of  the  proposition,  nor  was  the  ques- 
tion discussed,  or  any  reference  made  to  prior  deci- 
sions in  this  court  declaring  that  strict  foreclosures 
'are  unknown  to  our  law,'  and  the  mortgagee  can  in 
no  case  in  this  state  become  the  owner  of  the  mort- 


§  183  REDEMPTION  FROM  SALE.  353 

without  the  performance  of  any  act  by  any- 
body.^'' If  redemption  has  been  made  by  a  re- 
demptioner,  then  npon  the  expiration  of  twelve 
months  after  the  sale  and  of  sixty  days  after  the 
redemption  without  other  redemption  beijig  made 
and  notice  thereof  given^  the  estate  of  the  re- 
demptioner  becomes  absolute.  In  each  case  the 
time  when  the  estate  becomes  absolute  is  post- 
poned by  the  refusal  to  account  for  rents  and 
profits  which  may  have  been  received,  as  pro- 
vided in  section  178  above. 

gaged  premises,  except  by  a  purcliase  upon  sale  un- 
der   judicial    decree.^' 

56  See  Code  of  Civil  Procedure^  section  703,  in 
part:  ^^If  no  redemption  be  made  within  twelve 
months  after  the  sale,  the  purchaser,  or  his  as- 
signee, is  entitled  to  a  conveyance;  or  if  so  re* 
deemed,  whenever  sixty  days  have  elapsed,  and  no 
other  redemption  has  been  made,  and  notice  thereof 
given,  and  the  time  for  redemption  has  expired,  the 
last  redemptioner,  or  his  assignee,  is  entitled  to  a 
sheriff ^s  deed;  but,  in  all  cases,  the  judgment  debtor 
shall  have  the  entire  period  of  twelve  months  from 
the  date  of  the  sale  to  redeem  the  property.'' 

Historical. — Practice  Act,  section  232,  contained  a 
similar  provision  except  that  the  judgment  debtor  was 
allowed  only  sixty  days  after  a  redemption  by  a  re- 
demptioner within  which  to  redeem. 

57  Page  V.  Eogers,  31  Cal.  293,  301;  Leonard  v. 
Flynn,  89  Cal.  543,  545,  26  Pac.  1099;  Duff  v.  Eandall, 
116  Cal.  226,  230,  58  Am.  St.  Eep.  158,  48  Pac.  66; 
Bennett  v.  Wilson,  122  Cal.  509,  513,  68  Am.  St.  Eep. 
61,  55  Pac.  390. 

Upon  the  expiration  of  the  period  of  redemption, 
the  title  becomes  absolute  in  the  purchaser,  although 
the  deed  given  by  the  sheriff  was  void,  for  the  deed 
is  but  evidence  of  the  title:  Lone  Jack  Min.  Co.  v. 
Megginson,  82  Fed.  89,  92,  27  C.  C.  A.  63. 
Liens— 23 


354  THE  FORECLOSURE  ACTION.  §  184 


AKTICLE  9. 

APPEAL  BONDS    IN    FORECLOSUEE    ACTIONS.! 

184.  Appeal  bond  from  order  for  sale  of  immovable 

property. 

185.  Appeal  bond  from  order  for  sale  of  mortgaged 

movable  property. 

184.    Appeal  Bond  from  Order  for  Sale   of   Im- 
movable Property.^ 

Any  person  who  appeals  from  a  judgment  or 
an  order  for  the  sale  of  encumbered  immovable 

1  In  connection  with  appeal  bonds  in  foreclosure 
cases,  the  general  discussion  of  the  subject  in  Es- 
tate of  Schedel,  69  Gal.  241,  10  Pac.  334,  and  Pen- 
nie  V.  Superior  Court  of  San  Francisco,  89  Cal.  31, 
26  Pac.   617,  might  be  examined. 

2  See  Code  of  Civil  Procedure,  section  945,  Prac- 
tice Act,  section  352;  ''If  the  judgment  or  order  ap- 
pealed from  direct  the  sale  or  delivery  of  possession 
of  real  property,  the  execution  of  the  same  cannot  be 
stayed,  unless  a  written  undertaking  be  executed  on 
the  part  of  the  appellant,  with  two  or  more  sureties,  to 
the  effect  that  during  the  possession  of  such  property 
by  the  appellant,  he  will  not  commit,  or  suffer  to  be 
committed,  any  waste  thereon,  and  that  if  the  judg- 
ment be  affirmed,  or  the  appeal  dismissed,  he  will  pay 
the  value  of  the  use  and  occupation  of  the  property 
from  the  time  of  the  appeal  until  the  delivery  of 
possession  thereof,  pursuant  to  the  judgment  or  order, 
not  exceeding  the  sum  to  be  fixed  by  the  judge  of  the 
court  by  which  the  judgment  was  rendered  or  order 
made,  and  which  must  be  specified  in  the  undertaking. 


§   184  APPEAL    BONDS.  355 

property  in  satisfaction  of  an  encumbrance  there- 
against  must  execute  a  written  undertaking  with 
two  or  more  sureties  in  an  amount  to  be  deter- 
mined by  the  court '  or  a  judge  thereof^  as  se- 
curity 

When  the  judgment  is  for  the  sale  of  mortgaged 
premises,  ana  the  payment  of  a  deficiency  arising 
upon  the  sale,  the  undertaking  must  also  provide 
for  the  payment  of  such  deficiency. '^ 

Code  of  Civil  Procedure,  section  1199,  expressly  de- 
clares that  the  general  provisions  as  to  appeals  are 
applicable  in  appeals  from  judgments  for  the  sale  of 
property  upon  a  mechanic's  lien. 

Construction  of  Code.— '^  This  section  is  double,  and 
provides  for  two  distinct  undertakings  upon  two  dis- 
tinct kinds  of  judgments,  one  directing  a  sale  of 
real  property,  and  the  other  directing  the  delivery  of 
the  possession  of  real  property.  In  a  case  where  the 
judgment  directs  a  sale,  the  undertaking  need  only 
provide  security  against  waste,  unless  such  sale  is  of 
mortgaged  premises  and  the  judgment  provides  for 
the  payment  of  a  deficiency,  in  which  case  it  must 
provide  for  the  payment  of  such  deficiency.  In  such 
a  case,  no  provision  need  be  inserted  in  the  under- 
taking for  the  payment  of  the  value  of  the  use  and  oc- 
cupation of  the  premises  pending  the  appeal,  for  the 
obvious  reason  that  the  judgment  creditor  does  not 
become  entitled  to  the  value  of  the  use  and  occupa- 
tion until  after  a   sale  has  been  made Where 

the  sale  is  directed  for  the  purpose  of  satisfying  any 
lien  other  than  a  mortgage  lien,  the  undertaking  need 
not  provide  for  the  payment  of  any  deficiency  which 
the  judgment  may  direct'':  Englund  v.  Lewis,  25  Cal. 
337,  353,  354.     See,  also,  Whitney  v.  Allen,  21  Cal.  233. 

3  To  be  Fixed  by  Court  or  Judge  Thereof.— The 
amount  of  the  undertaking  for  the  deficiency  is  to  be 
fixed  by  the  court  as  well  as  the  amount  of  the  under- 
taking against  waste:  Boob  v.  Hall,  105  Cal.  413,  38 
Pac.  977,  in  bank,  Harrison,  J.,  dissenting;  Hubbard 
V.  University  Bank,  120  Cal.  632,  52  Pac.  1070. 


356  THE    FORECLOSURE    ACTIOiS".  §    184 

(1)  if  tlie  aj)peliant  is  in  possession,'*  against 
the  commission  of  waste  during  the  time  of  ap- 
peal, and  also 

(2)'  whether  in  possession  or  not,^  in  case  of  the 

The  court  may  fix  the  amount  of  the  bond  upon  an 
ex  parte  application,  although  it  would  be  better  and 
safer  practice  to  give  the  respondent  an  opportunity 
to  be  heard;  and  when  the  order  is  complied  with  the 
proceedings  are  stayed:  Hubbard  v.  University  Bank, 
120  Cal.  632,  52  Pac.  1070. 

As  the  effect  of  the  bond  is  to  stay  all  further  pro- 
ceedings in  the  court  whose  judgment  was  appealed 
from,  the  court  has  no  power  to  alter  the  amount  of 
the  bond  or  impose  further  conditions  upon  appellant: 
Hubbard  v.  Universitv  Bank,  120  Cal.  632,  52  Pac. 
1070. 

^'It  was  not  necessary  for  the  judge  to  name  in  the 
order  [fixing  the  amount  of  the  bond  in  case  of  an 
appeal  from  a  judgment  foreclosing  a  mortgage  in 
which  a  deficiency  judgment  was  ordered]  separate 
amounts  for  waste,  occupation,  and  deficiency.  It  was 
sufficient  to  name  the  whole  amount  which  in  his  judg- 
ment would  be  necessary  to  meet  the  requirements  of 
section  945,  although  the  undertaking  itself  must  con- 
tain covenants  for  each  of  the  matters  covered  by  the 
section^':  Wheeler  v.  Karnes,  130  Cal.  618,  620,  621, 
63  Pac.  62;  Ogden  v.  Davis,  116  Cal.  32,  37,  38,  47  Pac. 
772. 

4  If  Appellant  in  Possession.— This  first  branch  of 
the  bond  is  required  solely  when  the  appellant  is  in 
possession:  Hoppe  v.  Hoppe,  99  Cal.  536,  34  Pac.  222. 

The  word  *' possession '^  applies  (1)  to  any  person 
who  is  actually  residing  upon  the  premises.  If  such 
person  appeals  and  desires  a  stay  he  must  give  the 
bond.  He  cannot  have  a  stay  without  it  upon  the 
plea  that  he  is  only  an  agent,  or  that  he  occupies  in 
subordination  to,  or  in  connection  with,  somebody  else; 
(2)  to  any  persons  in  subordination  to  whom  the  prop- 
erty is    held.     If    such    person    appeals  and    desires  a 


§    184  APPEAL     BONDS.  357 

stay,  he  cannot  avoid  giving  the  bond  on  the  ground 
that  another  is  in  actual  possession  of  the  property,  if 
such  other  holds  in  subordination  to  him:  McMillan 
V.  Hayward,  84  Cal.  85,  24  Pac.  151. 

So  an  administrator,  being  entitled  to  the  possession 
of  all  the  property  of  the  estate  except  the  homestead, 
cannot  avoid  the  bond  on  the  ground  that  the  heirs 
of  the  decedent  are,  with  his  permission,  in  possession 
of  the  premises:  McMillan  v.  Hayward,  84  Cal.  85,  24 
Pac.  151. 

Where  a  lessee  of  land  held  under  a  verbal  lease  for 
a  year,  which  probably  would  be  terminated  during 
the  appeal,  and  the  appellant  was  the  lessor  and  also 
the  mortgagor  of  the  property,  the  appeal  being  from 
a  judgment  foreclosing  the  mortgage,  although  there 
was  no  deficiency  judgment,  a  stay  bond  must  be  given. 
'^The  case  should  be  a  very  clear  one  to  authorize  the 
court  to  refuse  to  apply  the  statute  to  a  particular 
case'':  Bank  of  Woodland  v.  Stephens,  137  Cal.  458, 
70  Pac.  293. 

Conversely,  an  appellant  not  in  possession  is  not  re- 
quired to  give  this  bond:  McMillan  v.  Hayward,  84 
Cal.  85,  24  Pac.  151;  compare  Eoot  v.  Bryant,  54  Cal. 
182. 

Where  the  respondent  is  in  possession,  no  bond 
against  waste  is  required:  Owen  v.  Pomona  Land  etc. 
Co.,  124  Cal.  331,  334,  57  Pac.  71. 

Where  mortgaged  land  is  in  the  possession  of  a  ten- 
ant holding  under  a  verbal  lease  for  a  year,  which 
would  probably  be  terminated  during  the  appeal,  al- 
though the  court  had  appointed  a  receiver  who  was 
not  in  actual  possession,  the  mortgagor  must,  in  case 
of  an  appeal  by  him,  file  a  stay  bond  in  order  to  stay 
proceedings:  Bank  of  Woodland  v.  Stephens,  137  Cal. 
458,  70  Pac.  293. 

5  Whether  in  Possession  or  not.— The  second  branch 
of  the  bond  is  required  in  every  case  of  the  sale  of 
mortgaged  property  where  there  is  a  provision  for  a 
deficiency   judgment. 

It  is  required  from  an  appellant  out  of  possession  as 
well  as  one  in  possession:  Spence  v.  Scott,  95  Cal.  152, 
30  Pac.  202.  Compare  Home  Loan  Assn.  v.  Wilkins, 
64  Cal.  379. 


358  THE    FORECLOSURE    ACTION^.  §    184 

sale  of  mortgaged  property^  under  a  judgment 
providing  for  the  payment  of  any  deficiency 
which  may  arise  upon  the  sale,  for  the  payment 
thereof ; 
otherwise  the  sale  is  not  stayed  by  the  appeal^ 

And  where  the  person  appealing  is  not  liable  for  the 
deficiency  as  well  as  where  he  is  personally  liable 
therefor:  Johnson  v.  King,  91  Cal.  307,  27  Pac.  644; 
Gutzeit  V.  Pennie,  97  Cal.  484,  487,  32  Pac.  584. 

G  Required  Merely  in  Case  of  Mortgage.— Where, 
however,  the  sale  is  directed  for  the  purpose  of  satis- 
fying any  encumbrance  other  than  a  mortgage,  the 
undertaking  need  not  provide  for  the  payment  of  a 
deficiency  which  may  be  directed:  Englund  v.  Lewis, 
25  Cal.  337,  354;  Painter  v.  Painter,  98  Cal.  625,  33 
Pac.  483. 

So  in  an  appeal  from  a  judgment  enforcing  a  ven- 
dor's lien,  the  undertaking  is  not  required  by  law  to 
cover  a  deficiency  judgment,  and  if  given  is  void: 
Englund  v.  Lewis,  25  Cal.  337,  354. 

So  in  an  appeal  from  a  judgment  foreclosing  a  me- 
chanic's lien:  Corcoran  v.  Desmond,  71  Cal.  100,  103; 
Central  Lumber  etc.  Co.  v.  Center,  107  Cal.  193,  198, 
40  Pac.  334. 

And  from  a  judgment  foreclosing  an  equitable  lien 
in  the  nature  of  a  mortgage:  Kreling  v.  Kreling,  116 
Cal.  458,  48  Pac.  383.  Compare  same  case,  118  Cal. 
413,  50  Pac.  546,  which  shows  that  it  concerned  an 
equitable  lien. 

And  from  a  judgment  foreclosing  a  lien  imposed  by 
court:  Owen  v.  Pomona  Land  etc.  Co.,  124  Cal.  331^ 
334,  57  Pac.  71. 

7  Where  the  Stay  Bond  is  not  given,  the  sale  is  not 
stayed  by  an  appeal,  and  a  writ  of  assistance  will 
issue  to  the  purchaser:  California  etc.  Sav.  Bank  v. 
Graves,  129  Cal.  649,  651,  62  Pac.  259.  See,  also, 
Montgomery  v.  Tutt,  11  Cal.  190,  193. 


§    185  APPEAL     BONDS.  359' 

185.     Appeal  Bond  from  Order  for  Sale  of  Mort- 
gaged Movable  Property. 

Any  person  who  appeals  from  a  judgment  or 
an  order  for  the  sale  of  mortgaged  movable  prop- 
erty in  satisfaction  of  a  mortgage  thereon  must 
execute  a  written  undertaking  with  two  or  more 
sureties^  in  an  amount  to  be  determined  by  the 
court  or  a  judge  thereof,  as  security  for  the  de- 
livery of  the  property  to  the  proper  officer  iti 
case  the  judgment  or  order  is  affirmed,  or,  in  de- 
fault of  such  delivery,  for  the  payment  to  the 
proper  officer  of  the  full  value  of  the  property 
at  the  date  of  the  appeal;  otherwise  the  sale  is 
not  stayed  by  the  appeal.^ 

8  See  Code  of  Civil  Procedure,  section  943,  last  sen- 
tence, new  provision  in  effect  March  3,  1897. 

But  where  a  pledgee  maintaining  a  foreclosure  ac- 
tion is  in  possession  of  the  pledged  property,  the 
pledgor  appealing  is  not  required  to  give  a  bond  ex- 
cept for  damages  and  costs  as  is  always  required: 
Commercial  etc.  Bank  v.  Hornberger,  134-  Cal.  90,  6Q 
Pac.  74. 

Historical.— Before  the  enactment  of  this  provision, 
no  stay  bond  was  required  in  case  of  an  appeal  from 
an  order  of  sale  of  mortgaged  movable  property: 
Snow  V.  Holmes,  64  Cal.  232,  30  Pac.  806. 


PART   TWO. 

ENCTJMBEAJ^CES    FOE    SECUEITY    CEE- 
ATED  BY  CONTEACT. 

INTEODUCTOEY    PEOPOSITIONS. 

186.  Encumbrance  may  be  created  against  future  in- 

terest. 

187.  Encumbrance  made  to  delay  or  defraud  creditors 

void. 

188.  Encumbrance   made   by   insolvent   without    con- 

sideration void. 

189.  Forfeitures  prohibited. 

186.     Encumbrance  may  be  Created  Against  Fu- 
ture Interest. 

An  agreement  may  be  made  to  create  an  en- 
cumbrance against  property  not  yet  acquired  by 
the  party  agreeing  to  give  the  encumbrance,  or 
not  yet  in  existence.  In  such  case  the  encum- 
brance agreed  for  attaches  from  the  time  when 
the  party  agreeing  to  give  it  acquires  any  interest 
in  such  property,  to  the  extent  of  such  interest.* 

1  See  Civil  Code,  section  2883;  also  section  249, 
below. 

Instance  Where  Lien  was  UpJield  on  Property  to  he 
Acquired:  Kreling  v.  Kreling,  118  Cal.  413,  419,  50  Pac. 
546. 

(361) 


362  CONTRACT  ENCUMBRANCES.  §    187 

187.  Encumbrance  Made  to    Delay   or   Defraud 

Creditors  Void. 
Every  encumbrance  made  with  intent  to  delay 
or  defraud  any  creditor  or  other  person  of  his 
demands  is  void  against  all  creditors  of  the 
debtor,  and  their  successors  in  interest,  and 
against  any  person  upon  whom  the  estate  of  the 
debtor  devolves  in  trust  for  the  benefit  of  others 
than  the  debtor.  The  question  of  intent  is  one 
of  fact,  not  of  law.^ 

188.  Encumbrance  Made  by  Insolvent  Without 

Consideration  Void. 

An  encumbrance  made  or  given,  voluntarily  or 
without  valuable  consideration,  by  a  party  while 
insolvent  or  in  contemplation  of  insolvency,  is 
void  as  to  existing  creditors.^ 

2  Civil  Code,  section  3439:  ''Every  transfer  of 
property  or  charge  thereon  made,  every  obligation  in- 
curred, and  every  judicial  proceeding  taken,  with  in- 
tent to  delay  or  defraud  any  creditor  or  other  person 
of  his  demands,  is  void  against  all  creditors  of  the 
debtor,  and  their  successors  in  interest,  and  against 
any  person  upon  whom  the  estate  of  the  debtor  de- 
volves in  trust  for  the  benefit  of  others  than  the 
debtor.'' 

Civil  Code,  section  3442,  in  part:  ''The  question 
of  fraudulent  intent  is  one  of  fact  and  not  of  law.'' 

Where  an  insolvent,  not  knowing  his  insolvency, 
makes  a  voluntary  transfer  of  his  property,  the  ques- 
tion of  fraudulent  intent  is  one  of  fact,  which  does 
not  necessarily  follow  from  his  insolvency,  and  which 
must  be  established  to  render  the  transfer  void:  Bull 
V.  Bray,  89  Cal.  286,  26  Pac.  873. 

3  Civil    Code,    section    3442,    latter    part:     "Any 


§    189  CONTRACT  ENCUMBRANCES.  363 

189.     Forfeitures  Prohibited. 

Sections  335  and  336  below,  are  applicable  to 
all  encumbrances  for  security  created  by  contract. 

transfer  or  encumbrance  of  property  made  or  given 
voluntarily,  or  without  valuable  consideration,  by  a 
party  while  insolvent  or  in  contemplation  of  insol- 
vency, shall  be  fraudulent,  and  void  as  to  existing 
creditors.  ^ ' 

New  provision,  in  effect  May  25,  1895. 

Compare  Civil  Code,  section  3432:  *^A  debtor  may 
pay  one  creditor  in  preference  to  another,  or  may  give 
to  one  creditor  security  for  the  payment  of  his  de- 
mand in  preference  to  another.'' 

As  enacted  1872. 


TITLE  1 

CONTEACT    E]SrCUMBEA:N"CES     DEPEND- 
ENT ON  POSSESSION. 

AGAINST  MOVABLE  PEOPEETY. 
PLEDGE. 
AETICLEl.    • 

NATUEE  OF  PLEDGE. 

190.  Pledge  defined. 

191.  Delivery  and  change  of  possession  of  corporeal 

property  necessary. 

192.  Notice  of  intention  to  pledge  must,  in  certain 

cases,  be  recorded. 

193.  Transfer    from    debtor    to     creditor    constitutes 

pledge. 

194.  Encumbrancer  may  pledge  his  right. 

195.  Person   under    sixteen   must   not   pledge   certain 

property. 
196.-    Insolvent  person  must  not  pledge  property  pur- 
chased on  credit. 

190.    Pledge  Defined. 

Every  bailment  by  way  of  security  for  the  per- 
formance of  an  obligation  is  a  pledge.^     Property 

1  Civil  Code,  section  2986:  **  Pledge  is  a  deposit 
of  personal  property  by  way  of  security  for  the  per- 
formance of  another  act.'' 

(364) 


§    190  NATURE   THEREOF.  365 

not  capable  of  manual  delivery  may  be  pledged 
by  a  written  transfer  of  the  title  thereto.^     In 

Section  2987:  *^  Every  contract  by  which  the  pos- 
session of  personal  property  is  transferred,  as  security 
only,  is  to  be  deemed  a  pledge/' 

Illustrations.— The  transfer  of  a  negotiable  instru- 
ment accompanied  with  a  bill  of  lading  or  shipping 
receipt  pledges  the  goods  'represented  by  the  bill  or 
receipt:  Dodge  v.  Meyer,  61  Cal.  405,  418. 
.  Moneys  advanced  by  a  trustee  to  the  beneficiary  of 
the  trust  on  the  understanding  that  the  same  should  be 
repaid  out  of  the  rents  of  the  trust  propeity  constitute 
a  lien  against  the  net  incoming  rents  (not  against  the 
trust  property) :  EUig  v.  Naglee,  9  Cal.  683,  696. 

2  Intangible  Property  Pledged  by  Written  Transfer. 

^  *  Incorporeal  property,  being  incapable  of  manual 
delivery,  cannot  be  pledged  without  a  written  trans- 
fer of  the  title.  Debts,  negotiable  instruments,  stocks 
in  incorporated  companies,  and  choses  in  action  gener- 
ally are  pledged  in  that  mode.  Such  transfer  of  the 
title  performs  the  same  office  that  the  delivery  of  pos- 
session does  in  case  of  a  pledge  of  corporeal  property. 
The  transfer  of  the  title,  like  the  delivery  of  posses- 
sion, constitutes  the  evidence  of  the  pledgee's  right 
of  property  in  the  thing  pledged.  The  transfer  m 
writing  of  shares  of  stock  not  only  does  not  prove 
that  the  transaction  is  not  a  pledge,  but  the  stock,  un- 
less it  is  expressly  made  assignable  by  the  delivery  of 
the  certificates,  cannot  be  pledged  in  any  other  man- 
ner'': Brewster  v.  Hartley,  37  Cal.  15,  25,  99  Am.  Dec. 
237. 

'^A  delivery  of  the  possession  of  pledged  property 
must  be  made  to  the  pledgee,  otherwise  his  right  can- 
not be  consummated.  When  the  property  is  of  a  char- 
acter or  quality  not  capable  of  manual  delivery,  such 
as  debts  and  choses  in  action,  the  same  may  be  pledged 
by  a  written  assignment  or  other  effective  means  of 
transfer,  as  the  transfer  of  the  capital  stock  of  a  cor- 
porate company  by  the  delivery  of  the  scrip  or  cer- 
tificate": Goldstein  v.  Hort,  30  Cal.  372,  375,  376. 


366  PLEDGE.  §    190 

case  of  property  capable  of  manual  delivery  the 
pledge  need  not  be  accompanied  by  a  writing.^ 

191.     Delivery  and  Change  of  Possession  of  Cor- 
poreal Property  Necessary.* 

Whenever  property  capable  of  manual  delivery 
is  pledged  by  a  person  in  possession  or  control 

''There  can  be  no  physical  possession  of  an  opea 
accoant)  but  its  assignment  by  an  instrument  of  writ- 
ing will  ^eslf  the  assignee  with  the  legal  right  to  col- 
lect the  pinme,  whether  such  assignment  be  an  absolute 
ownership,  or  for  the  mere  purpose  of  collection,  either 
as  the  agent  of  the  assignor,  or  as  security  for  the 
performance  of  an  obligation  from  the  assignor  to  the 
assignee,  and,  in  the  latter  case,  the  power  of  collec- 
tion will  be  so  coupled  with  an  interest  in  the  ac- 
count as  to  prevent  the  assignor  from  doing  any  act 
to  impair  the  rights  of  the  assignee  to  collect  the 
amount'^:  Works  v.  Merritt,  105  Cal.  467,  469,  38  Pac. 
1109. 

IllustraUons. — A  transfer  to  a  bank  of  a  certificate 
of  its  own  stock  as  security  for  an  indebtedness  due 
it  constitutes  a  pledge:  Jennings  v.  Bank  of  California, 
79  Cal.  323,  326,  12  Am.  St.  Eep.  145,  21  Pac.  852. 

The  assignment  and  delivery  of  a  policy  of  insurance 
constitutes  a  pledge  thereof:  Savings  Bank  of  St. 
Helena  v.  Middlekauff,  113  Cal.  463,  466,  45  Pac.  840. 

3  In  Case  of  Property  Capable  of  Manual  Delivery 
Writing  not  Necessary:  Smith  v.  Mott,  76  Cal.  171,  18 
Pac.  260. 

^  ^  In  resi^ect  to  most  kinds  of  property,  a  delivery  of 
the  property  to  the  pledgee,  without  any  written  trans- 
fer of  the  title,  is  sufficient  to  pass  the  requisite  spe- 
cial property' ':  ^Brewster  v.  Hartley,  37  Cal.  15,  25,  99 
Am.  Dec.  237. 

4  Delivery  and  Change  of  Possession  Necessary. 
Civil  Code,  section  2988,  provides:   *^The  lien  of  a 

pledge  is  dependent  on  possession,  and  no  pledge  is 


§    191  NATURE   THEREOF.  367 

valid  until  the  property  pledged  is  delivered  to  the 
pledgee,  or  to  a  pledgeholder,  as  hereafter  described.'' 

Civil  Code,  section  3440:  *^  Every  transfer  of  per- 
sonal property,  other  than  a  thing  in  action,  or  a  ship 
or  cargo  at  sea  or  in  a  foreign  port,  and  every  lien 
thereon,  other  than  a  mortgage,  when  allowed  by  law, 
and  a  contract  of  bottomry  or  respondentia,  is  con- 
clusively presumed,  if  made  by  the  person  having  at 
the  time  the  possession  or  control  of  the  property,  and 
not  accompanied  by  an  immediate  delivery,  and  fol- 
lowed by  an  actual  and  continued  change  of  posses- 
sion of  the  things  transferred,  to  be  fraudulent,  and 
therefore  void,  against  those  who  are  his  creditors 
while  he  remains  in  possession,  and  the  successors  in 
interest  of  such  creditors,  and  against  any  persons 
upon  whom  his  estate  devolves  in  trust  for  the  benefit 
of  others  than  himself,  and  against  purchasers  and 
encumbrancers  in  good  faith  subsequent  to  the  trans- 
fer/' 

'^The  object  of  the  statute  is  to  require  notice  to 
the  world  of  the  transfer  of  personal  property,  in 
order  that  men  may  be  able  to  deal  with  each  other 
upon  equal  terms,  and  from  a  common  level ' ' :  Murphy 
V.  Mulgrew,  102  Cal.  547,  550,  41  Am.  St.  Eep.  200,  36 
Pac.  857. 

Histo7Hcal.—Stats.  1850,  c.  266,  sees.  15,  16,  and  18, 
in  effect  April  19,  1850,  contained  a  similar  provision. 

'^15.  Every  sale  made  by  a  vendor  of  goods  and 
chattels  in  his  possession,  or  under  his  control,  and 
every  assignment  of  goods  and  chattels,  unless  the 
same  be  accompanied  by  an  immediate  delivery,  and 
be  followed  by  an  actual  and  continued  change  of 
possession  of  things  sold  or  assigned,  shall  be  conclu- 
sive evidence  of  fraud  as  against  the  creditors  of  the 
vendor,  or  the  creditors  of  the  person  making  such  as- 
signment, or  subsequent  purchasers  in  good  faith. 

^^16.  The  term  ^creditors,'  as  used  in  the  last  sec- 
tion, shall  be  construed  to  include  all  persons  wno 
shall  be  creditors  of  the  vendor  or  assignor,  at  any 
time  while  such  goods  and  chattels  shall  remain  in  his 
possession,  or  under  his  control. 

^^18.  Nothing  contained  in  the  last  three  sections 
shall  be  construed  to  apply  to  contracts  of  bottomry, 


368  PLEDGE.  §    191 

thereof,^  the  property^  or  where  the  property  if? 
deposited  with  a  third  person  the  muniineiit  of 
title  thereto,^  must  be  expeditiously  delivered'' 
to  the  pledgee  or  pledgeholder  and  kept  in  his 
open  unequivocal  possession  as  pledgee  for  i 
length  of  time  sufficient  to  give  general  advertise  • 
ment  of  the  new  status  of  the  property.^     When 

respondentia,  nor  assignments  or  hypothecations  of 
vessels  or  goods,  at  sea,  or  in  foreign  states,  or  with- 
out this  state;  provided,  the  assignee  or  mortgagee 
phall  take  possession  of  such  vessel  or  goods  as  soon 
as  may  be  after  the  arrival  thereof  within  this  state. ' ' 

^^Upon  no  question  of  general  jurisprudence  has 
there  been  so  much  controversy  and  conflict  as  in  the 
construction    of    the    English    statutes    of    fraud,    and 

analogous  statutes  of  the  American  states This 

disagreement  has  been  greater  upon  the  question  now 
before  us— the  effect  of  the  retention  of  the  possession 
of  personal  property  by  the  vendor,  after  an  absolute 
sale — than  upon  any  other  portion  of  the  statute. 
Two  sects  divided  the  judiciary  upon  this  question, 
one  holding  that  the  retention  was  per  se  fraud;  the 
other,  that  it  was  only  prima  facie  evidence  of  fraud, 
susceptible  of  explanation  and  rebuttal.  And  these 
sects  have  been  split  into  numerous  minor  subdivi- 
sions.'^  The  English  courts,  the  federal  courts,  and 
the  courts  of  New  York  hold  the  first  and  most  strin- 
gent of  these  rival  views;  but  most  of  the  states  have 
adopted  the  more  liberal  rule.  The  California  legisla- 
ture has  ,  however,  adopted  the  stringent  rule,  but  did 
not  intend  to  go  beyond  it  as  interpreted  by  the  Eng- 
lish and  federal  courts:  Stevens  v.  Irwin,  15  Cal.  503, 
505,  506,  76  Am.  Dec.  500. 

Tlie  Statute  Applies  to  Pledges  Equally  as  to  Sales.— 
Thus,  the  same  rules  as  to  delivery  and  change  of  pos- 
session are  applicable  in  either  case :  Hilliker  v.  Kuhn, 
71  Cal.  214,  221,  16  Pac.  707;  Eohrbough  v.  Johnson, 
107  Cal.  144,  149,  40  Pac.  37;  Dubois  v.  Spinks,  114 
Cal.  289,  294,  46  Pac.  95. 


§    191  NATURE  THEREOF.  369 

5  Where  the  Property  is  already  in  the  possession 
of  the  pledgee,  no  delivery  to  him  is  necessary:  Smith 
V.  Mott,  76  Cal.  171,  18  Pac.  260. 

6  Delivery  and  Change  of  Possession  of  Muniment 
of  Title  Sufficient.— Goods  at  sea  may  be  pledged  by 
an  assignment  of  the  bill  of  lading,  which  is  deemed 
equivalent  to  actual  possession,  because  it  is  a  deliv- 
ery of  the  means  of  obtaining  possession:  Goldstein  v. 
Hort,  36  Cal.  372,  376. 

Where  the  pledged  property  was  placed  by  the 
pledgor  in  a  warehouse  of  a  third  party,  and  the 
pledgee  held  •  the  warehouse  receipts  therefor  in  his 
own  name,  the  change  of  possession  is  sufficient:  Sa- 
linas City  Bank  v.  Graves,  79  Cal.  192,  197,  21  Pac.  732. 

7  Expeditious  Delivery  Essential.— (The  words  of 
the  code  are  ^^  immediate  delivery. '')  '^By  an  imme- 
diate delivery  is  not  meant  a  delivery  instant er;  but 
the  character  of  the  property  sold,  its  situation,  and 
all  the  circumstances  must  be  taken  into  considera- 
tion in  determining  whether  there  was  a  delivery  with- 
in a  reasona,ble  time,  so  as  to  meet  the  requirement  of 
the  statute^':  Samuels  v.  Gorham,  5  Cal.  226;  Dubois 
V.  Spinks,  114  Cal.  289,  293,  46  Pac.  95. 

8  Open,  UnecLuivocal,  etc.,  Possession  Essential. — 
(The  words  of  the  code  are  ^^  actual  and  continued 
change  of  possession.'')  '* The  word  ^actual'  was  de- 
signed to  exclude  the  idea  of  a  mere'  formal  change  of 
possession,  and  the  word  ^continued'  to  exclude  the 
idea  of  a  mere  temporary  change.  But  it  never  was 
the  design  of  the  statute  to  give  such  extension  to  the 
meaning  of  this  phrase,  'continued  change  of  posses- 
sion,' as  to  require,  upon  penalty  of  a  forfeiture  of 
the  goods,  that  the  vendor  should  never  have  any  con- 
trol over  or  use  of  them.  This  construction,  if  made 
without  exception,  would  lead  to  very  unjust  and  very 
absurd  results.  A  vendor  could  never  become  trustee 
of  the  goods,  without  their  being  forfeited  or  liable 
for  his  debts.  If  a  livery-stable  keeper  hired  a  horse 
to  the  original  vendor,  it  would  be  liable  for  his 
debts;  or  if  a  boarder  came  into  a  room,  the  furniture 
would  be  liable  for  his  debts  if  he  once  owned  it.    The 

Liens— 24 


370  PLEDGE.  §    191 

property  not  capable  of  manual  delivery  after- 
ward becomes  capable  of  manual  delivery,  it  must 
thereupon  be  so  delivered  and  taken  into  the  pos- 
session of  the  pledgee.^     But  after  the  lapse  of 

^continued  change  of  possession/  then,  does  not  mean 
a  continuance  for  all  time  of  this  possession,  or  a  per- 
petual exclusion  of  all  use  and  control  of  the  prop- 
erty by  the  original  vendor.  A  reasonable  construc- 
tion must  be  given  to  this  language,  in  analogy  to  the 
doctrines  of  the  courts  holding  the  general  principles 
transcribed  into  the  statute.  The  delivery  must  be 
made  of  the  property;  the  vendee  must  take  the  actual 
possession;  that  possession  must  be  open  and  unequivo- 
cal, carrying  with  it  the  usual  marks  and  indicia  of 
ownership  by  the  vendee.  It  must  be  such  as  to  give 
evidence  to  the  world  of  the  claims  of  the  new  owner. 
He  must,  in  other  words,  be  in  the  usual  relation  to 
the  property  which  owners  of  goods  occupy  to  their 
property.  This  possession  must  be  continuous — not 
taken  to  be  surrendered  back  again— not  formal,  but 
substantial.  But  it  need  not  necessarily  continue  in- 
definitely, when  it  is  bona  fide  and  openly  taken,  and 
is  kept  for  such  a  length  of  time  as  to  give  general 
advertisement  to  the  status  of  the  property  and  the 
claim  to  it  by  the  vendee '^  Stevens  v.  Irwin,  15  Cal. 
503,  506,  507,  76  Am.  Dec.  500. 

This  case  is  sustained  in  a  long  line  of  cases,  many 
of  which  are  referred  to  in  George  v.  Pierce,  123  Cal. 
172,  177,  56  Pac.  53. 

^  ^  Fitzgerald  v.  Gorham,  4  Cal.  290,  Stewart  v.  Scan- 
nell,  8  Cal.  80,  and  Bacon  v.  Scannell,  9  Cal.  271,  were 
substantially  overruled  by  Stevens  v.  Irwin'':  God- 
chaux  V.  Mulf  ord,  26  Cal.  316,  323,  85  Am.  Dec.  178. 

^^  ^Actual'  means  existing  in  act,  and  truly  and  ab- 
solutely so;  really  acted  or  acting;  carried  out;  op- 
posed to  potential,  possible,  virtual,  or  theoretical'* 
(p.  170).  ^^The  possession  which  the  law  requires  the 
vendee  to  have,  after  a  transfer  to  him  of  personal 
property,  is  not  sufficient  if  it  amounts  simply  to  con- 
structive possession,  or  the  mere  possession  which  the 


§    191  NATURE   THEREOF.  371 

law  attaches  to  the  ownership  of  the  land'^  (p.  173): 
Bunting  v.  Saltz,  84  Cal.  168,  24  Pac.  167. 

''The  efficacy  of  the  statute  would  be  entirely  de- 
stroyed if  the  vendor  were  allowed  to  remain  in  pos- 
session of  the  property  as  the  agent  of  the  vendee,  in 
the  absence  of  any  notice  to  the  world  of  such  a 
change  of  conditions'^:  Murphy  v.  Mulgrew,  102  Cal. 
547,  550,  551,  41  Am.  St.  Eep.  200,  36  Pac.  857. 

CJianqe  of  Possession  cannot  he  Accomplished  hij  Writ- 
ings.—  The  statute,  in  dealing  ''with  a  change  of  pos- 
session sufficient  to  defeat  creditors,  does  not  contem- 
plate writings,  but  acts.  No  writings  pertaining  to  a 
transfer  of  personal  property,  regardless  of  their  num- 
ber or  character,  can  create  an  actual  and  continued 
change  of  possession  as  to  creditors  of  the  pledgor. 
Acts  only  can  do  it.  A  visible,  actual,  continued 
change  of  possession  must  -be  had,  and  the  law  will  be 
satisfied  with  nothing  else.  Writings  never  can  ac- 
complish this  result^' :  George  v.  Pierce,  123  Cal.  172, 
175,  56  Pac.  53;  Hitchcock  v.  Hassett,  71  Cal.  331,  334, 
12  Pac.  228. 

Thus  a  change  of  possession  is  not  affected  merely 
by  having  the  former  owner  manage  the  property  as  a 
servant,  agent,  or  clerk  of  the  pledgree:  Lilienthal  v. 
Ballon,  125  Cal.  183,  187,  57  Pac.  897. 

9  When  Property  Becomes  Capable  Thereof,  Must 
be  Delivered. — "Growing  crops  are  chattels  not  sus- 
ceptible of  manual  delivery  until  harvested,  and  are 
not  'in  the  possession  or  under  the  control  of  the 
vendor'  within  the  meaning  of  the  statute  requiring  an 
immediate  delivery  and  continued  change  of  posses- 
sion  When  the  crop  was  harvested  it  was  the 

duty  of  plaintiff  [the  vendee]  to  take  immediate  pos- 
session of  the  grain,  and  to  retain  such  possession'': 
O'Brien  v.  Ballon,  116  Cal.  318,  321,  48  Pac.  130. 

(1869)  "A  growing  crop,  until  ready  for  harvest, 
cannot,  by  itself,  become. the  object  of  a  delivery,  and 
can  only  be  delivered  into  the  possession  of  the  vendee 
by  delivering  to  him  the  possession  of  the  land  also, 
of  which  it  is  a  part.  We  do  not  consider  that  chat- 
tels thus  situated  fall  within  the  rule  prescribed  by 
the  statute  in  relation  to  the  immediate  delivery  and 
actual  and  continued  change   of  possession  of  goods 


372  PLEDGE.  §191 

the  s-ufficient  time  the  redelivery  of  the  property 
to  the  pledgee  in  a  new  character  does  not  of  it- 
self defeat  the  pledge. ^^ 

and  chattels  in  the  possession  and  under  the  control 
of  the  vendor,  at  least  until  nature  has  prepared  them 
for  delivery  to  the  reaper.  To  so  construe  the  statute 
would  make  it  an  absolute  interdiction  upon  the  sale 
of  growing  crops,  unless  the  vendor  is  willing  to  aban- 
don the  possession  of  his  farm  to  the  vendee  at  the 
same  time.  Growing  crops,  in  respect  to  delivery,  are 
not  unlike  ships  and  cargoes  at  sea,  of  which  delivery 
cannot  be  made  until  they  reach  port.  If  delivery  of 
ship  and  cargo  be  made  within  a  reasonable  time 
after  reaching  port,  the  sale  is  good  as  against  credi- 
tors and  subsequent  purchasers Although  grow- 
ing crops  are  chattels,  and,  as  we  have  seen,  will  pass 
by  verbal  sale,  yet  they  are  not  susceptible  of  manual 
delivery  until  harvested'^:  Davis  v.  McFarlane,  37 
Cal.  634,  638,  99  Am.  Dec.  340. 

So  until  harvested  and  reduced  to  actual  possession 
growing  crops  will  pass  by  deed  or  conveyance:  Bours 
V.  Webster,  6  Cal.  661;  Bernal  v.  Hovious,  17  Cal. 
541,  545,  79  Am.  Dec.  147. 

Where  a  person  in  possession  of  certain  land  sold 
the  crop  growing  upon  it  by  deed,  the  mere  fact  that 
the  vendor  remained  on  the  premises,  or  in  the  occu- 
pancy of  the  house  thereon,  in  the  face  of  the  deed, 
does  not  amount  to  possession  of' the  crop  so  as  to  ren- 
der the  sale  void  as  to  creditors:  Yisher  v.  Webster, 
13  Cal.  58,  61;  Bernal  v.  Hovious,  17  Cal.  541,  545,  79 
Am.  Dec.  147. 

lo  Redelivery  of  Property  to  Pledgor  in  New  Char- 
acter Admissible. — ^^  There  is  na  doubt  that  the  trans- 
fer of  possession  to  the  pledgee  of  the  thing  pledged 
is  requisite  to  constitute  a  valid  pledge,  and  the  con- 
tinuance  of   possession   is   also    requisite As   a 

general  rule,  it  is,  no  doubt,  true  that  the  delivery 
back  of  the  possession  of  the  thing  pledged  with  the 
consent  of  the  pledgee  terminates  the  bailment  and 
his  lien But  if  the  pledgor  recover  possession 


§    191  NATURE   THEREOF.  373* 

of  the  pledged  property  wrongfully,  without  the  con- 
sent  of  the   pledgee,   the  pledge   is   still  valid 

And  if  it  is  delivered  back  to  the  pledgor  in  a  new 
character,  as  a  special  bailee  or  agent,  the  pledgee 
will  still  be  entitled  to  the  pledge,  not  only  against 
the  owner,  but  against  third  persons,  for  under  such 
circumstances  the  possession  is  perfectly  consistent 
with  the  existence  of  the  original  right  of  the 
pledgee'':  Palmtag  v.  Doutrick,  59  Cal.  154,  159,  43 
Am.  Rep.  245. 

Illustrations. — Where  a  pledgee  of  certain  pianos 
permitted  the  pledgor  as  his  agent  to  let  one  of  them 
and  to  deliver  it  to  the  lessee,  directing  that  the  lease 
should  be  made  in  his  own  name,  but  the  pledgor  made 
the  lease  in  his  own  name  and  appropriated  the  rent 
to  his  own  use  and  afterward  sold  the  piano  to  a 
vendee,  who,  however,  had  notice  that  the  pledgee 
claimed  some  interest  therein,  the  pledge  was  not  de- 
feated by  these  circumstances,  and  the  lessee  right- 
fully redelivered  the  property  to  the  pledgee,  of  whose 
claim  he  had  been  informed  soon  after  receiving  the 
piano,  notwithstanding  the  pledgor  had  directed  him 
to  deliver  the  piano  to  the  vendee:  Palmtag  v.  Dout- 
rick, 59  Cal,  154,  43  Am.  Eep.  245. 

"Where  a  pledged  thresher  in  the  possession  of  a 
pledgeholder  was  operated  by  him  under  an  agreement 
with  the  pledgor,  although  for  a  short  time,  in  the 
absence  of  the  pledgeholder,  the  pledgor  had  taken 
charge  of  it,  this  was  not  such  a  possession  by  the 
pledgor  as  would  render  the  pledge  void  as  to  third 
parties:  Hilliker  v.  Kuhn,  71  Cal.  214,  16  Pac.  707. 
See  Goldstein  v.  Nunan,  Q6  Cal.  542,  6  Pac.  451,  a  case 
of  sale. 

In  Salinas  City  Bank  v.  Graves,  79  Cal.  192,  21  Pac. 
732,  however,  a  flouring-mill  company  bought  grain 
and  stored  it  in  warehouses,  the  warehouse  receipts 
being  taken  in  the  name  of  the  Salinas  City  Bank, 
which  advanced  money  thereon  as  a  pledgee.  The 
mill  company  was  permitted  to  take  the  grain  in  quan- 
tities as  required,  to  be  made  into  flour,  and  the  flour 
was  stored  in  the  mill  company's  warehouse  until  sold 
or  shipped.     The  pledgee  held  the  keys  to  this  ware- 


574  PLEDGE.  §    192 

192.  Notice  of  Intention  of  Pledge  must,  in  Cer- 
tain Cases,  be  Recorded. 
Notice  of  an  intended  pledge  of  a  quantity  ot 
a  stock  in  trade  amounting  to  substantially  the 
whole  thereof,  made  out  of  the  ordinary  course  of 
trade  or  out  of  the  regular  and  usual  practice 
and  method  of  business  of  the  pledgor,  unless  by 
direction  of  a  competent  court,  or  by  a  person 
acting  in  the  regular  discharge  of  official  duty 
or  of  a  trust  imposed  upon  him  by  law,  must  be 
recorded  in  the  office  of  the  county  recorder  of 
each  county  in  which  the  stock  in  trade  or  any 
part  thereof  is  situate  at  least  five  days  before 
the  actual  consummation  of  the  sale,  and  must 
set  forth: 

(1)  the  name  and  address  of  the  intended 
pledgee, 

(2)  a  general  statement  of  the  character  of  the 
property  to  be  pledged,  and 

(3)  the  date  when  and  place  where  the  consider- 
ation money,  if  any,  for  the  pledge  is  to  be 
paid.** 

house,  but  intrusted  them  to  a  person  who  was  also 
connected  with  the  mill  company,  and  the  employees 
of  the  mill  company  had  full  access  to  the  warehouse 
during  working  hours.  The  court  held  that  as  to 
creditors  the  pledge  was  ended  when  the  grain  passed 
into  the  possession  of  the  mill  company  for  milling. 

11  Civil  Code,  section  3440  (as  amended  by  Stats. 
1903,  March  10,  p.  Ill,  c.  100),  latter  part,  provides: 
''The  sale,  transfer,  or  assignment  of  a  stock  in  trade 
(or  of  such  a  quantity  of  a  stock  in  trade  as  to  sub- 


§    193  NATURE   THEREOF.  375 

193.    Transfer  from  Debtor  to  Creditor  Constitutes 
Pledge. 

In  the  absence  of  a  special  agreement  to  the 
contrary,  to  be  affirmatively  established  by  the 

stantially  amount  to  a  whole)  in  bulk,  or  in  any  man- 
ner otherwise  than  in  the  ordinary  course  of  trade,  and 
in  tiie  regular  and  usual  practice  and  method  of  busi- 
ness of  the  vendor,  transferor,  or  assignee,  will  be 
conclusively  presumed  to  be  fraudulent  and  void  as 
against  the  existing  creditors  of  the  vendor,  trans- 
feror, or  assignor,  unless  at  least  five  days  before  the 
consummation  of  such  sale,  transfer,  or  assignment 
the  vendor,  transferor,  or  assignor,  or  the  intended 
vendee,  transferee,  or  assignee,  shall  record  in  the 
office  of  the  county  recorder  in  the  county  or  counties 
in  which  the  said  stock  in  trade  is  situated,  a  notice 
of  said  intended  sale,  transfer,  or  assignment,  stating 
the  name  and  address  of  the  intended  vendee,  trans- 
feree, or  assignee,  and  a  general  statement  of  the 
character  of  the  property  or  merchandise  intended  to 
be  sold,  assigned,  or  transferred,  and  the  date  when, 
and  the  place  where,  the  purchase  price,  if  any  there 
be,  is  to  be  paid;  provided,  nevertheless,  that  if  such 
intended  sale  is  to  be  at  public  auction  the  notice 
above  required  to  be  recorded  shall  state  that  fact, 
the  time,  terms,  and  place  of  said  sale,  the  names  and 
addresses  of  the  vendor  and  auctioneer,  and  a  general 
statement  of  the  character  of  the  property  or  mer- 
chandise required  to  be  sold,  but  such  sale  shall  in  no 
event  occur  within  five  days  of  the  recordation  of  said 
notice;  provided,  further,  that  the  provisions  of  this 
section  shall  not  apply  or  extend  to  any  sale,  trans- 
fer, or  assignment  made  under  the  direction  or  order 
of  a  court  of  competent  jurisdiction,  or  by  an  executor, 
administrator,  guardian,  receiver,  or  other  officer  or 
person  acting  in  the  regular  and  proper  discharge  of 
official  duty,  or  in  the  discharge  of  any  trust  imposed 
upon  him  by  law,  nor  to  any  transfer  or  assignment 
made  for  the  benefit  of  creditors  generally,  nor  to  any 
sale,  transfer  or  assignment  of  any  property  exempt 
from  execution/' 


376  PLEDGE.  §    193 

debtor^  any  transfer  of  movable  property  from 
the  debtor^  or  from  a  third  person  for  him,  to 
his  creditor,  constitutes  a  pledge  of  the  property 
transferred,  and  does  not  extinguish  nor  reduce 
in  amount  the  obligation  to  secure  which  the 
transfer  was  made.^^ 

12  Transfer  from  Debtor  to  Creditor  Constitutes 
Pledge. 

''The  owner  of  property  remains  such  until  he  is 
devested  of  his  ownership  by  law,  or  his  voluntary  act. 
The  mere  transfer  of  his  property  to  another  does  not 
devest  him  of  his  owjiership,  unless  such  was  his  in- 
tent, and  manifested  by  suitable  acts. 

''If  the  person  to  whom  the  transfer  is  made  is  his 
creditor,  his  ownership  will  none  the  less  be  retained 
in  the  absence  of  any  evidence  respecting  his  motives 

in  making  the  transfer When  a  debtor  deposits 

property  with  his  creditor,  in  the  absence  of  any  show- 
ing as  to  the  purpose  with  which  the  deposit  is  made 
or  received,  it  is  presumed  that  it  was  intended  as  a 
collateral  security  for  the  debt.  Unless  there  is  some 
evidence  tending  to  show  an  intention  on  the  part 
of  the  debtor  to  give,  and  also  on  the  part  of  the 
creditor  to  receive,  the  property  in  satisfaction  of  the 
debt,  either  in  whole  or  in  part,  the  law  presumes  that 
it  is  given  only  as  a  collateral  security.  Especially 
does  this  presumption  arise  if  the  property  given  is 
itself  a  chose  in  action  or  a  security  of  a  different  na- 
ture from  the  debt,  whose  value  is  neither  intrinsic  nor 
apparent,  and  is  not  agreed  upon  by  the  parties 

"The  duty  of  establishing  the  contrary  is  alfirma- 
tive,  and  it  rests  upon  the  debtor.  If' he  fails  to  per- 
form this  duty,  the  law  makes  the  positive  inference 
that  the  assignment  is  only  as  collateral  security^': 
Borland  v.  Nevada  Bank,  99  Oal.  89,  95,  96,  37  Am.  St. 
Eep.  32,  33  Pac.  737. 

"This  court  has  repeatedly  recognized  the  rule  that 
an  express  agreement  must  be  shown  to  establish  the 
fact  that  a  bill  or  note  of  either  the  debtor  or  a  third 


§    194  NATURE  THEREOF.  377 

194.     Encumbrancer  may  Pledge  His  Right. 

An  encumbrancer  in  possession  of  movable 
property  may  pledge  it  to  the  extent  of  his  en- 
cumbrance.^^ 

person  was  taken  by  the  creditor  in  payment  of  a  pre- 
existing debt^':  Brown  v.  Olmstead,  50  Cal.  162,  165, 
166. 

'^  There  is  no  evidence  in  this  case  of  any  express 
agreement  that  the  new  note  was  to  be  in  payment  of 
the  old  one,  or  that  the  debt  due  on  the  old  note  was 
to  be  extinguished  by  accepting  the  new  one.  The 
only  fact  tending  that  way  was,  that  the  old  note 
was  surrendered  when  the  new  note  was  received; 'but 
that  was  ....  insufficient;  ....  The  law  will  not 
presume  such  an  agreement,  and  it  must  be  proved  by 
the  party  relying  upon  if:  Welch  v.  Arrington,  23 
Cal.  322. 

^  •  Unless  received  by  express  agreement  as  payment, 
it  dia  not  extinguish  the  debt'^  Griffith  v.  Grogan,  12 
Cal.  317,  321,  322. 

' '  The  acceptance  of  a  note  payable  at  a  future  time 
for  a  pre-existing  debt  does  not  extinguish  the  debf : 
Brewster  v.  Bours,  8  Cal.  501,  506. 

Thus,  in  Stone  v.  Owens,  105  Cal.  292,  297,  298,  38 
Pac.  726,  it  was  held  that  the  legal  effect  of  the 
assignment  of  a  contract  as  security  for  the  pay- 
ment of  debts  coupled  with  a  power  of  attorney  ta 
receive  the  money  to  become  due  under  the  contract 
was  to  pledge  the  contract,  and  no  obligation  was  im- 
posed upon  the  pledgee  to  perform,  or  pay  for,  the 
work  which  the  pledged  contract  required  to  be  per- 
formed by  the  pledgor. 

13  Civil  Code,  section  2990:  '^One  who  has  a  lien 
upon  property  may  pledge  it  to  the  extent  of  hi& 
lien/' 


378  '  PLEDGE.  §    195 

195.  Person  under  Sixteen  must  not  Pledge  Cer- 

tain Property. 

Any  person  who  receives  in  pledge  from  a  per- 
son under  the  age  of  sixteen  years  any  junk, 
metal,  mechanical  tools,  or  implements,  is  guilty 
of  a  misdemeanor.^^ 

196.  Insolvent  Person  must  not  Pledge  Property 
Purchased  on  Credit. 

Any  person  who,  within  three  months  before 
the  filing  of  a  petition  consequent  upon  which  he 
is  adjudged  an  insolvent  under  the  state  in- 
solvent laws,  with  intent  to  defraud  his  cred- 
itors pledges  any  property  which  has  been  ob- 
tained on  credit  and  remains  unpaid  for,  other- 
wise than  by  bona  fide  transactions  in  the  ordi- 
nary way  of  his  trade,  is  guilty  of  a  misdemeanor 
punishable  by  imprisonment  in  the  county  jail 
for  not  less  than  three  months  nor  more  than 
two  years. *^ 

14  See  Pen.  Code,  see.  501. 

15  Compare  Insolvent  Law  1895,  sec.  60,  latter  part. 


§    197  OPERATION    THEREOF.  379 


ARTICLE  2. 

OPERATION    OF    PLEDGE. 

197.  Pledge  does  not  transfer  title. 

198.  Increase  of  pledged  property  also  pledged. 

199.  After-acquired  title  inures  to  pledgee. 

200.  Pledge    of    future    obligation    prolongs    secured 

obligation. 
S;01.     Executory  agreement  to  pledge  mostly  void. 

202.  Failure  to  file  notice  of  intention  to  pledge  ren- 

ders pledge  void  against   creditors. 

203.  Pledge  of  corporate  stock  not  entered  on  books 

of   corporation   valid   except   as   against    bona 
fide   purchasers. 

204.  Pledge    by    apparent    owner    valid    as    to    bona 

fide   pledgee. 

205.  Transfer   by   pledgee    not    clothed   with    indicia 

of  ownership  subject  to  pledge. 

200.  Pledged  property  may  be  attached  bv  garnish- 
ment   process. 

207.  Measure  of  damages  caused  by  conversion  of 
pledged   property. 

197.     Pledge  does  not  Transfer  Title. 

Ko  pledge  can  transfer  any  title  to  the  pledged- 
property.^ 

1  Pledge  does  not  Transfer  Title:  Hyatt  v.  Argenti, 
3  Cal.  151,  162;  Dewey  v.  Bowman,  8  Gal.  145,  151; 
Plevland  v.  Badger,  35  Cal.  404,  410;  Wright  v.  Eoss, 
36  Cal.  414,  428;  Brewster  v.  Hartley,  37  Cal.  15,  25,  26, 
99  Am.  Dec.  237;  Cross  v.  Eureka  Lake  and  Yuba  Canal 
Co.,  73  Cal.  302,  306,  2  Am.  St.  Kep.  808,  14  Pac.  885; 


380  PLEDGE.  §    198 

198.  Increase  of  Pledged  Property  also  Pledged. 

The  increase  of  pledged  property  is  pledged 
with  the  property.^ 

199.  After-acquired  Title  Inures  to  Pledgee. 

Any  interest  in  pledged  property  acquired  by 
the  person  pledging  it  after  making  the  pledge 

Haber  v.  Brown,  101  Cal.  445,  452,  35  Pac.  1035;  Stone 
V.  Owens,  105  Cal.  292,  297,  38  Pac.  726;  Anderson 
V.  Pacific  Bank,  112  Cal.  598,  601,  53  Am.  St.  Eep. 
228,  44  Pac.  1063;  Fernandez  v.  Tormey,  121  Cal.  515, 
519,   53   Pac.   1119. 

See,   also   section  4,   above. 

When  a  chose  in  action  is  pledged,  an  assignment 
and  delivery  are  necessary  to  give  the  pledgee  the 
fall  authority  readily  to  control  it,  but  the  title  does 
not  in  consequence  pass:  Gay  v.  Moss,  34  Cal.  125, 
132. 

^^A  general  property  in  the  thing  pledged  remains 
in  the  pledgor,  and  only  a  special  property  rests  in 
the  pledgee^':  Brewster  v.  Hartley,  37  Cal.  15,  25, 
99  Am.  Dec.  237. 

'^It  seems  clear,  in  view  of  the  code  provision,  that 
a  mere  indorsement  of  non-negotiable  paper  by  way 
of  pledge  should  be  restricted  in  effect  to  an  author- 
ity from  the  pledgor  to  the  pledgee  to  enforce  the 
obligation  in  his  own  name  as  trustee  and  agent  for 
the  pledgor,  and  to  apply  the  proceeds  in  payment 
of  the  debt  secured,  accounting  to  the  pledgor  for 
any  surplus  collected.  It  could  not  operate  as  an 
assignment  of  the  general  title  so  long  as  the  pledge 
subsists,  and  could  only  operate  as  such  in  case  of 
an  agreement  that  the  pledge  should  be  extinguished, 
and  the  amount  of  the  collateral  security  applied  as 
a  payment  upon  the  debt  secured,  or  in  case  of  a 
transfer  of  the  collateral  security  by  the  pledgee  tc> 
third  parties'':  Haber  v.  Brown,  101  Cal.  445,  453, 
35  Pac.  1035. 

a  Civ.  Code,  sec.  2989. 


§    199  OPERATION    THEREOF.  38-1 

inures  to  the  benefit  of  the  pledgee  as  of  the 
time  of  the  pledge.^ 

200.     Pledge  of  Future  Obligation  Prolongs  Se- 
cured Obligation. 

The  transfer  by  way  of  pledge  of  a  personal 
obligation  payable  at  a  future  time  prolongs  the 
time  of  payment  of  the  indebtedness  secured  by 
such  transfer  until  the  maturity  of  the  security."* 
Where  a  series  of  personal  obligations  payable  at 
successive  times  are  thus  received  in  pledge,  up- 
on default  in  the  payment  of  any  one  of  them 
at  maturity  the  pledgee  may  terminate  the  agree- 

3  Goldstein  v.  Hort,  30  Cal.  372,  377. 

4  **  Unless  received  by  express  agreement  as  pay- 
ment, it  did  not  extinguish  the  debt.  It  only  op- 
erated to  extend  until  its  maturity  the  period  for 
the  payment  of  the  debt.  This  is  the  settled  doctrine 
as  to  the  notes  of  the  debtor,  or  of  third  persons, 
taken  for  an  antecedent  debt.  Their  acceptance  is 
considered  as  accompanied  with  the  condition  of  their 
payment  at  their  maturity ''  (pp.  321,  322).  '^The 
authorities  proceed  upon  the  obvious  ground  that 
nothing  is  to  be  considered  as  payment  in  fact  but 
that  which  is  in  truth  such,  unless  something  else 
is  expressly  agreed  to  be  received  in  its  place''  (p. 
823):   Griffith  v.  Grogan,  12  Cal.  317. 

'^The  taking  of  the  new  note  operated  as  an  ex- 
tension of  the  time  of  payment  of  the  old  note'': 
Welch  V.  Arrington,  23  Cal.  322. 

^^The  acceptance  of  a  note  payable  at  a  future 
time  for  a  pre-existing  debt  does  not  extinguish  the 
debt;  its  only  effect  is  to  suspend  the  creditor's  right 
to  recover  until  the  maturity  of  the  note":  Brewster 
V.  Bours,  8  Cal.  501,  '506. 


382  PLEDGE.  §    200 

ment  and  enforce  the  obligation  secured  by  such 
pledge  without  further  delay.^ 

201.     Executory    Agreement   to   Pledge    Mostly 
Void.<5 

An  executory  agreement  to  pledge,  not  accom- 
panied by  the  requisite  delivery  and  change  of 

5  Where  a  note  secured  by  mortgage  was  after- 
ward further  secured  by  the  pledge  of  two  notes  pay- 
able at  different  times,  the  time  of  the  payment  of  the 
original  note  is  extended  to  that  of  the  collateral  secu- 
rities, but  up©n  default  in  payment  of  the  first  of  the 
notes  given  as  security  according  to  its  terms  the  origi- 
nal note  may  be  enforced.  The  court  said:  ^*The 
[lower]  court  finds  that  the  parties  intended  a  condi- 
tional payment,  and  there  is  no  doubt  that  such  was 
the  object  and  effect  of  the  transaction.  The  debt  was 
not  extinguished,  and  the  acceptance  of  the  notes 
only  operates  a  temporary  suspension  of  the  remedy 
for  its  recovery.  The  liability  of  the  defendant 
[promisor  on  the  original  note]  was  not  affected,  and 
payment  of  the  notes  at  maturity  was  necessary  to 
prevent  the  plaintiff  from  enforcing  it.  The  first 
of  the  notes  [received  as  collateral  security]  became 
due  and  was  not  paid,  and  the  action  [to  foreclose 
the  mortgage  which  secured  the  original  note]  was 
commenced  before  the  second  note  had  matured. 
....  The  notes  were  taken  upon  the  understanding 
that  they  were  to  be  paid  according  to  their  terms, 
and  the  failure  in  respect  to  the  first  note  entitled 
the  plaintiff  [mortgagee]  to  put  an  end  to  the  trans- 
action. The  agreement  on  his  part  was  to  receive 
payment  in  a  particular  manner,  and  the  contract 
ceased  to  be  binding  upon  default  of  payment  in 
the  manner  agreed  upon^':  Crary  v.  Bowers,  20  Cal. 
85,  88,  89. 

6  See  Civil  Code,  sections  2988  and  3440,  as  quoted 
under  section  191,  note  4,  above. 


§    201  OPERATION    THEREOF.  383 

possession  of  the  pledged  property,  or,  in  case 
of  incorporeal  property,  by  a  written  transfer  of 
title,'''  is  valid  as  against  the  pledgor  and  his  per- 
sonal representatives;^  but  as  against  any  bona 
fide  purchaser  or  encumbrancer  for  value  and 
any  creditor  (whether  secured  or  unsecured)  who 
becomes  such  during  the  time  that  the  property 
remains  in  the  possession  of  the  pledgor  or  un- 
transf erred,  is  void.^     Whether  or  not  the  deliv- 

7  **Such  transfer  of  the  title  performs  the  samo 
office  that  the  delivery  of  the  possession  does  in  case 
of  a  pledge  of  corporeal  property'':  Brewster  v.  Hart- 
ley, 37  Cal.  15,  25,  99  Am.  Dec.  237. 

8  Executory  Agreement  Valid  Between  Parties: 
George  v.  Pierce,  123  Cal.  172,  173,  56  Pac.  53. 

Where,  under  contractual  agreement,  one  person 
advances  money  to  another  for  the  express  purpose 
of  purchasing  a  band  of  cattle,  the  loan  to  be  repaid 
from  the  proceeds  of  the  sale  of  the  cattle,  the 
raoney  lender  has  a  lien  against  the  cattle  when  pur- 
chased for  the  sum  advanced,  which  lien  is  valid  as 
against  the  borrower  and  parties  taking  the  prop- 
erty with  notice  of  the  lien:  Citizens'  Bank  of  Paso 
Kobles  V.  Rucker   (Cal.,  March  13,  1903),  72  Pac.  46. 

i>  Void  as  Against  a  Creditor  at  Large,  Who  Be- 
comes Such  During  the  Time  that  the  Property  Re- 
mains in  the  Possession  of  the  Pledgor.— *' The  code 
does  not  limit  the  creditor  to  a  seizure  while  the 
property  remains  in  the  possession  of  the  person  at- 
tempting to  make  a  transfer  of  it,  but  its  effect  is 
to  make  the  attempted  transfer  fraudulent,  and  there- 
fore void,  as  against  the  demands  of  a  person  who 
was  a  creditor  during  the  time  [that  the  property 
remained  in  the  possession  ef  the  transferor].  It  is 
claimed  that  the  code  only  makes  the  sale  void  dur- 
ing the  time  that  the  property  remains  in  the  pos- 
session of  the  vendor,  and  thus  subjects  it  to  a  seiz- 


384        •  PLEDGE.  §    201 

ery  and  change  of  possession  is  sufficient  is  always 
a  question  of  fact^  never  a  matter  of  law.^^ 

lire  during  that  time.  But  that  is  not  a  correct  con- 
struction of  the  provision  of  the  code.  It  denounces 
the  transfer  as  fraudulent  and  void,  as  against  the 
claijns  of  a  creditor  who  is  such  creditor  during  any 
of  the  time  that  the  person  who  made  the  transfer 
remained  in  possession,  after  a  transfer  which  is  not 
accompanied  by  an  immediate  delivery  and  followed 
hy  an  actual  and  continued  change  of  possession^': 
Watson  V.  Eodgers,  53  Cal.  401;  Edwards  v.  Sonoma 
Valley  Bank,  59  Cal.  148;  Eohrbough  v.  Johnson,  107 
Cal.  144,  419,  40  Pac.  37. 

Executory  agreement  to  pledge  void  as  against 
creditor:  Hitchcock  v.  Hassett,  71  Cal.  331,  334,  12 
Pac.    228. 

So,  where  a  person  sold  some  property  in  1871,  con- 
tracted a  debt  in  1874,  and  delivered  the  property 
to  the  purchaser  in  September,  1876,  the  creditor  could 
attach  the  property  the  following  month,  although 
in  the  possession  of  the  purchaser:  Watson  v.  Rod- 
gers,  53  Cal.  401. 

10  Delivery  and  Change  of  Possession  Questions  of 
Fact. — ^"'What  constitutes  an  ^immediate  delivery' 
or  an  ^actual  and  continued  change  of  possession'  is, 
however,  a  fact  to  be  determined  by  the  court  upon 
the  evidence  presented  in  each  particular  case.  The 
circumstances  connected  with  a  transfer  of  personal 
property  are  so  varied  that  it  would  be  impossible  to 
frame  a  rule  applicable  to  each  case,  or  to  determine 
in  advance  what  acts  would  be  sufficient  to  meet  the 
requirements  of  the  statute'':  Claudius  v.  Aguirre, 
89  Cal.  501,  503,  26  Pac.  1077;  Samuels  v.  Gorham, 
•5  Cal.  226;  Godchaux  v.  Mulf  ord, "  26  Cal.  316,  322, 
323,  85  Am.  Dec.  178;  Woods  v.  Bugbey,  29  Cal.  466, 
476;  Byrnes  v.  Moore,  93  Cal.  393,  29  Pac.  70;  Eohr- 
bough V.  Johnson,  107  Cal.  144,  149,  40  Pac.  37;  Du- 
bois V.  Spinks,  114  Cal.  289,  293,  46  Pac.  95. 

In  no  case  can  the  mere  fact  that  the  vendee  has 
the    control    of    the    property,    as   matter    of    law,    be 


§    202  OPERATION    THEREOF.  385 

202.  Failure  to  File  Notice  of  Intention  to 
Pledge  Renders  Pledge  Void  as  Against 
Creditors. 

Whenever  a  notice  of  intention  to  pledge  is  re- 
quired to  be  filed,  a  pledge  made  without  such 
filing,  except  when  property  exempt  from  exe- 
cution is  pledged,  is  void  against  all  existing 
creditors  of  the  pledgor.^^ 

203.  Pledge  of  Corporate  Stock  not  Entered  on 

Books    of    Corporation   Valid   Except   as 
Against  Bona  Fide  Purchasers.^^ 
A  pledge  of  corporate  stock,  hot  entered  intL> 
the  books  of  the  corporation,  is  valid  against 

conclusive  that  the  change  of  possession  has  becomfr 
actual  and  continued  as  against  creditors:  Hesthal  v^ 
Myles,  53  Cal.  623,  626. 

The  declarations  of  the  vendor  of  the  propert}'",. 
marie  while  in  actual  possession  of  the  property  sold, 
with  the  knowledge  or  consent,  express  or  implied, 
of  the  vendee,  are  admissible  in  determining  the 
question  of  the  delivery  of  the  property,  being  a  part 
of  the  res  gestae:  Cahoon  v.  Marshall,  25  Cal.  197.. 
202;  Murphy  v.  Mulgrew,  102  Cal.  547,  552,  41  Am.. 
St.  Eep.  200,  36  Pac.  857. 

11  See  Civil  Code,  section  3440,  latter  part,  as^ 
quoted  under  section  193,  note  11,  above. 

12  Weston  V.  Bear  Eiver  etc.  Co.,  6  Cal.  425; 
Naglee  v.  Pacific  Wharf  Co.,  20  Cal.  259;  People 
V.  Elmore,  35  Cal.  653;  Parrott  v.  Byers,  40  Cal.  614,. 
625;  Farmers'  Nat.  Gold  Bank  v.  Wilson,  58  CaL 
600;  Blakeman  v.  Puget  Sound  Iron  Co.,  72  Cal.  321^ 
13  Pac.  872;  Sprecliels  v.  Nevada  Bank,  113  Cal.  272,, 
276,  54  Am.  St.  Eep.  348,  45  Pac.  329;  McFaH  v. 
Buckeye  etc.  Assn.,  122  Cal.  468,  68  Am.  St.  Eep.  47^ 

Liens— 25 


386  PLEDGE.  §    203 

everyone  except  a  bona  fide  purchaser  or  encum- 
brancer for  value. ^^ 

204.     Pledge    by    Apparent    Owner  Valid  as  to 
Bona  Fide  Pledgee.^^ 

No  person  who  allows^^  another  to  assume  the 
apparent  ownership^^  of  property  for  the  pur- 

5o  Pac.  253;  West  Coast  Safety  Faucet  Co.  v.  Wulff, 
133  Cal.  315,  85  Am.  St.  Eep.  171,  65  Pac.  622. 

13  The  expression  ''bona  fide  purchaser  for  value" 
does  not,  however,  include  a  person  who  buys  a 
certificate  of  stock  indorsed  in  blank,  which  has 
been  stolen  from  or  lost  by  the  owner  without  his 
fault,  when  bought  from  the  thief  or  finder  or  per- 
son deraigning-  from  him:  Barstow  v.  Savage  Min. 
Co.,  64  Cal.  388,  49  Am.  Eep.  705,  1  Pac.  349;. Sher- 
wood V.  Meadow  Val.  Min.  Co.,  50  Cal.  412.  See,  also, 
Craig  V.  Hesperia  Land  etc.  Co.,  113  Cal.  7,  14,  54 
Am.  St.  Eep.  316,  45  Pac.  10.  The  contrary  was  held 
in  Winter  v.  Belmont  Min.  Co.,  53  Cal.  428. 

14  Compare  Civil  Code,  section  2991.  This  section 
must  be  read  together  with  Stats.  1877-78,  p.  835,  c. 
535. 

By  that  statute  a  transfer  of  ''goods,  or  of  the 
documents  of  title  to  goods,"  by  way  of  pledge  or 
security,  made  by  a  person  intrusted  with  the  posses- 
sion thereof  to  a  bona  fide  pair  chaser  for  value,  was 
declared  valid  as  against  the  owners  of  the  goods 
or  muniment  of  title  to  the  amount  actually  ad- 
vanced by  the  transferee  to  the  person  intrusted 
with  the  possession  (sections  1,  2  and  8). 

This  statute  was  applied  in  Amann  v.  Lowell,  66 
Cal.  306,  5  Pac.  363. 

.  15  No  Person  Who  Allows  Another.— In  Arnold  v. 
Johnson,  66  Cal.  402,  5  Pac.  796,  where  a  bailee  of  a 
certificate  of  stock  indorsed  in  blank  pledged  the 
same  to  a  bona  fide  pledgee  for  value,  the  court  said: 
"The  difference  between  this  case  and  Barstow  v. 
Savage  Min.  Co.,  64  Cal.  388,  49  Am.  Eep.  70o,  1  Pac. 


§    204  OPERATION    THEREOF.  387 

349,  is  that  in  this  case  the  owner  of  the  stock  volun- 
tarily delivered  the  indorsed  certificate  to  the  person 
who  pledged  it,  while  in  that  the  indorsed  certificates 
were  stolen  from  the  owner  of  the  stock.  In  this 
esse  the  owner  allowed  another  to  assume  the  ap- 
parent ownership  of  the  stock.  In  that  the  owner 
did  not  allow  another  to  assume  the  apparent  owner- 
ship.    The  distinction  is  an  important  one.'' 

10  What  Amounts  to  Apparent  Ownership.— The 
mere  possession  of  chattels,  by  whatever  means  ac- 
quired, if  there  be  no  other  evidence  of  property  or 
authority  to  sell  from  the  true  owner,  will  not  en- 
able the  possessor  to  give  a  good  title.  But  if  the 
owner  intrusts  to  another,  not  merelj'  the  possession 
of  the  property,  but  also  written  evidence,  over  his 
own  signature,  of  title  thereto  and  of  unconditional 
power  of  disposition  over  it,  the  case  is  vastly  differ- 
ent: Shafer  v.  Lacy,  121  Cal.  574,  578,  52  Pac.  1004. 
Compare  Brewster  v.  Sime,  42  Cal.  139,  147. 

The  mere  statement  of  a  person  that  he  is  the 
owner  of  property  then  stored  in  a  common  carrier  *s 
warehouse,  without  s^howing  a  bill  of  lading  or  in- 
voice thereof,  does  not  establish  apparent  ownership 
in  him;  and  a  pledgee  of  such  person  is  not  protected 
against  the  real  owner:  Chicago  etc.  Press  Co.  v. 
Lowell,  60   Cal.  454. 

An  indorsee  of  a  warehouse  receipt  is  the  apparent 
owner:  Davis  v.  Eussell,  52  Cal.  611,  616,  28  Am.  Eep. 
647. 

A  factor  is  the  apparent  owner  under  Civil  Code, 
section  2369,  providing:  ^*A  factor  has  ostensible 
authority  to  deal  with  the  property  of  his  principal 
as  his  own,  in  transactions  with  persons  not  having 
notice  of  the  actual  ownership'*:  See  Green  v.  Camp- 
bell, 52  Cal.  586;  Wisp  v.  Hazard,  60  Cal.  459,  6  Pac. 
91. 

Historical.— In  the  early  California  cases,  a  similar 
rule  as  to  factors  was  adopted,  which,  however,  was  not 
applied  to  persons  whose  sole  business  was  to  sell  the 
goods  of  others  consigned  to  him:  Hutchinson  v.  Bours, 
6  Cal.  383;  Glidden  v.  Lucas,  7  Cal.  26,  30;  Horr  v. 
Barker,  11  Cal.  393,  70  Am.  Dec.  791.     Compare  Leet 


388  PLEDGE.  §    204 

pose  of  making  any  transfer'^''  thereof  can  de- 
feat a  pledge  of  the  property  actually  made^'^ 

V.  "Wadsworth,  5  Cal.  404.  But  these  cases  were  over- 
ruled and  the  common-law  rule  restored  in  Wright  v. 
Solomon,  19  Cal.  64,  79  Am.  Dee.  196,  and  the  doctrine 
of  this  case  prevailed. until  the  adoption  of  the  code. 

Certificates  of  stock  are  so  far  subject  to  the  opera- 
tion of  the  negotiability  principle  that  the  possessor 
of  a  certificate  indorsed  in  blank  is  the  apparent 
owner  thereof,  and  hence  a  bona  fide  pledgee  for 
value  thereof  may  hold  the  security  for  the  full 
amount  advanced  by  him  thereon:  Ambrose  v.  Evans, 
€6  Cal.  74,  4  Pac.  963;  Arnold  v.  Johnson,  66  Cal. 
402,  5  Pac.  796;  Brittan  v.  Oakland  Bank  of  Savings, 
124  Cal.  282,  288,  289,  71  Am.  St.  Eep.  58,  57  Pac. 
84;    Thompson   v.    Toland,   48   Cal.   99,   111,   112. 

The  same  is  true  of  a  warrant  on  a  municipal 
treasury:   Coit  v.  Humbert,  5  Cal.  260. 

Liikewise,  it  follows  that  the  pledgee  of  a  note  ex- 
ecuted without  consideration  may  enforce  it  against 
the  maker  for  the  amount  of  his  pledge:  Bell  v. 
Bean,   75   Cal.   86,   16  Pac.   52. 

3  7  For  Purpose  of  Transf er.— ^  ^  One  who  has  al- 
lowed another  to  assume  the  apparent  ownership  ut 
property  for  the  purpose  of  sale  or  transfer  cannot 
recover  from  the  pledgee  of  such  other  person,  if 
the  pledgee  receives  the  property  in  good  faith,  in 
the  ordinary  course  of  business  and  for  value.  The 
rule  of  the  code  permits  the  owner  to  show  that  the 
property  was  not  intrusted  to  the  bailee  or  person 
assuming  ownership,  for  the  purpose  of  sale,  but  for 
transportation  or  temporary  custody  and  the  like  ob- 
jects^': Shafer  v.  Lucv,  121  Cal.  &74,  577,  52  Pac. 
1004. 

IS  Actual  Transfer  is  Necessary.— Under  section  3 
of  the  act  of  1877-78  (see  note  14,  above),  the  goods 
must  be  actually  transferred  before  the  transferee 
receives  notice  of  the  want  of  authority  of  the  per- 
son in  possession  of  them,  to  transfer  the  goods,  in 
order    to    render    the    transfer    valid    as    against    the 


§    204:  OPEKATION    THEREOF.  389 

by  tlio  other  to  a  pledgee  in  good  faith^^  in  the 
ordinary  course  of  business  and  for  present 
value  ;^^  but  the  pledge  is  valid  as  against  every- 
one. 

205.     Transfer  by  Pledgee  not  Clothed  with  In- 
dicia of  Ownership  Subject  to  Pledge. 

A  transferee  of  pledged  property,  either  abso- 
lutely or  conditionally  transferred  to  him  by  a 
pledgee  not  clothed  with  the  apparent  indicia  of 

owner,  although  it  is  not  necessary  for  the  transfer 
to  be  made  at  the  same  time  as  the  advance. 

10  Pledgee  In  Good  Faith. — The  pledgee  of  a  certi- 
ficate of  mining  stock,  pledged  by  a  person  in  whose 
name  it  stood,  with,  however,  the  word  *' trustee' ' 
added,  after  the  name,  is  a  pledgee  in  good  faith. 
The  mere  addition  of  the  word  *^ trustee''  after  the 
name,  on  a  certificate  of  mining  stock,  is  not,  in 
this  state,  of  itself,  nothing  more  appearing,  to  be 
deemed  constructive  notice  of  the  equities  of  the 
secret  owner  of  the  stock:  Brewster  v.  Sime,  42  Cal. 
139,  144-148;   Thompson  v.  Toland,  48  Cal.  99,   113. 

20  Present  Value  as  Distinguished  from  a  Pre- 
existing Debt  Necessary.— Under  section  2  of  the  act 
of  1877-78  (see  note  14,  above),  an  antecedent  debt 
cannot  be  considered  a  valuable  consideration  for 
such  a  transfer.  Before  the  enactment  of  this 
statute,  the  rule  was  declared  in  Davis  v.  Eussell, 
52  Cal.  611,  616,  28  Am.  Eep.  647,  to  be  that  a  pre- 
existing indebtedness  was  a  valuable  consideration 
within  the   meaning   of   Civil   Code,   section  2991. 

In  Niles  v.  Edwards,  90  Cal.  10,  13,  27  Pac.  159,  a 
transfer  by  an  apparent  owner  was  held  not  to  cre- 
ate a  pledge  as  against  the  owner  of  the  property, 
the  transferee  not  having  parted  with  value  on  the 
faith  of  the  pledge  but  merely  holding  an  antecedent 
indebtedness   from   the   pledgor. 


390:  PLEDGE.  §  205 

ownership  nor  authorized  to  make  the  transfer, 
succeeds  to  the  rights  and  duties  of  the  pledgee 
under  the  original  pledge.^^ 

206.     Pledged  Property  may  be  Attached  by  Gar- 
nishment Process.^^ 

In  case  of  the  attachment  of  or  levy  of  an  exe- 
cution upon  pledged  property  in  the  possession 
of  the  pledgee  or  pledgeholder  upon  a  demand 

21  Transfer  by  Pledgee  not  Clothed  with  Indicia 
of  Ownership. — Although  an  unauthorized  sale  by  the 
pledgee  is  void,  the  transferee  has  some  equities,  as 
the  pledgee  holds  the  property  not  only  by  way  of 
security,  but  also  as  bailee,  and  the  pledge  carries 
the  implication  that  the  property  may  be  sold  to  dis- 
charge the  secured  obligation. 

**The  pawnee  may  deliver  the  goods  to  a  stranger 
without  consideration,  or  he  may  sell  and  assign  all 
his  interest  absolutely,  or  he  may  assign  it  condi- 
tionally by  way  of  pawn,  without  in  either  case  de- 
stroying the  original  lien,  or  giving  the  owner  a 
right  to  reclaim  them  on  any  other  or  better  terms 
than  he  could  have  done  before  such  delivery  or 
assignment^' :  Williams  v.  Ashe,  111  Cal.  180,  186, 
187,  43  Pac.  595;  Brittan  v.  Oakland  Bank  of  Sav- 
ings, 124  Cal.  282,  287-289,  71  Am.  St.  Rep.  58,  57  Pac. 
84;  Dewey  v.  Bowman,  8  Cal.  145,  152. 

So,  a  purchaser  from  a  pledgee,  even  under  an 
illegal  sale,  may  set  off  the  amount  of  the  secured 
debt  against  a  claim  for  damages  for  wrongful  deal- 
ing with  the  pledged  property:  Williams  v.  Ashe,  111 
Cal.    180,    187,   43   Pac.    595. 

22  Interest  of  Owner  must  be  Reached  by  Garnish- 
ment: Treadwell  v.  Davis,  34  Cal.  601,  607,  94  Am. 
Dec.  770;  Dubois  v.  Spinks,  114  Cal.  289,  294,  295, 
40  Pac.  95. 

^^  Whilst  the  interest  of  the  pledgor  may  therefore 
be  reached  under   an  execution,  it   can  only  be   done 


§    200  OPERATION    THEREOF.  391 

against  the  owner  of  the  property,  the  attaching 
officer  cannot  take  the  property  from  the  pledgee, 
hut  must  reach  the  interest  of  the  owner  hy  serv- 
ing a  garnishment  upon  the  pledgee.     Where  the 

property  is  capable  of  manual  delivery,  the  court 
may,  after  an  examination  of  the  pledgee,  on  such 
terms  as  m.ay  he  just,  having  reference  to  his 
pledge,  order  the  property  to  be  delivered  to  the 
officer.^^ 

207.    Measure  of  Damages  Caused  by  Conversion 
of  Pledged  Property. 

Where  pledged  property  has  been  wrongfully 
converted,  the  pledgee  in  an  action  for  the  re- 
covery of  damages  for  such  conversion,^^  where 

by  serving  a  garnishment  on  the  pledgee,  and  not 
by  a  seizure  of  the  pledge.  The  law  wisely  provides 
that  the  pledgee  shall  not  be  disturbed  in  his  posses- 
sion, unless  it  be  by  an  order  of  the  court  made  after 
examination,  'on  such  terms  as  may  be  just,  having 
reference  to  any  liens  thereon,  or  claims  against  the 
same.'  In  this  method  the  rights  of  all  parties  may 
be  protected,  and  it  is  the  only  method  by  which 
the  interest  of  the  pledgor  can  be  subjected  to  au 
execution'':  Treadwell  v.  Davis,  34  Cal.  601,  607,  04 
Am.  Dec.  770.  See  Code  Civ.  Proc,  sees.  542  and 
544;  Practice  Act,  sees.  125  and  127. 

By  Code  of  Civil  Procedure,  section  688,  Practice 
Act,  section  217,  it  is  provided  that  property  not 
capable  of  manual  delivery  ''may  be  attached  on  ex- 
ecution in  like  manner  as  upon  writs  of  attachment." 

23  See  Code  Civ.  Proc,  sec.  545,  Practice  Act,  sec. 
128. 

24  Action  for  Damages. — The  measure  of  damages 
here  provided    applies  merely  in  an  action  for  dam- 


392  PLEDGE.  §    207 

the  property  has  not  been  re(;overed  back  by 
him^^^  may  recover 

(1)  in  every  case  a  fair  compensation  for  tha 
time  and  money  properly  expended  in  pursuit 
of  the  property,^^'  and 

(2)  in  case  of  a  conversion  by  a  person  having 
a  right  to  the  property  after  the  discharge  o£ 
the  pledge  superior  to  that  of  the  pledgee,  the 
amount  owing  upon  the  secured  obligation  if 
the  property  is  worth  that  much,  but  if  worth 
less  than  that  amount,  only  the  value  of  the 
property  ;^''  or  in  case  of  a  conversion  by  a  per- 

flges  for  wrongful  conversion,  but  does  not  apply  in 
an  action  for  the  recovery  of  movable  property  which 
has  been  wrongfully  detained,  with  damages  for  the 
detention.  The  latter  action  is  regulated  by  the 
Code  of  Civil  Procedure,  section  627,  which  specifies 
what  the  verdict  shall  be  in  such  case,  and  Code  of 
Civil  Procedure,  section  667,  first  and  second  sen- 
tences, which  specifies  what  the  judgment  shall  pro- 
vide; while  Civil  Code,  section  3336,  applies  in  the 
former  case,  and  establishes  the  measure  of  damages 
obtainable  where  the  return  of  the  specific  property 
is  not  demanded:  Kelly  v.  McKibben,  54  Cal.  192, 
195;    Eedington    v.    Nunan,    60    Cal.    632,    639. 

25  Where  Property  has  not  Been  Recovered  Back 
by  Him:  See  section  306,   note   79,  below. 

26  See  Civil  Code,  section  3336,  second  subdivision, 
and  Civil  Code,  section  3338,  as  quoted  at  section  306, 
notes  81  and  82,  below. 

27  See  Civil  Code,  section  3338,  as  quoted  at  section 
306,  note  81,  below. 

Compare  the  following:  ''In  an  action  by  the 
pledgee  against  a  stranger  for  the  conversion  of 
goods,    the    plaintiff   is    entitled    to    recover    the    full 


§    207  OPERATION    THEREOF.  393 

son  without  such  right  to  the  property,  the 
value  of  the  property  at  the  time  of  the  con- 
version with  interest  from  that  time,  or  where 
the  action  has  been  prosecuted  with  reasonable 
diligence,  the  market  value  of  the  property  at 
any  time  between  the  conversion  and  the  ver- 
dict, without  interest,  at  the  option  of  the  in- 
jured party.^^ 

value  of  the  goods,  because  he  is  answerable  over 
to  the  pledgor  for  the  surplus.  But  if  the  goods  be 
converted  by  the  owner,  or  by  anyone  acting  in 
privity  with  him,  the  pledgee  can  recover  only  the 
value  of  his  special  interest  in  the  pledge'^:  Tread- 
well  V.  Davis,  34  Cal.  601,  606,  94  Am.  Dec.  770; 
Thompson  v.  Toland,  48  Cal.   99,  117. 

But)  in  view  of  sections  3336  and  3338  of  the  Civil 
Code  these  cases  do  not  seem  to  contain  a  complete 
statement  of  the  rights  of  the  pledgee. 

28  See  Civil  Code,  section  3336,  as  quoted  at  section 
306,  note  6,  below. 

In  certain  cases,  where  the  provisions  of  Civil  Code, 
section  3336,  as  modified  by  Civil  Code,  section  3338, 
do  not  seem  to  have  received  the  attention  of  the 
court,  it  was  held  that  where  the  sheriff  takes  the 
pledged  property  from  the  pledgee,  under  process 
against  the  pledgor,  the  damages  for  the  conversion 
of  the  property  were  to  be  measured  by  this  second 
measure.  For  by  seizing  the  property  instead  of 
serving  a  garnishment,  the  sheriff  became  a  tres- 
passer, and  '^therefore  could  not  be  in  privity  with 
the  pledgor '^  Dubois  v.  Spanks,  114  Cal.  289,  294, 
295,  46  Pae.  95;  Treadwell  v.  Davis,  34  Cal.  601,  607, 
608,  94  Am.  Dec.  770. 


394  PLEDGE.  §   208 


AETICLE3. 

EIGHTS  AND   DUTIES. 

208.     Pledgee  must  exercise  ordinary  care. 

200.  Pledgee  must  account  for  income  and  advan- 
tages from  pledged  property. 

210.  Pledgor  entitled  to  receive  back  precisely  sim- 
ilar   property. 

231.  Pledgee  of  corporate  stock  may  enter  trans- 
action  on  books   of   corporation. 

212.     Pledgee  may  collect  dividends. 

2-13.     Pledgor  votes  stock. 

214.  Pledgor    may    require    pledged    property    to    be 

sold  when  adequate  to  satisfy  demand. 

215.  Pledgee  may  retain  from  proceeds  sufficient  to 

satisfy   his   largest    possible    demand. 

216.  Pledgee  may  retain  pledged  property  until   se- 

cured  obligation   satisfied. 

217.  Effect  of  misrepresentation  of  value  of  pledged 

property. 

218.  Effect    of    transfer    of    mortgaged    property    to 

pledgee    of    secured    obligation. 

219.  Effect   between   parties    of    sale   by  pledgee    of 

pledged    collateral    securities. 

220.  Amount    of    damages    recoverable   for   wrongful 

dealing  with  pledged  property. 

208.     Pledgee  must  Exercise  Ordinary  Care.^ 

A  pledgee  must,  in  the  absence  of  a  special 
agreement,^  use  at  least  ordinary  care  for  tho 
preservation  of  the  pledged  property. 


§    209  RIGHTS    AND    DUTIES.  395 

209.  Pledgee  must  Account  for  Income  and  Ad- 
vantages from  Pledged  Property. 

Upon  the  satisfaction  of  the  secured  obligation, 
the  pledgee  must  ^account  for  all  thei  incomo, 
profits,  and  advantages  derived  by  him  from  the 
bailment,  and  cannot  make  any  gains  to  himself, 
directly  or  indirectly,  in  dealing  with  the  pledged 
property.^ 

210.  Pledgor  Entitled  to  Receive  Back  Precisely 

Similar  Property. 

Upon  the  satisfaction  of  the  secured  obligation, 
the  right  of  the  owner  of  property  which  has 
been  bailed  as  security  therefor  is  not  to  recover 
the  identical  thing  bailed,  but  merely  a  precisely 
similar  thing.* 

1  St.  Losky  V.  Davidson,  6  Cal.  643. 

Civil  Code,  section  2997,  provides:  ''A  pledgee 
....  assumes  the  duties  and  liabilities  of  a  deposi- 
tary for  reward.'' 

Section  1852:  ''A  depositary  for  hire  must  use  at 
least  ordinary  care  for  the  preservation  of  the  thing 
depiosited. ' ' 

The  pledgee  of  negotiable  paper  must  use  ordinary 
diligence  in  preserving  the  legal  validity  thereof,  and 
is  answerable  to  the  pledgor  to  the  extent  of  the 
loss  consequent  upon  the  breach  of  such  duty:  Haw- 
ley  Bros.  Hardware  Co.  v.  Brownstone,  123  Cal.  643, 
649,   56   Pac.   468. 

2  The  parties  may  stipulate  for  a  different  degree 
of  care;  St.  Losky  v.  Davidson,  6  Cal.  643. 

3  Hunsaker  v.  Sturgis,  29  Cal.  142,  145. 

4  Pledgor  Entitled  to  Receive  Back  Precisely 
Similar  Property:  Atkins  v.  Gamble,  42  Cal.  86,  100- 


396  PLEDGE.  §    211 

211.     Pledgee    of    Corporate   Stock   may   Enter 
Transaction  on  Books  of  Corporation.^ 

A  pledgee  of  corporate  stock  may  cause  a 
proper  entry  of  the  transaction  between  himself 
and  his  pledgor  to  be  so  entered  npon  the  books 
of  the  corporation  as  to  show  the  names  of  the 
pledgor  and  pledgee,  the  number  of  the  certifi- 

lOC,  10  Am.  Eep.  282;  Hayward  v.  Eogers,  62  Cal. 
348;  Krouse  v.  Woodward,  110  Cal.  638,  643,  42  Pac. 
1085. 

Illustrations.— A  pledgee  who  disposed  of  pledged 
corporate  stock  to  a  bona  fide  purchaser  or  encum- 
brancer for  value,  but  owned  other  similar  stock  must, 
upon  the  extinction  of  the  pledge,  compensate  the 
owner  from  such  other  stock:  Krouse  v.  Woodward, 
lie    Cal.   638,   42   Pac.    1085. 

A  return  of  precisely  similar  stock  to  the  pledgor 
upon  the  satisfaction  of  the  pledge  is  a  sufficient 
compliance  by  the  pledgee  with  his  duties:  Atkins  v. 
Gamble,  42  Cal.  86,  10  Am.  Eep.  282. 

The  mere  fact,  then,  that  the  pledgee  sold  the  par- 
ticular certificate  of  stock  pledged  to  him  does  not, 
of  itself,  render  him  liable  for  a  conversion  of  the 
pledge:   Thompson  v.  Toland,  48   Cal.  99,  116. 

5  Pledgee  of  Corporate  Stock  may  Enter  Transaction 
en  Books  of  Corporation.— Civil  Code,  section  324, 
provides:  ''Whenever  the  capital  stock  of  any  cor- 
poration is  divided  into  shares,  and  certificates  there- 
of are  issued,  such  shares  of  stock,  except  as  herein- 
after provided,  are  personal  property,  and  may  be 
transferred  by  indorsement  by  the  signature  of  the 
proprietor,  his  agent,  attorney,  or  legal  reptresenta- 
tive,  and  the  delivery  of  the  certificate;  but  such 
transfer  is  not  valid,  except  as  to  the  parties  thereto, 
until  the  same  is  so  entered  upon  the  books  of  the 
corporation,  as  to  show  the  names  of  the  parties  by 
whom  and  to  whom  transferred,  the  number  of  the 
certificate,  the  number   or  .designation  of  the  shares, 


§    211  RIGHTS    AND    DUTIES.  397 

cate^  the  number  or  designation  of  the  shares, 
and  the  date  of  the  transfer;  but  must  not  have 
such  stock  transferred  to  his  own  name,  nor  sur- 

ancl  the  date  of  transfer;  provided,  however,  that  any 
corporation  organized  for,  or  engaged  in  the  business 
of  selling,  distributing,  supplying,  or  delivering  water 
for  irrigation  purposes,  or  for  domestic  use,  may,  in 
its  by-laws,  provide  that  water  shall  only  be  so  sold, 
distributed,  supplied,  or  delivered  to  owners  of  the 
capital  stock,  and  that  such  stock  shall  be  appurte- 
nant to  certain  lands  Avhen  the  same  are  described  in 
the  certificate  issued  therefor;  and  when  such  certifi- 
cate shall  be  so  issued,  and  a  certified  copy  of  such 
by-law  recorded  in  the  office  of  the  county  recorder  in 
the  county  where  such  lands  are  situated,  the  shares 
of  stock  so  located  on  any  land  shall  only  be  trans- 
ferred with  said  lands  and  shall  pass  as  an  appurte- 
nance thereto." 

Historical.— Before  the  adoption  of  the  code,  the 
law  was  substantially  the  same  [except  the  provisions 
in  regard  to  corporations  to  sell  water] :  Winter  v. 
Belmont  Min.   Co.,  53   Cal.  428,  431. 

This  section  "is  general  in  its  terms,  and  applies  not 
merely  to  sales  of  stock,  but  to  all  transfers  thereof  and 
thus  includes  transfers  by  way  of  pledge  as  fully  as 
tiansfors  by  which  the  absolute  title  is  parted  with. 
We  entertain  no  doubt,  therefore,  that  under  this  sec- 
tion a  pledgee  of  stock  has  the  right,  and  as  an  ordi- 
nary business  precaution  it  may  well  be  his  duty,  to 
cause  a  proper  entry  of  the  transaction  between  him- 
self and  his  pledgor  to  be  entered  upon  the  books 
of  the  corporation  for  his  protection,  as  the  section 
contemplates 

''In  the  case  of  a  sale  of  stock,  the  purchaser's 
right  to  have  the  stock  transferred  from  the  name  of 
the  seller  into  his  own,  and  to  surrender,  if  he  desires, 
the  old  certificate,  and  to  have  a  new  one  issued  to 
him  in  his  own  name,  is  unquestioned  and  unques- 
tionable. 

''But  in  the  case  of  a  pledgee,  unless  this  partic- 


398  PLEDGE.  §    211 

render  the  original  certificate  of  stock  and 
cause  a  new  one  to  be  issued  in  his  own  name; 
and  an  injunction^  will  issue  to  prevent  such 
transfer. 

Tilar  form  of  procedure  is  necessary  for  his  protection, 
it  will  not  be  adjudged  to  be  within  his  rights,  for 
the  effect  of  it  might  be  to  imperil,  upon  the  other 
hand,  valuable  rights  and  privileges  of  the  pledgor. 
Thus,  as  here,  it  would  give  rise  to  questions  involv- 
ing: the  right  to  vote  the  stock  at  corporate  elections, 
questions  as  to  who  should  receive  and  retain 
dividends,  questions  of  the  removal  of  the  stock  to 
foreign  jurisdictions,   and  the  like. 

^^All  that  Civil  Code,  section  324,  exacts  of  the 
pledgee  for  the  protection  of  his  interests,  is  that  he 
should  cause  the  transaction  and  the  nature  of  it  to 
be  so  entered  upon  the  books  of  the  corporation  as  to 
show  the  names  of  the  pledgor  and  pledgee,  the 
number  or  designation  of  the  shares,  and  the  date  of 
the  transfer.  All  this  may  be  done  to  the  full  pro- 
tection of  the  pledgee's  rights  without  the  surrender 
of  the  certificates,  their  cancellation,  and  the  issuance 
to  him  of  new  ones,  and,  when  done,  the  pledgee 
would  be  fully  protected  against  a  subsequent  pur- 
chaser, who  would  be  charged  with  the  constructive 
notice  which  the  entries  upon  the  books  of  the  cor- 
poration impart;  and,  upon  the  other  hand,  there 
would  be  preserved  to  the  pledgor  all  the  rights  inci- 
dent to  his  ownership  under  the  pledge'':  Spreckels  v. 
Nevada  Bank,  113  Cal.  272,  277,  278,  54  Am.  St.  Eep. 
348,  45  Pac.  329. 

6  An  Injunction  will  issue  to  prevent  a  transfer  of 
pledged  stock  in  the  books  of  the  corporation: 
Spreckels  v.  Nevada  Bank,  113  Cal.  272,  54  Am.  St. 
Kep.  348,  45  Pac.  329. 

For  an  illustration  of  the  injury  to  the  pledgor, 
which  might  result  from  such  transfer,  see  Strout  v. 
Natoma  etc.  Co.,  9  Cal.  78;  Naglee  v.  Pacific  Wharf 
Co.,  20   Cal.   529. 


§    212  EIGHTS    AND    DrTIES.  399 

212.  Pledgee  may  Collect  DividendsJ 

A  pledgee  of  stock  may,  at  his  option,®  collect 
any  dividends  thereon,  the  amount  whereof  must 
forthwith  be  credited  upon  the  principal  obliga- 
tion. 

213.  Pledgor  Votes  Stock. 

The  pledgor  of  stock  has  the  right  to  vote  it." 

214.  Pledgor  may  Require  Pledged  Property  to 

be    Sold    When    Adequate  to  Satisfy  De- 
mand. 

Whenever  pledged  property  can  be  sold  for 
a  price  sufficient  to  satisfy  the  secured  obligation, 
the  owner  may  require  the.  holder  to  sell  it.^^ 

7  McAuley  v.  Moody,  128  Cal.  202,  208,  60  Pac.  778. 

8  To  be  Collected  at  His  Option.— The  failure  of 
the  pledgee  of  stock  to  collect  any  dividends  thereon 
does  not  put  him  under  the  duty  of  crediting  them 
upon  the  indebtedness:  McAuley  v:  Moody,  128  Cal. 
202,    60   Pac.    778. 

Likewise,  the  pledgee  of  securities  is  entitled  to 
collect  the  money  due  upon  them:  Fernandez  v. 
Tormey,   121   Cal.   515,   520,   53   Pac.   1119. 

9  Dulin  V.  Pacific  Wood  etc.  Co.,  103  Cal.  357,  363, 
35  Pac.  1045,  37  Pac.  207. 

10  Compare  Civil  Code,  section  3007:  ''Whenever 
property  pledged  can  be  sold  for  a  price  sufficient  to 
satisfy  the  claim  of  the  pledgee,  the  pledgor  may  re- 
quire it  to  be  sold,  and  its  proceeds  to  be  applied  to 
such  satisfaction,  when  due." 


400  PLEDGE.  §    215 

215.  Pledgee  may  Retain   from   Proceeds   Suffi- 

cient to  Satisfy  His  Largest  Possible  De- 
mand. 

Upon  the  sale  of  pledged  property  by  order 
of  the  owner  thereof  before  the  secured  obliga- 
tion is  due,  the  pledgee  may  retain  out  of  the 
proceeds  all  that  can  possibly  become  due  under 
his  claim  until  it  becomes  due,  and  must  pay 
the  surplus  to  the  pledgor.^^ 

216.  Pledgee  may  Retain  Pledged  Property  Until 

Secured  Obligation  Satisfied. 

Although  the  secured  obligation  has  been  bar- 
red by  lapse  of  time,  the  pledgee  may  lawfully 
retain  the  pledged  property  thereafterward  until 
the  secured  obligation  is  satisfied.*^ 

11  Compare  Civil  Code,  section  3009:  *'When  prop. 
-erty  pledged  is  sold  by  order  of  the  pledgor  be- 
fore the  claim  of  the  pledgee  is  due,  the  latter  may 
retain  out  of  the  proceeds  all  that  can  possibly  be- 
•come  due  under  his  claim  until  it  becomes  due/' 

12  May  Retain  Property  Until  Secured  Obligation 
Satisfied:  Cross  v.  Eureka  Lake  etc.  Canal  Co.,  73 
Cal.  302,  306,  2  Am.  St.  Eep.  808,  14  Pac.  885;  Spect 
V.  Spect,  88  Cal.  437,  441,  22  Am.  St.  Rep.  314,  26 
Pac.  203;  Zellerbach  v.  Allenberg,  99  Cal.  57,  69,  33 
Pac.  786;  Gage  v.  Riverside  Trust  Co.-,  86  Fed.  (C.  C.) 
984,  998.  See,  also,  Treadwell  v.  Davis,  34  Cal.  601, 
606,  94  Am.  Dec.  770;  Sonoma  Valley  Bank  v.  Hill, 
50  Cal.  107,  110,  111. 

See  section  84,  note  9,  above;  also  section  338,  be- 
low. 

Rationale.— ^  ^  Common  honesty  requires  a  debtor  to 
pay  his  just  debts  if  he  is  able  to  do  so,  and  the 
courts,  when   called   upon,   always  enforce   such  ptay- 


§    217  RIGHTS    AND    DUTIES.  401 

217.  Effect    of    Misrepresentation  of  Value  of 
Pledged  Property. 

Where  a  debtor  has  obtained  credit,  or  an  ex- 
tension of  time,  by  the  fraudulent  misrepresenta- 
tion of  the  value  of  property  pledged  by  or  for 
him,  the  creditor  may  demand  a  further  pledge 
to  correspond  with  the  value  represented; 
and,  in  default  thereof,  may  recover  his  debt  im- 
mediately, though  not  actually  due.^^ 

218.  Effect  of  Transfer  of  Mortgaged  Property 
to  Pledgee  of  Secured  Obligation. 

If  without  the  consent  of  the  pledgor  the 
pledgee  of  an  obligation  secured  by  mortgage 
takes  a  conveyance  of  the  mortgaged  property 
without  a  judicial  sale  in  satisfaction  of  the  se- 
cured obligation,  the  pledgor  may,  at  his  option, 
either 

(1)  cause  the  conveyance  of  the  property  and  the 
release  of  the  mortgage  to  be  annulled,  or 

(2)  hold  the  pledgee  as  trustee  of  the  property 
for  the  benefit  of  the  pledgor,  and'  compel  hira 
to  account  for  the  value  thereof  in  excess  of 
the  amount  owing  the  pledgee  from  the 
pledgor.*^ 

ments  if  they  can.  The  fact  that  a  debt  is  barred  by 
the  statute  of  limitations  in  no  way  releases  the 
debtor  from  his  moral  obligation  to  pay  it":  Booth 
V.  Hoskins,  75  Cal.  271,  276,  17  Pac.  225;  Zellerbach  v. 
AUenberg,  99   Cal.   57,  69,  33  Pac.   786. 

13  Civil  Code,  sec.  2999. 

14  Where  the  pledgee  of  a  note  secured  by  mort- 

Liens— 26 


402  PLEDGE.  §    219 

219.     Effect  Between  Parties  of  Sale  by  Pledgee 
of  Pledged  Collateral  Securities. 

A  pledgee  who  transfers  pledged  collateral  se- 
curities (whether  negotiable  or  non-negotiable) 
to  third  persons  without  authority  of  the  pledgor 

will  be  deemed  at  the  option  of  the  pledgor  to 
have  taken  the  pledged  property  at  its  face  valu(3 
in  satisfaction  of  the  obligation  for  which  it  was 
pledged  to  him,  and  may  be  regarded  as  having 
pledged  to  his  assignee  his  own  personal  respon- 

gage  took  a  conveyance  of  the  mortgaged  prop- 
erty from  the  mortgagor  in  satisfaction  of  the  mort- 
gage (without  a  foreclosure),  the  pledgor  might  hold 
the  pledgee  as  a  trustee  of  the  property  as  he  had 
taken  title  to  the  property  without  the  consent  and 
in  violation  of  his  rights,  or  the  pledgor  could  treat 
the  pledgee  as  having  wrongfully  converted  the  prop- 
erty, hold  him  for  the  value  thereof,  have  the 
pledgee's  debt  satisfied  therefrom,  and  recover  the 
balance:  Kelly  v.  Matlock,  85  Cal.  122,  129,  24  Pac. 
642. 

In  Chester  v.  Hill,  66  Cal.  480,  6  Pac.  132,  the  court 
held,  under  similar  circumstances,  that  the  pledgor 
was  entitled  to  the  annulment,  and  that  he  might 
also  obtain  the  foreclosure  of  his  mortgage  in  the 
same  action,  the  proper  parties  being  joined  there- 
in. 

In  Ponce  v.  McElvey,  47  Cal.  154,  where  the  pledgee 
of  a  note  secured  by  mortgage  presented  the  secured 
claim  against  the  estate  of  the  deceased  mortgagor, 
and  the  mortgaged  property  was  subsequently  sold  at 
an  administrator's  sale  to  the  pledgee,  the  court  de- 
termined that  the  pledgee  held  the  property  in  trust, 
and  that  an  action  might  be  brought  to  have  the 
trust  declared,  and  the  trust  property  sold,  and -the 
proceeds  applied  first  to  the  obligation  owing  the 
pledgee,  and  the  remainder  to  the  pledgor. 


§    219  RIGHTS    AND    DUTIES.  403 

sibility,  and  not  that  of  his  pledgor ;  and  no  sub- 
sequent reassignment  of  the  collateral  securities 
to  himself  will  restore  him  to  his  original 
rights.  ^^ 

220.     Amount     of     Damages    Recoverable    for 
Wrongful  Dealing  with  Pledged  Property. 

In  an  action  against  a  pledgee  for  damages 
for  a  wrongful  dealing  with  the  pledged  property, 
the  pledgee  may  set  off  the  amount  of  his  special 
property  in  such  property.^® 

15  Haber  v.  Brown,  101  Cal.  445,  453,  454,  35  Pac. 
1035. 

i«  Compare  Williams  v.  Ashe,  111  Gal.  180,  187, 
43    Pac.    595. 


404  PLEDGE.  §    221 


AETICLE  4. 


PLEDGELENDER. 


221.  Pledgelender    defined. 

222.  Withdrawal     of    pledged    property    by   pledge- 

lender. 

223.  Pledgelender 's   rights    similar   to   pledgor  ^s. 

221.  Pledgelender  Defined. 

Every  person  who  pledges  property  in  which 
he  has  a  pledgeable  interest  as  security  for  the 
performance  of  the  obligation  of  another  persoji 
is  a  pledgelender.^ 

222.  Withdrawal  of  Pledged  Property  by  Pledge- 
lender. 

N'o  pledgelender  can  withdraw  the  property 
pledged  otherwise  than  a  pledgor  for  himself 
might,  and  if  he  receives  from  the  debtor  a  con- 
sideration for  the  pledge  he  cannot  withdraw  it 
without  his  consent.^ 

1  Civil  Code,  section  2992:  ''Property  may  be 
pledged  as  security  for  the  obligation  of  another  per- 
son than  the  owner,  and  in  so  doing  the  owner  has 
all  the  rights  of  a  pledgor  for  himself,  except  as 
hereinafter  stated. '' 

2  See  Civil  Code,  section  2994. 


§  223 


PLEDGELENDER. 


405 


223.     Pledgelender's  Rights  Similar  to  Pledgor's. 

Except  as  to  withdrawal,  a  pledgelender  has  all 
the  rights  of  a  pledgor.^ 

3  Compare   Civil    Code,   sections    2992    and    2994; 
quoted  immediately  above. 


406  PLEDGE.  §   224 


AKTICLE5. 
PLEDGEHOLDEE. 

224.  Pledgeholder  defined. 

225.  Duty  of  pledgeholder  to  pledgee. 

2z6.     Pledgeholder  for  reward  cannot  exonerate  him- 
self. 

227.  Pledgeholder  for  reward  must  exercise  ordinary- 

care. 

228.  Manner  in  which   gratuitous  pledgeholder  may 

exonerate  himself. 

229.  Gratuitous    pledgeholder    must    exercise    slight 

care. 

224.  Pledgeholder  Defined. 

A  pledgor  and  pledgee  may  agree  upon  a 
third  person  with  whom  to  deposit  the  pledged 
property,  who,  if  he  accepts  the  deposit,  is  called 
a  pledgeholder.^ 

225.  Duty  of  Pledgeholder  to  Pledgee. 

A  pledgeholder  must  enforce  all  the  rights 
of  the  pledgee  unless  authorized  by  him  to  waive 
them.2  I 

1  Civil  Code,  section  2993. 
3  Civil  Code,  section  2996. 


§    226  PLEDGEHOLDER.  407 

226.  Pledgeholder  for  Reward  cannot  Exonerate 
Himself. 

A  pledgeholder  for  reward  cannot  exonerate 
himself  from  his  undertaking.^ 

227.  Pledgeholder  for  Reward    must    Exercise 

Ordinary  Care. 

A  pledgeholder  for  reward  mnst  use  at  least 
ordinary  care  for  the  preservation  of  the  pledged 
property.* 

228.  Manner  in  Which  Gratuitous  Pledgeholder 
may  Exonerate  Himself. 

A  gratuitous  pledgeholder  can  only  exonerate 
himself  from  his  undertaking  hy  giving  reason- 
able notice  to  the  pledgor  and  pledgee  to  appoint 
a  new  pledgeholder,  and  in  case  of  their  failure 
to  agree,  by  depositing  the  property  pledged 
with  some  impartial  person,  who  will  then  be  en- 
titled to  a  reasonable  compensation  for  the  care 
of  the  same.^ 

3  Civil  Code,  section  2995,  first  clause. 

4  Civil  Code,  section  2997:  "A  pledgee,  or  pledge- 
holder for  reward,  assumes  the  duties  and  liabilities 
of  a  depositary  for  reward.'' 

Section  1852:  *'A  depositary  for  hire  must  use  at 
least  ordinary  care  for  the  preservation  of  the  thing 
deposited. ' ' 

5  Civil  Code,  section  2995,  latter  clause. 


'408  PLEDGE.  §    229 

229.     Gratuitous    Pledgeholder    must     Exercise 
Slight  Care. 
A  gratuitous  pledgeholder  must  use  at  least 
slight  care  for  the  preservation  of  the  pledged 
propert}^^ 

6  Civil  Code,  section  2998:  ''A  gratuitous  pledge- 
holder assumes  the  duties  and  liabilities  of  a  gratuitous 
depositary. ' ' 

Section  1846:  ^'A  gratuitous  depositary  must  use 
at  least  slight  care  for  the  preservation  of  the  thing 
deposited." 


230  A   CUMULATIVE    SECURITY.  409 


ARTICLE  6. 
PLEDGE  A  CUMULATIVE  SECUEITY. 
230.     Pledge  a  cumulative  security. 

230.     Pledge  a  Cumulative  Security. 

A  pledge  is  an  additional  and  cumulative  se- 
curity, the  existence  of  which  does  not  affect  nor 
impair  the  right  to  maintain  a  direct  action  for 
the  enforcement  of  the  secured  ohligation;  nor 
is  the  pledge  affected  or  discharged  by  such  ac- 
tion or  the  judgment  rendered  therein  until  the 
judgment  is  satisfied.^ 

1  Pledge  is  Additional  and  Cumulative  Security: 
Hawley  Bros.  Hardware  Co.  v.  Brownstone,  123  Cal. 
643,  648,  56  Pac.  468;  Sonoma  Valley  Bank  v.  Hill, 
59  Cal.  107,  110;  Ehrlich  v.  Ewald,  66  Cal.  97,  4  Pac. 
1062;  Savings  Bank  of  St.  Helena  v.  Middlekaufl:, 
113  Cal.  463,  467,  45  Pac.  840;  French  v.  McCarthy, 
125   Cal.   508,   512,   58   Pac.    154. 

In  the  absence  of  a  statute  or  stipulation  to  the 
contrary,  the  possession  of  the  pledged  property  does 
not  suspend  the  right  of  the  pledgee  to  proceed  per- 
sonally against  the  pledgor  for  his  debt,  without  sell- 
ing the  pledge,  for  the  reason  that  the  security  is 
only  collateral:  Sonoma  Valley  Bank  v.  Hill,  59  Cal. 
107,  110. 

Code  of  Civil  Procedure,  section  726,  sections  385- 
388  below,  is  inapplicable  to  pledges:  Ehrlich  v. 
Ewald,  66  Cal.  97,  4  Pac.  1062. 


410  PLEDGE.  §    230 

Where  a  second  note  extending  the  time  of  payment 
was  given  as  security  for  the  payment  of  a  former 
note,  ''as  soon  as  that  extended  time  had  expired, 
the  plaintiff  [pledgee]  had  a  right  to  bring  his  action 
upon  the  old  note,  if  the  amount  was  not  then  paid": 
Welch  V.  Arrington,  23  Cal.  322. 

An  executory  contract  for  a  pledge  is  not  affected 
by  a  direct  action  for  the  recovery  of  the  money, 
nor  was  the  right  to  recover  the  money  in  a  direct 
action  affected  by  the  existence  of  the  lien:  Citizens' 
Bank  of  Paso  Kobles  v.  Rucker  (Cal.,  March  13,  1903), 
72  Pac.  46. 


231  ~  ENFORCEMENT   THEREOF.  411 


AETICLE  7. 

ENFOECEMENT    OF    PLEDGE. 

231.  Methods    of    enforcement. 

232.  Pledgee  generally  may  not  sell  evidence  of  in- 

debtedness. 

233.  Demand  of  performance  of  principal  obligation 

must  be  made. 

234.  Demand  of  performance,  how  waived. 

235.  Actual  notice  of  sale  must  be  given  pledgor. 

236.  Sale  of  pledged  property  must  be  made  at  pub- 

lic auction. 

237.  Irregular  sale  voidable. 

238.  Pledgee  may  purchase  at  sale. 

239.  Application  of  proceeds  of  sale. 

240.  Pledgee  may  maintain  action  for  deficiency. 

231.     Methods  of  Enforcement.^ 

An  obligation  secured  by  pledge  may  be  en- 
forced against  the  pledged  property  either 

(1)  by    a   nonjudicial    sale  as  hereinafter  pro- 
vided;,^ or 

(2)  by  a  foreclosure  action.^ 

1  Methods  of  Enforcement:  Wilson  v.  Brannan,  27 
Cal.  258,  271;  Wright  v.  Eoss,  36  Cal.  414,  429;  Ehrlich 
V.  Ewald,  66  Cal.  97,  4  Pac.  1062.  Compare  Mauge  v. 
Heringhi,  26  Cal.  577. 

a  Nonjudicial  Sale.— Civil  Code,  section  3000: 
^' Where  performance  of  the  act  for  which  a  pledge 
is  given  is  due,  in  whole  or  in  part,  the  pledgee  may 
collect  what  is  due  to  him  by  a  sale  of  the  property 
pledged,  subject  to  the  rules  and  exceptions  herein- 
after prescribed. '^ 

3  Foreclosure    Action. — Civil    Code,    section    3011: 


412  PLEDGE.  §    232 

232.    Pledgee  Generally  may  not  Sell  Evidence  of 
Indebtedness.^ 

In  the  absence  of  a  special  agreement  permit- 
ting the  sale,^  a  pledgee  or  pledgeholder^  must 
not  himself  sell  any  evidence  of  indebtedness 
pledged  to  him,  except  the  obligations  of  govern- 

"  Instead  of  selling  pledged  property,  ....  a  pledgee 
may  foreclose  the  right  of  redemption  by  a  judicial 
sale,  under  the  direction  of  a  competent  court." 

4  Civil  Code,  section  3006,  provides.  ^'A  pledgee 
cannot  sell  any  evidence  of  debt  pledged  to  him,  ex- 
cept the  obligations  of  governments,  states,  or  cor- 
porations; but  he  may  collect  the  same  when  due." 

Where  the  pledged  property  is  a  note  secured  by 
mortgage,  the  pledgee  may  upon  its  maturity  collect 
it  by  a  foreclosure  action:  Kelly  v.  Matlock,  85  Cal. 
122,    129,    24   Pac.   642. 

5  In  Absence  of  Special  Agreement.— The  provision 
that  the  pledgee  must  not  sell  the  evidence  of  indebt- 
edness, being  designed  for  the  benefit  of  the  pledgor, 
may  be  waived  by  him.  The  effect  of  an  agreement, 
however,  which  permits  the  pledgee  to  sell  the  evi- 
dence of  debt  is  not  to  restrict  the  pledgee  to  the 
mode  agreed  upon  (as  was  urged  by  counsel),  but  is 
merely  a  permission  added  to  his  statutory  rights; 
so  that  he  may  either  sell  or  collect,  while  under 
the  code  he  could  only  collect.  The  authorization  is 
considered  in  law  as  given  not  for  the  purpose  of 
restricting  or  curtailing  the  rights  of  the  pledgee, 
but  for  the  purpose  of  enlarging  his  rights,  making 
the  pledge  more  advantageous  to  him  by  giving 
him  a  more  effectual  and  speedy  means  of  obtaining 
money  from  his  security:  Mc Arthur  v.  Magee,  114 
Cal.  126,  129,  45  Pac.  1068;  Farmers'  etc.  Bank  v. 
Copsey,  134  Cal.  287,  66  Pac.  324.  Compare  Donohoe 
V.  Gamble,  38   Cal.  340,  351,  99  Am.  Dec.  399. 

6  Civil  Code,  section  3006,  applies  to  a  pledge- 
holder: Fernandez  v.  Tormey,  121  Cal.  515,  520,  53 
Pac.  1119. 


§    232  ENFORCEMENT   THEREOF.  413 

ments,  states^  or  corporations.  He  may,  how- 
ever, collect  the  same  when  due,  or  cause  it  to 
be  sold  by  judicial  sale  in  a  foreclosure  action.'' 

'233.  Demand  of  Performance  of  Principal  Obli- 
gation must  be  Made. 
After  the  principal  obligation  is  due  and  be- 
fore a  sale  of  the  property  pledged  as  security 
for  the  performance  thereof  is  made,  the  pledgee 
must  demand  performance  thereof  from  the  debt- 
or if  the  debtor  can  be  found.® 

234.     Demand  of  Performance,  How  Waived. 

A  debtor  or  pledgor  waives  a  demand  of  per- 
formance as  a  condition  precedent  to  a  sale  of 
the  pledged  property  by  a  positive  refusal  to  per- 
form after  performance  is  due;  but  cannot  waive 
it  in  any  other  manner  except  by  contract.® 

7  Such  evidence  of  debt  is,  however,  subject  to 
sale  in  a  foreclosure  action  in  satisfaction  of  the  de- 
mand secured  thereby:  Donohoe  v.  Gamble,  38  Cal. 
340,  353,  354,  99  Am.  Dec.  399  (Ehodes,  J.,  dissenting). 

8  Compare  Civ.  Code,  sec.  3001. 

Dewey  v.  Bowman,  8  Cal.  145,  151;  Gay  v.  Moss, 
34  Cal.   125,  132. 

Where  the  pledgee  does  not  demand  performance  nor 
give  reasonable  notice  of  the  intended  sale,  the  sale 
amounts  to  a  conversion,  and  the  pledgor  becomes 
liable  for  the  value  of  the  pledged  property  with 
interest,  less  the  amount  of  the  secured  obligation: 
Gay  V.  Moss,   34  Cal.   125,   132. 

9  Civ.  Code,  sec.  3004. 

Hyatt  V.  Argenti,  3  Cal.  151,  160-167;  Bendel  v. 
Crystal  Ice   Co.,   82   Cal.   199,  22  Pac.   1112. 


4H  PLEDGE.  §    235 

235.  Actual  Notice  of  Sale  must  be  Given  Pledg- 

or. 

A  pledgee  must  give  actual  notice  to  the 
pledgor  of  the  time  and  place  at  which  the 
pledged  property  will  he  sold,  at  such  reasonable 
time  before  the  sale  as  will  enable  the  pledgor 
to  attend;  but  such  notice  may  be  waived  by  the 
pledgor  at  any  time.  Mere  waiver  of  demand  of 
performance  does  not  waive  this  notice.^^ 

236.  Sale  of  Pledged  Property  must  be  Made  at 
Public  Auction. 

The  sale  by  a  pledgee  of  pledged  property  must 
be  made  at  public  auction  in  the  manner  and 
upon  the  notice  to  the  public  usual  at  the  place 
of  sale  in  respect  to  auction  sales  of  similar  prop- 
erty, and  must  be  for  the  highest  obtainable 
price;  but  the  pledgor  may  consent  to  a  private 
sale.*-^ 

An  express  stipulation  in  writing  made  by  a  pledgor 
in  a  draft  on  the  pledgee  making  it  payable  when 
the  pledgee  was  in  funds  from  the  proceeds  of  the 
securities  placed  in  his  hands,  after  deducting  the 
amount  due  him  and  interest,  sufficiently  shows  the 
authority  of  the  pledgee  to  sell  at  his  pleasure  with- 
out demand  of  payment:  Hyatt  v.  Argenti,  3  Cal.  151, 
158. 

10  Civ.  Code,  sees.  3002,  3003;  Bendel  v.  Crystal 
Ice  Co.,  82  Cal.  199,  22  Pac.  1112. 

11  Civ.  Code,  sec.  3005. 

Winiams  v.  Hahn,  113  Cal.  475,  45  Pac.  815. 
Where  but  two  days'  notice  of  the  sale  was  given, 
and    the    evidence    showed    that    as   much    as    ten    or 


§    237  ENFORCEMENT    THEREOF.  415 

237.  Irregular  Sale  Voidable.^^ 

A  sale  of  pledged  property  which  is  not  made 
in  conformity  with  the  provisions  of  the  five  pre- 
ceding sections  is  voidable  at  the  election  of  the 
pledgor  exercised  within  a  reasonable  time.^^ 

238.  Pledgee  may  Purchase  at  Sale. 

Whenever  pledged  property  is  sold  by  the 
holder  thereof  as  hereinbefore  provided,  the 
pledgee  or  pledgeholder  may  purchase  such  prop- 
erty at  the  sale.** 

twenty  days'  notice  was  usually  given  of  the  sale  of 
similar  property,  the  sale  is  invalid:  Bendel  v. 
Crystal  Ice  Co.,  82  Cal.  199,  22  Pac.  1112. 

12  Sale  is  Merely  Voidable.—* '  The  provision  of  the 
code  for  notice  to  the  pledgor  before  sale  of  a  pledge 
is  made  for  his  benefit,  and  he  alone  has  a  right  to 
complain  of  its  omission.  Where,  after  a  sale  with- 
out notice,  he  has  been  credited  upon  his  indebtedness 
with  the  full  value  of  the  pledge,  it  may  be  greatly 
to  his  advantage  to  accept  the  situation,  and  he  may 
ratify  the  sale  either  expressly  or  by  implication.  He 
is  not  bound  to  object,  and  until  he  does  object  the 
sale  and  credit  bind  his  creditor'':  Colton  v.  Oak- 
land Bank  of  Savings,  137  Cal.  376,  70  Pac.  225,  228A. 

Sale  rendered  valid  by  being  ratified:  Child  v, 
Hugg,  41  Cal.  519;  Hill  v.  Finigan,  62  Cal.  426,  439. 

As  to  the  Rights  Which  Third  Parties  may  OMain  in 
the  Pledged  Property  by  its  transfer  by  the  pledgee, 
see  sections  204  and  205,  above. 

13  Election  to  Declare  Sale  Void  Must  be  Exer- 
cised Within  a  Reasonable  Time:  Hill  v.  Finigan,  77 
Cal.  267,  272,  11  Am.  St.  Eep.  279,  note,  19  Pac.  494. 

14  Compare  Civ.  Code,  section  3010,  as  amended 
in  effect  March  8,  1895. 

Historical.— JJndeT  the  common  law  the  pledgee 
could  not  become  a  purchaser  at  his  own  sale,   and 


416  PLEDGE.  §   239 

239.  Application  of  Proceeds  of  Sale. 

After  the  pledgee  has  lawfully  sold  the  pledged 
property,  or  otherwise  collected  its  proceeds,  he 
may  apply  the  same  to  the  necessary  expenses 
of  sale  or  collection,  and  to  the  satisfaction  of 
the  amount  due  on  the  secured  ohligation,  and 
must  pay  the  surplus  to  the  pledgor  on  demand.*^ 

240.  Pledgee   may   Maintain   Action   for  Defi- 
ciency. 

After  a  lawful  sale  of  the  pledged  property  has 
been  made,  the  pledgee  may  maintain  an  action 
to  recover  any  unsatisfied  deficiency  that  may  re- 
sult against  any  person  personally  liable  for  the 
payment  thereof.^^ 

so  it  was  in  this  state  before  the  enactment  of  this 
section:   Wright  v.  Eoss,   36  Cal.  414,  442. 

Before  March  8,  1895,  this  section  read:  **A  pledgee 
or  pledgeholder  cannot  purchase  the  property  pledged, 
except  by  direct  dealing  with  the  pledgor.''  This 
section  is  interpreted  in  Hill  v.  Finigan,  62  Cal.  426, 
439. 

15  See  Civ.  Code,  sec.  3008. 

That  pledgee  must  account  for  the  surplus  is  also 
affirmed  in  Dewey  v.  Bowman,  8  Cal.  145,  151,  152; 
Haber  v.  Brown,  101  Cal.  445,  452,  453,  35  Pac.  1035. 

16  Mauge  V.  Heringhi,  26  Cal.  577. 


TITLE  % 

COISFTEACT  EXCUMBEANCES  INDEPEND- 
ENT OFTOSSESSION. 

CHAPTER   1. 

MORTGAGE. 
ARTICLE  1. 

NATUEE    OF    MOETGAGE. 

Subdivision  1,    What  is  Mortgage. 

241.  Mortgage   defined. 

SuMivision  2.     The  Instrument  of  Mortgage, 

242.  Mortgage  must  be  evidenced  by  formal  writing. 

243.  Form  of  instrument  of  mortgage. 

244.  Description  of  mortgaged  property  must  be  suffi- 

cient  for   identification. 

245.  As   against   mortgagor   instrument   of  mortgage 

may  be  reformed. 

Subdivision  3,    Most  Formal  Hypothecations  Mortgages. 

246.  Most    transactions    hypothecating    property    as 

security    deemed   mortgages. 

247.  Extrinsic   evidence  admissible. 

248.  Test  of  mortgage. 

Liens— 27  (417) 


418  MORTGAGE.  §    241 

Suhdivision  Jf.    What  Property  Mortgageable, 

249.  Future   interests  mortgageable. 

250.  Every  interest  in  immovable  property  mortgage- 

able. 

251.  Enumeration  of  mortgageable  movable  property. 

252.  Enumeration  to  be  liberally  construed. 

Subdivision  5.    Possession. 

253.  Possession  of  mortgageil  property  may  be  con- 

ferred on  mortgagee. 

254.  Upon  change  of  possession  of  movable  property 

transaction  deemed  pledge. 

Subdivision  6,    Power  of  Sale, 

255.  Mortgage  may  confer  power  of  sale. 

256.  Power  of  sale  deemed  part  of  security. 

Subdivision  7,    Insurance, 

257.  Mortgage  may  confer  power  to  insure. 

Subdivision  8.    Interpretation. 

258.  Mortgage    construed    in    connection    with    other 

related  writings. 

259.  Ambiguities  to   be  resolved   in  favor   of   mort- 

gagor. 

260.  Mortgage  only  secures  obligations  expressly  se- 

cured thereby. 

Subdivision  1,     What  is  Mortgage, 

241.     Mortgage  Defined. 

A  mortgage  is  a  charge  or  encumbrance  created 
by  formal  contract  against  specific  property, 
without  the  necessity  of  a  change  of  possession 
of  the  property,  as  security  for  the  future  per- 
formance of  an  obligation,  whether  previously 


§    241  NATURE    THEREOF.  419 

existing  or   contemporaneously  made   or  there- 
after to  arise.^ 

Subdivision    2,     The    Instrument    of    Mortgage, 

242.     Mortgage   must    be    Evidenced  by  Formal 
Writing. 
A  mortgage^  can  be  created,  renewed,  or  ex- 
tended to  secure  an  additional  obligation,^  only 

1  What  is  Mortgage.— See  Civil  Code,  section  2920: 
'^  Mortgage  is  a  contract  by  which  scecific  property 
is  hypothecated  for  the  performance  of  an  act,  with- 
out the  necessity  of  a  change  of  possession.'' 

Section  2923:  *^The  lien  of  a  mortgage  is  special, 
unless  otherwise  expressly  agreed,  and  is  independent 
of    possession." 

A  pre-existing  debt  is  a  sufficient  consideration  for 
a  mortgage:  Frey  v.  Clifford,  44  Cal.  335,  342,  45  CaL 
580,   583,   and  many   other   cases. 

May  Secure  Future  Advances:  Tapia  v.  Demartini,  77 
Cal.  383,  11  Am.  St.  Eep.  288,  19  Pac.  641;  Irwin  v. 
McDowell,  91  Cal.  119,  27  Pac.  601;  Lemon  v.  Wolff, 
121  Cal.  272,  53  Pac.  801;  Moss  v.  Odell,  134  Cal 
464,   66   Pac.   581. 

3Iay  be  Given  as  Indemnity:  Waldrip  v.  Blake,  74 
Cal.   409,    16   Pac.    226. 

2  Civil  Code,  section  2922:  *'A  mortgage  can  be 
created,  renewed,  or  extended,  only  by  writing,  exe- 
cuted with  the  formalities  required  in  the  case  of  a 
grant  of  real  property'':  See,  also,  Porter  v.  Mullerr 
53    Cal.    677. 

That  a  power  of  attorney  to  execute  a  mortgage 
mnst  likewise  be  in  writing,  see  Civil  Code,  sections 
2933   and   2309. 

3  Extended  to  Secure  an  Additional  Obligation.— 
*^The  term  ^extended,'  as  here  used  [that  is,  in  Code» 
section  2922   (note  2,  above)],  refers  to  a  broadening 


420  MORTGAGE.  §    242 

in  writing,  executed  with  the  formalities  required 
in  the  case  of  a  grant  of  real  property.  The  ob- 
ligation secured  by  the  mortgage  need  not,  how- 
ever, be  evidenced  by  a  separate  writing.^ 

243.     Form  of  Instrument  of  Mortg^age. 

A  mortgage  may  be  made  in  substantially  the 
following  form: 

This  mortgage,  made  the day  of , 

in  the  year  ,  by  A  B  of ,  by  oc- 
cupation a ,  mortgagor,  to  C  D  of , 

by  occupation  a  ,  mortgagee,  witnesseth: 

That  the  mortgagor  mortgages  to  the  mort- 
gagee   [here  describe  the  property],  as  security 

for  the  payment    to    him    of  dollars  oq 

[or  before] "the  day  of  ,  in  the 

year  ,  with  interest  thereon  [or,  as  se- 
curity for  the  payment  of  a  note  or  obligation, 
describing  it,  etc.]. 

(Signed)     A     B. 

In  the  case  of  a  mortgage  of  immovable  prop- 
erty, the  phrase  "by  occupation  a  ^^  may 

be  omitted.^ 

of  the  security  to  cover  additional  advances^':  Lon- 
don etc.  Bank  v.  Bandmann,  120  Cal.  220,  223,  52  Pac. 
583. 

^^The  extension  of  a  lien  is  not  tHe  prolongation 
of  its  life,  but  is  making  it  security  for  an  additional 
obligation'^:  Southern  Pacific  Co.  v.  Prosser,  122  Cal. 
413,  418,  55  Pac.  145. 

4  Whitney  v.  Buckman,  13  Cal.  536.  Compare 
Blankman  v.  Yallejo,   15   Cal.   638,  644. 

5  Civ.  Code,  sees.  2948,  2956. 


§    244  NATURE    THEREOF.  421 

244.     Description  of  Mortgaged  Property  must  be 
Sufficient  for  Identification. 

In  respect  to  third  parties^^  the  description 
of  mortgaged  property  in  an  instrument  of  mort- 

The  words  ''we  mortgage  the  property,"  when  ac- 
companied by  a  provision  for  the  sale  of  it  in  case 
the  money,  recited  in  the  instrument  as  being  thus 
secured,  is  not  paid,  are  clearly  sufficient  to  create 
a  mortgage:  De  Leon  v.  Higuera,  15  Cal.  483,  496. 

No  particular  form  of  words  is  necessary  to  con- 
stitute a  mortgage:  Woodworth  v.  Guzman,  1  Cal. 
203,    205. 

6  As  to  Third  Parties,  description  must  be  suffi- 
cient by  inquiries  directed  by  instrument  to  identify 
property:  HaU  v.  Glass,  123  Cal.  500,  507,  69  Am. 
St.  Eep.  77,  56  Pac.  336. 

''The  general  rule  is  that  the  description  in  a 
chattel  mortgage  need  not  be  so  specific  and  certain 
that  the  property  might  be  identified  by  the  descrip- 
tion alone.  If  the  description  of  the  personal  prop- 
erty contained  in  the  chattel  mortgage  is  such  as 
will  enable  third  persons  to  identify  the  property, 
aided  by  the  inquiry  which  the  mortgage  itself  di- 
rects, the  mortgage,  when  recorded,  is  notice  to  all 
third  parties. 

"Descriptions  of  personal  property  in  a  chattel 
mortgage  are  not  required,  of  themselves,  to  fully 
identify  the  property.  They  are  required  to  furnish 
the  means  and  information  by  which,  upon  inquiry, 
the  property  can  be  identified.  That  is  certain  which 
can  be  made  certain  by  making  the  inquiry  indi- 
cated and  directed  by  the  mortgage^':  Alferitz  v. 
Ingalls,  83  Fed.   (C.  C.)    964,  966,  968. 

Thus,  in  Alferitz  v.  Ingalls,  83  Fed.  (C.  C.)  964, 
967-969,  the  court  held  a  movable  property  mortgage 
of  "8,000  sheep,  and  the  increase  thereof,''  which 
set  forth  that  at  the  time  of  the  execution  thereof 
they  were  owned  by,  and  in  the  possession  of,  the 
mortgagors  in  Merced  county,  California,  valid  subse- 


422  MORTGAGE.  §   244 

gage  must  be  sufficient  to  enable  them  by  in- 
quiries directed  by  the  instrument  itself  to  iden- 
tify the  property  covered  thereby ;  but  as  between 
the  parties  themselves''  is  sufficiently .  certain  if 

quently  when  the  sheep  had  been  driven  into  Es- 
meralda county,  Nevada.  The  court  said:  **The  de- 
scription directed  parties  to  the  situs  of  the  property 
....  at  the  time  of  the  execution  of  the  mortgages. 
This  directed  third  parties  to  the  starting  point  of 
inquiry.  But  the  large  bands  of  sheep  on  this  coast 
are  not  usually  kept  in  any  particular  farm  or  range. 
They  are  generally  driven,  as  in  the  present  case, 
from  one  county  to  another  in  the  same  state,  or 
across  the  line  into  another  state.  In  the  summer 
time  they  are  driven  into  the  mountains,  grazing  upon 
the  public  lands,  and  there  herded  and  kept,  and  upon 
the  approach  of  winter  are  driven  back  to  the  val- 
leys. The  most  the  mortgage  can  do  is  to  direct  the 
attention  of  the  parties  to  the  time  and  place  where 
the  property  was  at  the  time  of  the  execution  of  the 
mortgage,  and  it  would  be  their  duty,  under  such  cir- 
cumstances, to  ascertain  whether  the  property  in  the 
possession  of  the  mortgagor  at  another  place  was  the 
same  band  of  sheep  that  was  mortgaged.  Any  person 
who  read  the  mortgages  in  question  would  naturally 
have  concluded  that  the  property  would  be,  as  it  was, 
found  in  the  possession  of  the  mortgagors,  and  could 
have  readily  ascertained,  upon  inquiry  suggested  by 
the    records,    whether    the    sheep    were    of    the    same 

band  described  in  the  mortgages Undoubtedly, 

it  would  in  all  cases  be  safer,  better,  and  clearer  if 
....  marks  and  brands  were  mentioned  in  a  descrip- 
tion in  a  chattel  mortgage,  as  it  would  obviate  ob- 
jections that  might  otherwise  be  urged  to  the  validity 
of  the  description.  But  the  decisions-  are  universal 
to  the  effect  that  it  is  not  necessary  that  the  descrip- 
tion in  the  mortgage  should  be  such  as  would  enable 
a  stranger  to  identify  the  property. '' 

Nor   is   a   mortgage   of   '^8,000    sheep,    and   the   in- 
crease thereof  in  Merced  county  void  on  the  ground 


§    244  NATURE    THEREOF.  423 

that  for  aught  that  appears  in  the  mortgage  or  the 
record  thereof  the  mortgagor  might  have  a  great 
many  more  in  his  possession  in  the  same  county,  as 
the  court  has  no  right  to  imagine  facts  to  exist 
which  if  shown  might  invalidate  the  mortgage:  Al- 
feritz  V.  Ingalls,  83  Fed.  (C.  C.)   964,  967. 

The  following  description  is  sufficient  to  mort- 
gage all  crops  planted  during  the  life  of  the  mort- 
gage: ^'All  the  crops  and  products,  of  whatever  na- 
ture, which  are  now  standing,  or  growing,  or  which 
shall  or  may  hereafter  at  any  time  be  sown,  planted, 
cut,  or  harvested  by  the  said  party  of  the  first  part 
during  the  continuance  of  this;  mortgage,  on  the 
following  described  lands  and  premises,  and  every 
part  and  portion  thereof,  to  wit  ....''  (the  descrip- 
tion of  the  land  then  following) :  Hall  v.  Glass,  123 
Cal.  500,  505,  69  Am.  St.  Eep.   77,  56  Pac.  336. 

7  As  Between  Parties  Themselves  description  suf- 
ficient if  capable  of  being  made  certain.  Extrinsic 
evidence  is  admissible  to  identify  the  mortgaged  prop- 
erty— that  is,  to  apply  to  the  property  the  descrip- 
tion contained  in  the  mortgage:  Hancock  v.  Watson, 
18  Cal.  317;  California  Title  etc.  Co.  v.  Pauly,  111 
Cal.  122,  127,  128,  43  Pac.  586;  Higgins  v.  Higgins, 
121  Cal.  487,  66  Am.  8t.  Rep.  57,  note,  53  Pac.  1081. 

^'It  is  only  necessary  that  the  description  of  prem- 
ises in  a  deed  or  mortgage  be  sufficiently  definite  and 
certain  to  enable  the  land  to  be  identified '':  Rea  v. 
Haffenden,  116  Cal.  596,  602,  603,  48  Pac.  716. 

It  is  undoubtedly  essential  to  the  validity  of  a  con- 
veyance that  the  thing  conveyed  be  described  so  as 
to  be  capable  of  identification,  but  it  is  not  essential 
that  the  conveyance  should  itself  contain  such  a  de- 
scription as  to  enable  the  identification  to  be  made 
without  the  aid  of  extrinsic  evidence.  This  doctrine 
as  to  conveyances  is  applicable  to  mortgages:  De  Leon 
V.  Higuera,  15  Cal.  483,  496. 

The  mortgagor,  however,  cannot  complain  at  the 
enforcement  of  a  mortgage  as  it  is  written  because  of 
mere  indefiniteness  of  description  of  the  mortgaged 
property,  whatever  the  effect  of  a  sale  under  such  de- 
scription. If  nothing  passes,  that  is  the  misfortune  of 
the  mortgagee:  Tryon  v.  Sutton,  13  Cal.  490;  Whitney 


424  MORTGAGE.  §    244 

capable  of  being  made  certain  by  extrinsic  evi- 
dence. A  mortgage  may  be  valid  as  to  property 
sufficiently  described  in. the  instrument  of  mort- 
gage^ and  void  as  to  other  property  because  of 
the  insufficiency  of  the  description  thereof.^ 

245.     As  Against  Mortgagor  Instrument  of  Mort- 
gage may  be  Reformed. 

As  against  a  mortgagor  and  every  other  person 
except  a  bona  fide  purchaser  or  encumbrancer 

V.  Buckman,  13  Cal.  536;  Graham  v.  Stewart,  68  Cal. 
374,  381,  9  Pac.  555. 

Illustrations.— The  word  ** estate/'  used  without 
qualification  in  description  of  the  property  covered  by 
a  mortgage,  comprehends  all  property  susceptible  of 
mortgage  in  respect  to  which  the  mortgage  is  prop- 
erly executed:  Higgins  v.  Higgins,  121  Cal.  487,  66  Am. 
St.  Rep.  57,  53  Pac.  1081. 

A  description  of  the  property  mortgaged  as  the 
'^interest  in  the  quartz-mill  and  lode  formerly  owned 
by  John  H.  Hancock,  said  interest  being  one-half  of 
the  mill  and  lode,''  when  applied  by  extrinsic  evi- 
dence, is  sufficient:  Hancock  v.  Watson,  18  Cal.  137. 

Where  the  owner  of  a  Mexican  grant  surveys  and 
subdivides  the  same  in  the  same  way  as  if  the  grant 
was  a  part  of  the  public  domain,  a  description  in  a 
mortgage  by  such  subdivisions  is  sufScient:  Eea  v. 
HafPenden,  116  Cal.  596,  602,  603,  48  Pac.  716;  Sav- 
ings Bank  of  San  Diego  Co.  v.  Daley,  121  Cal.  199,  202, 
53  Pac.  420. 

A  trust  deed  in  the  nature  of  a  mortgage  of  all 
the  lands  belonging  to  the  trust  or  in  a  designated 
county  covers  all  lands  in  that  county  shown  by 
proper  evidence  dehors  the  trust  deed  to  have  be- 
longed to  the  trustor  at  the  time  of  its  execution: 
Staples  V.  May  (Cal.),  23  Pac.  710,  712B. 

8  Hall  V.  Glass,  123  Cal.  500,  505,  69  Am.  St.  Rep. 
77,  56  Pac.  336. 


§    245  NATUEE    THEREOF.  425 

for  value,  a  mistake  in  the  description  of  mort- 
gaged property,  and  all  other  mistakes  arising 
therefrom,  may  be  corrected  by  a  court  of  equity 
as  matter  of  course  to  conform  to  the  intention 
of  the  parties.^ 

9  As  Against  Mortgagor  Instrument  of  Mortgage 
may  be  Reformed:  Woodworth  v.  Guzman,  1  Cal.  203, 
205;  GiselTTian  v.  Starr,  106  Cal.  651,  659,  40  Pac.  8. 
Davis  V.  Ward,  109  Gal.  186,  50  Am.  St.  Kep.  29,  41  Pac. 
1010. 

A  court  of  equity  may  reform  a  mortgage  by  go- 
ing back  to  the  original  mistake  and  correcting  all 
subsequent  mistakes  which  grow  out  of  it:  Quivey  v. 
Baker,  37  Cal.  465;  Donald  v.  Deals,  57  Cal.  399,  405. 

Having  reformed  the  mortgage  and  mistakes  grow- 
ing out  of  it  down  to  the  foreclosure  sale  of  the  mort- 
gaged property,  the  court  may  direct  a  new  notice  and 
sale  if  justice  requires  it:  Busey  v.  Moraga,  130  Cal. 
586,  588,  589,  62  Pac.  1081. 

Although  it  is  conceded  that  the  party  might  have 
had  full  relief  from  the  mistake  in  the  original  ac- 
tion, he  may  nevertheless  bring  a  separate  action  to 
correct  the  mistake:  Busey  v.  Moraga,  130  Cal.  586, 
588,  62  Pac.  1081. 

Illustratwns. — Where  a  subsequent  purchaser  re- 
ceived notice  of  the  mistake  after  part  payment  of 
his  purchase  money,  the  mortgagee,  upon  refunding 
such  part  payment,  may  have  the  mortgage  reformed 
and  enforced:  Davis  v.  Ward,  109  Cal.  186,  191,  50 
Am.  St.  Eep.  29,  41  Pac.  1010. 

A  mortgage  on  the  separate  property  of  the  wife 
may  be  reformed:  Savings  etc.  Soc.  v.  Meeks,  66  Cal. 
371,  5  Pac.  624. 

Likewise  a  mortgage  on  the  homestead  of  a  mar- 
ried claimant:  Stevens  v.  Holman,  112  Cal.  345,  350, 
351,  53  Am.  St.  Eep.  216,  44  Pac.  670. 

And  a  mortgage  which  was  given  to  secure  a  non- 
negotiable  note  which  was  transferred  by  the  mort- 
gagee for  value  after  maturity:   San  Jose  Eanch  Co. 


426  MORTGAGE.  §    240 

Subdivision     S,    Most    Formal    Hypothecations 
Mortgages, 

246.     Most  Transactions  Hypothecating  Property 
as  Security  Deemed  Mortgages.*^ 

Every  transaction^  evidenced  in  part  by  an  in- 
strument of  conveyance  other  than  a  trust  deed 

V.  San  Jose  Land  etc.  Co.,  132  Cal.  582,  584,  64  Pac. 
1097. 

lo  Most  Transactions  Hypothecating  Property  as 
Security  Deemed  Mortgages.— Civil  Code,  section 
2924:  **  Every  transfer  of  an  interest  in  property,  other 
than  in  trust,  made  only  as  security  for  the  per- 
formance of  another  act,  is  to  be  deemed  a  mortgage, 
except  when  in  the  case  of  personal  property  it  is  ac- 
companied by  actual  change  of  possession,  in  which 
case  it  is  deemed  a  pledge." 

Transactions  Held  to  Create  Mortgages. 

A  conveyance  of  real  property,  conditioned  to  be 
void  on  the  "payment  of  a  certain  sum  of  money  on 
a  given  day,  otherwise  to  remain  in  full  force  and 
virtue:   Ferguson  v.  Miller,  4  Cal.  97. 

A  deed  absolute  in  form  of  certain  property,  the 
grantor  remaining  in  possession  under  a  lease,  and  a 
parol  agreement  of  defeasance  being  established: 
Lodge  V.  Turman,  24  Cal.  385. 

An  agreement  by  which  a  first  party  was  to  let  a 
second  party  have  a  certain  sum  of  money  in  con- 
sideration for  which  the  second  party  was  to  con- 
vey certain  property  to  the  first,  the  first  party  there- 
upon to  lease  the  property  to  the  second  at  a  rent 
which  would  be  equivalent  to  interest  upon  such  sura 
of  money  and  to  reconvey  upon  payment  of  the  sum 
with  rent,  and  notwithstanding  the  lease  was  not  exe- 
cuted until  several  days  after  the  deed:  Sears  v.  Dixon, 
33   Cal.   326,  332. 

A  conveyance  of  certain  land,  made  for  the  purpose 
of  securing  an  indebtedness  owing  to  the  creditor 
grantee,  the  grantor  having  the  right  to  liquidate  the 


I 


§    246  NATURE    THEREOF.  427 

indebtedness  either  by  its  payment  or  by  the  con- 
veyance of  certain  other  property  at  a  certain  agreed- 
valuation:  Purser  v.  Eagle  Lake  Land  etc.  Co.,  Ill 
Cal.  139,  142-144,  43  Pac.  523. 

A  conveyance  by  a  mortgagee  under  a  deed  absolute 
in  form,  conveying  the  mortgaged  property  to  a  third 
person  who  paid  him  the  mortgage  obligation,  and 
thereupon  held  the  land  as  security  for  the  payment 
of  such  sum  advanced,  the  transaction  being  made 
under  agreement  with  the  mortgagor:  Wilcox  v. 
Gregory,  135  Cal.  217,  67  Pac.  139. 

A  duly  acknowledged  and  recorded  contract  for  an 
annuity,  the  payment  of  which  was  to  constitute  a 
lien  upon  the  estate  of  the  obligor  during  his  life- 
time and  after  his  death  during  the  lifetime  of  the 
obligee,  constitutes  a  valid  mortgage  upon  the  im- 
movable property  of  the  obligor:  Higgins  v.  Higgins, 
321  Cal.  487,  66  Am.  St.  Eep.  57,  53  Pac.  1081. 

A  deed  made  by  the  owner  of  property  to  a  second 
party  who  thereupon,  on  the  same  day,  deeds  it  to 
a  third  person,  parol  evidence  showing  that  the  prop- 
erty was  transferred  to  the  second  party  without  con- 
sideration, and  to  the  third  party  to  secure  an  in- 
debtedness of  the  original  grantor  to  the  third  party 
and  such  future  advances  as  might  be  made:  Hooker 
V.  Burr,  137  Cal.  663,  70  Pac.  778. 

Transactions  not  Amounting  to  Mortgages. 

Where  a  deed  absolute  was  given  *'as  security'' 
for  the  performance  of  a  future  and  contingent  act, 
it  is  not  a  mortgage,  but  a  conditional  sale  (appar- 
ently on  the  ground  that  there  was  no  subsisting  in- 
debtedness between  the  parties) :  Patterson  v.  Don- 
ner,  48  Cal.  369,  378,  379,  Ehodes,  C.  J.,  dissenting. 
(Later  cases  have  held  that  a  deed  absolute  in  form 
may  be  a  mortgage,  though  given  to  secure  future  ad- 
vances.) 

Under  the  homestead  law  as  amended  in  1860,  the 
homestead  was  in  no  event  mortgageable.  Where 
married  homestead  claimants  made  a  deed  absolute  in 
form,  but  intended  as  a  mortgage  of  the  homestead, 
parol  evidence  was  admissible  to  show  that  the  deed 
was  in  reality  intended  as  a  mortgage;  and  that  fact 


428  MORTGAGE.  §    246 

in  the  nature  of  a  mortgage/^  in  essence^^  in- 
tending to  hypothecate  specific  property  as  se- 
curity for  the  future  performance  of  an  obliga- 

appearing  both  deed  and  mortgage  were  rendered  in- 
valid: Sears  v.  Dixon,  33  Cal.  326. 

A  deed  absolute  in  form  of  a  homestead,  together 
with  a  contemporaneous  oral  agreement  of  defeasance, 
does  not  constitute  either  a  deed  or  a  mortgage  of 
the  homestead,  because  the  deed  cannot  be  taken  alone, 
and  the  defeasance  is  not  executed  as  a  mortgage  of 
the  homestead  is  required  to  be:  Merced  Bank  v. 
Eosenthal,  99  Cal.  39,  49,  31  Pac.  849,  33  Pac.  732,  in 
bank. 

tllustrating  Difference  Between  Mortgage  and  Con- 
veyance. 

Where  A  executed  a  deed  to  B,  conveying  cer- 
tain property  to  him,  and  contemporaneously  with 
this  B  executed  a  conveyance  to  A,  the  words  of  con- 
veyance being  the  same  in  both,  and  where  the  lat- 
ter deed  recited  the  former  deed  and  that  it  was 
made  in  consideration  of  an  agreement  by  B  to  pay  A 
forty  thousand  dollars,  to  be  realized  from  sales  to 
be  made,  and  not  otherwise  chargeable  to  him,  and 
purported  to  reconvey  the  lands  to  A  to  secure  the 
said  sum  of  forty  thousand  dollars,  the  former  deed 
conveyed  the  title  to  the  property,  but  the  latter  deed 
merely  mortgaged  the  property  to  A.  *^The  lan- 
guage used  in  the  latter  instrument  has  always,  both 
here  and  elsewhere,  been  construed  to  constitute  a 
mortgage'':  Adams  v.  Hopkins  (Cal.),  69  Pac.  228, 
231A-232A. 

11  Except  Deed  of  Trust:  See  sections  414-425,  be- 
low. 

An  absolute  deed  made  to  one  person  as  security 
for  the  obligation  of  a  third  person  is  a  mortgage, 
except  in  case  of  an  express  trust:  Banta  v.  Wise, 
335  Cal.  277,  67  Pac.  129. 

12  It  is  the  real  character,  not  the  form  of  the  in- 
strument, to  which  the  court  will  look:  Peninsular  etc. 
Fishing  Co.  v.  Pacific  Steam  Whaling  Co.,  123  Cal. 
689,  694,  56  Pac.  804. 


§    246  NATLBE    THEREOF.  429 

tion^  whether  previously  existing  or  contempora- 
neously made  or  thereafter  to  arise/^  is  deemed 
to  create  a  mortgage. 

247.     Extrinsic  Evidence  Admissible. 

The  presumption  arising  from  the  execution 
and  delivery  of  an  instrument  of  conveyance  is 
that  such  instrument  was  made  pursuant  to  an 
agreement  to  sell  and  vests  absolute  title  in  the 
grantee.^^  But  extrinsic  evidence  of  every  kind 
is  admissible/^  except  as  against  a  bona  fide  pur- 
is  The  debt  to  secure  which  the  deed  is  given 
may  be  an  antecedent  debt,  or  one  created  at  the 
time,  or  it  may  be  advances  to  be  thereafter  made  by 
the  mortgagee  to  or  for  the  mortgagor:  Husheon  v. 
Husheon,  71  Cal.  407,  412!,  12  Pac.  410;  Campbell  v. 
Freeman,  99  Cal.  546,  548,  549,  34  Pac.  114;  Banta  v. 
Wise,  135  Cal.  277,  67  Pac.  129. 

14  Presumption:  Locke  v.  Moulton,  96  Cal.  21,  29, 
30  Pac.  957;  Ford  v.  Irwin,  18  Cal.  117,  120,  121;  Eoss 
V.  Brusie,  70  Cal.  465,  11  Pac.  760;  Mahoney  v.  Bost> 
wick,  96  Cal.  53,  58,  31  Am.  St.  Eep.  174,  30  Pac. 
1020;  Penney  v.  Simmons,  99  Cal.  380,  33  Pac.  1121. 

15  Extrinsic  Evidence  Admissible.— Civil  Code,  sec- 
tion 2925:  '^The  fact  that  a  transfer  was  made  sub- 
ject to  a  defeasance  on  a  condition  may,  for  the 
purpose  of  showing  such  transfer  to  be  a  mortgage,  be 
proved  (except  as  against  a  subsequent  purchaser  or 
encumbrancer  for  value  and  without  notice),  though' 
the  fact  does  not  appear  by  the  terms  of  the  in- 
strument. ' ' 

"Whether  a  deed  absolute  in  form  is  a  mortgage  ia 
a  question  of  intention  to  be  inferred  from  all  the 
facts  and  circumstances  of  the  transaction  in  which 
the  deed  was  executed,  taken  in  connection  with  the 
conduct  of  the  parties  after  its  execution:  Montgomery 
V.  Spect,  55  Cal.  352. 


430  MORTGAGE.  §    247 

chaser  or  encumbrancer  for  value/^  to  show  that 
the  transaction  in  its  entirety  amounts  to  a  mort- 
gage. In  order^  however,  to  overcome  the  pre- 
sumption, this  evidence  must  make  a  clear  case.^'' 

Parol  evidence  is  always  admissihle  to  show  that 
a  deed,  absolute  on  its  face,  is  intended  as  a  mort- 
gage, without  regard  to  the  existence  of  fraud,  ac- 
cident, or  mistake  in  the  creation  of  the  instrument: 
Pierce  v.  Eobinson,  13  Cal.  116,  124-133;  People  v. 
Irwin,  14  Cal.  428,  435,  436;  Johnson  v.  Sherman,  15 
Cal.  287,  291,  76  Am.  Dec.  481;  Lodge  v.  Turman,  24 
tJal.  385,  390,  391;  Hopper  v.  Jones,  29  Cal.  18,  87  Am. 
Dec.  146;  Cunningham  v.  Hawkins,  27  Cal.  603;  Sears 
V.  Dixon,  33  Cal.  326,  332;  Gay  v.  Hamilton,  33  Cal. 
686;  Eaynor  v.  Lyons,  37  Cal.  452;  Farmer  v.  Grose, 
42  Cal.  169,  172;  Batemen  v.  Burr,  57  Cal.  480,  482; 
Eoss  V.  Brusie,  64  Cal.  245,  30  Pac.  811;  Husheon  v. 
Husheon,  71  Cal.  407,  411,  412,  12  Pac.  410;  Baker  v. 
Fireman's  Fund  Ins.  Co.,  79  Cal.  34,  41,  14  Pac.  686; 
Locke  V.  Moulton,  96  Cal.  21,  29,  30  Pac  957;  Hawley 
V.  Liverpool  etc.  Ins.  Co.,  102  Cal.  651,  655,  36  Pac. 
926;  Ahern  v.  McCarthy,  107  Cal.  382,  383,  40  Pac. 
482;  Yance  v.  Anderson,  113  Cal.  532,  538,  45  Pac. 
816. 

It  matters  not  whether  it  is  a  case  at  law  or  in 
equity,  so  called:  Cunningham  v.  Hawkins,  27  Cal. 
603;  Hopper  v.  Jones,  29  Cal.  18,  87  Am.  Dec.  146; 
Jackson  v.  Lodge,  36  Cal.  28,  47-56,  per  Sawyer,  C.  J., 
and  Sanderson  and  Sprague,  JJ.;  Ehodes  and  Crockett, 
JJ.,  dissenting;  Taylor  v.  McLain,  64  Cal.  513,  514, 
2  Pac.  399. 

Historical.— In  Pierce  v.  Eobinson,  the  early  cases 
of  Lee  V.  Evans,  8  Cal.  424,  434,  Low  v.  Henry,  9 
Cal.  538,  548,  and  Arguello  v.  Edinger,  10  Cal.  150, 
360-166,  holding  the  contrary  doctrine,  were  overruled. 

In  Taylor  v.  McLain,  the  case  of  Davenport  v. 
Turpin,  43  Cal.  597,  604,  holding  that  such  evidence 
was  not  admissible  in  actions  ^*at  law,''  was  over- 
ruled. 


§    247  NATURE    THEREOF.  431 

Thus  a  grantor  in  possession  is  not  estopped  from 
showing  that  a  deed  absolute  in  form  given  to  his 
grantee  is  a  mortgage  by  the  fact  that  the  secured 
obligation  is  barred  by  lapse  of  time,  and  to  show  that 
fact  will  bar  the  grantee's  right  to  a  recovery  of 
possession  and  to  all  other  relief:  Locke  v.  Moulton, 
96  Cal.  21,  32,  30  Pac.  957. 

Parol  evidence  is  also  admissible  to  show  that  a 
deed  absolute  in  form  and  a  defeasance  are  parts  of 
the  same  transaction:   Gay  v.  Hamilton,  33  Cal.   686. 

What  may  he  Shown  hy  Parol  Evidence,— AXthoxagh.  an 
absolute  deed,  intended  as  such  at  the  time  of  its 
execution  and  delivery,  cannot  be  changed  into  a 
mortgage  by  the  subsequent  oral  declarations  of  the 
grantee,  his  subsequent  declarations  are  admissible 
to  show  that  at  the  time  an  absolute  deed  was  made, 
it  was  intended  merely  as  security:  Harp  v.  Harp,  136 
Cal.  421,  69  Pac.  28.  See,  also,  Ross  v.  Brusie, 
64  Cal.   245,  30  Pac.  811. 

After  the  death  of  the  grantee,  corroborated  testi- 
mony as  to  his  declarations  as  to  the  nature  of  the 
transaction  may  be  sufficient  to  show  it  to  be  in- 
tended as  a  mortgage:  Harp  v.  Harp,  136  Cal.  421, 
69  Pac.  28. 

A  written  memorandum  signed  by  the  parties  con- 
temporaneously with  the  Execution  of  the  deed  is  ad- 
missible for  such  purpose:  Eogers  v.  Jones,  92  Cal. 
80,  28  Pac.  97. 

Parol  Evidence  is  also  Admissible  in  Rebuttal.— *  ^  A 
deed  absolute  upon  its  face  may  be  shown  by  parol 
evidence  to  be  a  mortgage,  and,  that  being  true,  no 
reason  can  be  conjectured  why  such  evidence  may 
not  be  rebutted  bv  parol":  Corcoran  v.  Hinkle  (Cal.), 
34  Pac.  1031,  103'4B. 

16  Except  Against  Bona  Fide  Purchaser:  See  section 
281,  below. 

17  Clear  Case.— '' Language  used  by  different  courts 
in  declaring  how  strong  such  evidence  must  be,  may 
be  seen  in  the  notes  to  Mahoney  v.  Bostwick,  31  Am.  St. 
Eep.  174, 180.  Some  of  the  expressions  there  quoted  are 
'Must  be  clear,  satisfactory,  and  convincing';  'clear 
and  satisfactory';  'clear  and  convincing-';  'very 
satisfactory';    'strong    and    convincing';    'clear,    un- 


432  MORTGAGE.  §   248 

248.     Test  of  Mortgage. 

Whenever  there  exists,  after  the  delivery  of 
the  instrument  of  conveyance,  an  unsatisfied  ob- 
ligation^^ from  the  grantor  to  the  grantee  which 
is  secured  by  the  conveyed  property,  the  transtie- 

equivocal,  and  convincing^;  *  clear,  explicit,  and  un- 
equivocal'; 'so  clear  as  to  leave  no  substantial 
doubt';  'sufficiently  strong  to  command  the  unhesi- 
tating assent  of  every  reasonable  mind'  ":  Sheehan  v. 
Sullivan,  126  Cal.  189,  193,  58  Pac.  543.  See,  also. 
Hopper  V.  Jones,  29  Cal.  19,  87  Am.  Dec.  146;  Henley 
V.  Hotaling,  41  Cal.  22,  26,  27;  Mahoney  v.  Bostwick, 
96  Cal.  53,  58,  31  Am.  St.  Eep.  174,  30  Pac.  1020; 
Ganceart  v.  Henry,  98  Cal.  281,  284,  33  Pac.  92;  Pen- 
ney V.  Simmons,  99  Cal.  380,  33  Pac.  1121;  Ahern  v. 
McCarthy,  107  Cal.  382,  40  Pac.  482;  Cline  v.  Bobbins, 
112  Cal.  581,  584,  44  Pac.  1023;  Wood  v.  Jensen,  130 
Cal.  200,  203,  62  Cal.  473;  Rawlins  v.  Ferguson,  133 
Cal.  470,  473,  65  Pac.  957. 

Whether  the  evidence  is  of  such  character  and 
strength  as  to  produce  this  conviction  is  a  question 
for  the  trial  court  or  jury  to  determine:  Mahoney  v. 
Bostwick,  96  Cal.  53,  58,  31  Am.  St.  Rep.  174,  30  Pac. 
1020;  Penney  v.  Simmons,  99  Cal.  380,  33  Pac.  1121. 

18  Controlling  Fact,  Indebtedness.— The  controlling 
fact  is  the  existence  of  an  indebtedness  from  the 
grantor  to  the  grantee  at  the  time  of  the  transac- 
tion, and  a  continuance  of  the  relation  of  debtor  and 
creditor.  If  the  debt  continues  after  the  execution 
of  the  conveyance,  the  transaction  constitutes  a  mort- 
gage; if  the  debt  was  extinguished  by  the  convey- 
ance, the  transaction  is  an  absolute  or  conditional  sale 
as  the  case  may  be:  Hickox  v.  Lowe,  10  Cal.  197,  206, 
207;  Henley  v.  Hotaling,  41  Cal.  22,  28;  Farmer  v. 
Grose,  42  Cal.  169,  172;  Montgomery  v.  fepect,  55  Cal. 
352,  353;  Manasse  v.  Dinkelspeil,  68  Cal.  404,  406, 
407,  9  Pac.  547;  Booth  v.  Hoskins,  75  Cal.  271,  275, 
17  Pac.  225;  Baker  v.  Fireman's  Fund  Ins.  Co.,  79 
Cal.  34,  40,  21  Pac.  357;  Garwood  v.  Wheaton,  128  Cal. 
399,  403,  '404,  60  Pac.  961. 


§    248  NATURE    THEREOF.  433 

Thus  ''a  conveyance  by  deed  of  grant  is  deemed 
to  be  a  mortgage  when  it  is  intended  as  a  mortgage  to 
secure  the  payment  of  a  promissory  note  or  the  per- 
formance of  any  other  obligation '' :  County  Bank  v. 
Goldtree,   129   Cal.   160,   162,   61  Pac.   785. 

Circumstances  Favoring  the  Conclusion  that  the 
Debt  Subsisted. 

To  accompany  a  deed  absolute  in  form  with  an 
agreement  for  a  reconveyance  upon  payment  of  the 
precise  amount  of  the  consideration  for  the  convej''- 
ance  with  stipulated  interest  thereon:  Hickox  v.  Lowe, 
10   Cal.   197,   207. 

Great  inequality  between  the  value  of  the  property 
conveyed  and  the  price  alleged  to  have  been  paid  for 
it:  Husheon  v.  Husheon,  71  Cal.  407,  412,  12  Pac.  410. 

The  retention  by  the  grantee  of  the  notes  of  the 
grantor  after  the  conveyance:  Smith  v.  Smith,  80  Cal. 
323,  326,  21  Pac.  4,  22  Pac.  186,  549. 

An  agreement  by  a  grantee  in  possession  under  a 
conveyance  with  a  condition  of  defeasance  to  apply 
the  proceeds  of  the  transferred  property,  after  deduct- 
ing the  expenses  of  its  care,  to  the  payment  of  the 
monthly  interest,  and  any  excess  upon  the  principal 
sum:  Hickox  v.  Lowe,  10  Cal.  197,  207,  208. 

The  fact  that  the  grantee  satisfied  judgments 
against  the  grantor  and  charged  them  against  the 
property:  Montgomery  v.  Spect,  55  Cal.  352,  356. 

Entries  in  the  grantee  ^s  books  showing  that  the 
grantor  was  charged  with  annual  interest  on  the 
''purchase  money''  for  the  land:  Locke  v.  Moulton, 
96  Cal.  21,  29,  30,  30  Pac.  957. 

Circumstances  Repelling  Conclusion  tJmt  Transaction 
was  Mortgage. 

Eepeated  statements  of  the  grantor  to  third  par- 
ties, also  his  conduct,  both  at  the  time  of  the  trans- 
action and  for  long  afterward,  establishing  the  fact 
that  he  understood  the  transaction  to  amount  to  a 
sale  with  an  option  of  repurchase:  Page  v.  Vilhac,  42 
Cal.  75,  85. 

The  fact  that  upon  the  transfer  of  property  to  a 
creditor,  the  creditor  surrendered  the  evidence  of  in- 
Liens— 28 


434  MORTGAGE.  §    248 

tion  creates  a  mortgage;  and  it  is  not  necessary 
for  the  grantor  to  be  personally  bound  to  satisfy 
this  obligation.^^  Where  the  parties  in  essence 
hypothecate  specific  property  as  security,  merely 
calling  the  transaction  something  other  than  a 
mortgage    does  not    alter  its  real    character.^^ 

debtedness  of  the  debtor  to  him,  and  executed  to  the 
debtor — transferor — his  note  for  the  balance  of  the 
purchase  money,  and  thereafter  had  no  evidence  of  in- 
debtedness of  the  transferor:  Morris  v.  Angle,  42  Cal. 
236,  243.  See,  also,  Ahern  v.  McCarthy,  107  Cal.  382, 
386,  40  Pac.  482. 

The  assessment  and  taxation  of  the  land  in  the 
name  of  the  grantee:  Locke  v.  Moulton,  96  Cal.  21,  30, 
30  Pac.  957. 

19  To  constitute  a  mortgage  it  is  not  necessary 
for  a  personal  obligation  to  pay  to  appear.  '  *  The 
only  object  in  taking  a  personal  obligation  is  to  pro- 
vide against  the  contingency  that  the  proceeds  arising 
from  the  sale  of  the  property  may  not  be  sufficient 
to  satisfy  the  debt.  No  end  could  be  obtained  by  re- 
quiring such  obligation  where  the  value  of  the  prop- 
erty mortgaged  greatly  exceeds  the  debt.  It  is  in 
these  cases  that  the  personal  obligation  is  likely  to 
be  omitted,  and  it  is  in  these  cases  that  the  equity 
of  redemption  is  evidently  much '  the  strongest'': 
Hickox  V.  Lowe,  10  Cal.  197,  210-211;  Montgomery  v. 
Spect,  55  Cal.  352,  356;  approved,  75  Cal.  271,  275,  80 
Cal.  348,  352;  Husheon  v.  Husheon,  71  Cal.  407,  412, 
12  Pac.  410;  Locke  v.  Moulton,  96  Cal.  21,  32,  30  Pac. 
957. 

20  **It  seems  clearly  apparent  from  plaintiff's 
testimony  alone  that  the  deed  was  intended  by 
both  parties  as  mere  security  for  a  debt,  and  none 
the  less  so  because,  in  plaintiff's  opinion,  it  is  not 
a  mortgage":  Malone  v.  Eoy,  94  Cal.  341,  346,  29 
Pac.  712. 

'•'The  question  was  whether  they  [certain  deeds 
absolute  in  form]   were  given  to  secure  the  perform- 


§    248  NATURE    THEREOF.  435 

But  where  the  transaction  is  susceptible  of  being 
otherwise  interpreted,^^  especially  if  the  parties 
so  agree  it  should  be  interpreted,  it  will  not  be 

ance  of  an  obligation — that  is,  to  secure  the  payment 
of  a  debt.  If  they  were  given  for  that  purpose  they 
were  mortgages,  no  matter  how  expressly  the  parties 
agreed  that  they  should  not  be  so  deemed.  They 
cannot,  by  agreeing  to  call  or  consider  an  instrument 
which  hypothecates  real  estate  for  the  payment  of  a 
debt  something  other  than  a  mortgage,  avoid  the 
necessity  of  foreclosure  or  deprive  the  debtor  of  his 
right  to  redeem.  If,  in  fact  and  in  law,  the  instru- 
ment is  a  mortgage,  it  does  not  matter  that  the  par- 
ties intend  and  stipulate  that  it  shall  be  something 
else,  and  that,  in  case  of  a  failure  to  pay,  the  title 
of  the  mortgagee  shall  be  absolute'':  Hodgkins  v. 
Wright,  127  Cal.  688,  690,  60  Pac.  431,  in  bank. 

21  Transaction  Capable  of  Being  Otherwise  Inter- 
preted.— A  contract  by  which  the  agent  of  lands  with 
power  of  sale  agrees  to  sell  them  at  an  agreed  price, 
and  the  purchaser  gives  the  right  of  repurchase  upon 
specified  terms,  both  parties  intending  a  conditional 
sale,  cannot  be  held  to  be  a  mortgage  at  the  instance 
of  a  third  party.  **Such  a  contract  is  not  opposed  to 
public  policy,  nor  is  it  in  any  sense  illegal;  and  courts 
would  depart  from  the  line  of  their  duties  should  they, 
in  disregard  of  the  real  intention  of  the  parties,  de- 
clare it  to  be  a  mortgage'':  Henley  v.  Hotaling,  41 
Cal.  22,  27. 

Illustrations  of  Conditional  Sales.— Where,  after  an 
action  had  been  commenced  to  foreclose  a  mortgage, 
the  mortgagor  and  mortgagee  entered  into  an  agree- 
ment, whereby  the  foreclosure  action  was  dismissed 
and  the  mortgaged  property  conveyed  to  the  mort- 
gagee, the  mortgagor  to  have  the  privilege  of  sell- 
ing the  lands  at  any  time  within  six  months  there- 
after and  of  retaining  all  moneys  which  he  might 
receive  at  such  sale  in  excess  of  a  certain  sum,  in 
view  of  the  facts  that  the  mortgagee  had  commenced 
the  foreclosure  action  because  he  deemed  the  security 
insufScient,  that  the  mortgagor   made  no  promise   to 


436  MORTGAGE.  §    248 

held  to  be  a  mortgage.  Where  the  transactioTi 
is  equivoeal,^^  slight  circumstances  will  deter- 
mine it  to  create  a  mortgage,  when  that  can  be 

pay  any  sum  to  the  mortgagee,  that  the  sum  to  be 
paid  to  the  mortgagee  in  case  of  a  resale  was  sev- 
eral thousand  dollars  less  than  the  mortgage  debt, 
that  no  interest  was  to  be  paid  by  the  mortgagor,  and 
that  the  mortgagee  at  once  took  possession  of  the 
premises  with  the  full  beneficial  use,  the  transaction 
plainly  was  a  conditional  sale,  or  a  mere  power  to 
sell  for  a  designated  sum— not  a  mortgage  at  all: 
Fletcher  v.  Northcross  (Cal.),  32  Pac.  328. 

Where  an  absolute  deed  of  certain  property 
and  a  contract  for  a  reconveyance  thereof  were 
made  at  different  times,  but  simultaneously  deliv- 
ered, the  consideration  for  the  deed  being  a  pre-ex- 
isting debt,  and  the  contract  provided  that  the  grantee 
in  possession  would  reconvey  the  property  to  the 
grantors  upon  the  payment  within  a  certain  time  of 
a  certain  sum  with  stipulated  interest,  less  the  amount 
received  by  the  grantee  as  rents  and  profits,  and  that 
the  contract  should  be  deemed  merely  a  contract  to 
reconvey  and  not  an  acknowledgment  that  the  con- 
veyance was  intended  as  a  mortgage,  the  transaction 
amounts  to  a  conditional  sale  and  not  to  a  mortgage, 
as  the  intention  of  the  parties  as  expressed  by  them- 
selves is  worthy  of  some  consideration.  ^  ^  Without  it 
the  presumption  would  be  that  the  deed  was  intended 
to  operate  as  a  mortgage,  and  it  is  clear  that  the 
party  executing  the  contract  did  not  intend  to  sub- 
ject himself  to  the  consequences  of  such  a  presump- 
tion. The  nature  of  the  transaction  seems  to  have 
been  well  understood,  and  the  provision  declaring  the 
meaning  and  intention  of  the  parties  must  be  regarded 
as  one  of  the  conditions  upon  which  tjie  contract  was 
executed '^  Ford  v.  Irwin,  18  Cal.  117;  same  case, 
People  V.  Irwin,  14  Cal.  428,  435,  436.  This  case  seems 
doubtful,  for  one  of  the  grounds  upon  which  it  was 
distinguished  from  Hickox  v.  Lowe,  10  Cal.  199,  in  14 
Cal.  428,  435,  436,  was  shown  to  be  erroneous  in  18 
Cal.  117. 

22  Transaction    Equivocal.— *' The     only     difficulty 


§    248  NATURE    THEREOF.  437 

done  without  violence  to  the  understanding  of 
the  parties  at  the  time  of  its  consummation.^^ 

Subdivisio7i  ^.     What  Property  Mortgageable. 

249.     Future  Interests  Mortgageable. 

A  mortgage  may  be  given  against  property  to 
be  acquired  by  the  mortgagor  after  the  execution 
of   the   mortgage,^^  against    a  crop    yet   to    be 

which  arises  in  a  case  like  the  present  is  to  ascer- 
tain the  fact  whether  the  debt  subsists,  or  has  been 
extinguished;  and  where  there  is  doubt  on  this  point, 
courts  of  equity  lean  in  favor  of  the  right  of  redemp- 
tion, and  construe  instruments  as  constituting  a  mort- 
gage, rather  than  a  conditional  sale ' ' :  Hickox  v.  Lowe, 
10  Cal.  197,  207. 

''A  conveyance,  with  an  attendant  agreement  for  a 
reconveyance  upon  the  payment  of  the  amount  of 
the  consideration  and  interest  ....  taken  together, 
in  the  absence  of  other  circumstances,  do  not  of  them- 
selves create  a  mortgage,  but  only  a  defeasible  pur- 
chase, which  should  be  narrowly  watched,  lest  it  may 
be  made  the  means  of  converting  what  was  in  fact  in- 
tended  as   security  into   an   absolute  purchase 

Slight  circumstances  will  determine  the  transaction  to 
be  one  of  mortgage,  when  that  can  be  done  without 
violence  to  the  understanding  of  the  parties":  Hickox 
V.  Lowe,  10  Cal.  197,  210. 

23  The  transaction  must  be  governed  by  the  inten- 
tion of  the  parties  at  the  time  of  its  con^immation, 
and  not  afterward:  Harp  v.  Harp,  136  Cal.  421,  69 
Pac.  28, 

24  On  Property  to  "be  Acauired:  California  Title 
etc    Co.  V.  Pauly,  111  Cal.  122,  126,  43  Pac.  586. 


438  MORTGAGE.  §    249 

planted^^^  or  against  the  increase  of  mortgage- 
able animals.^^ 

250.     Every    Interest    in    Immovable   Property 
Mortgageable. 

Any  interest  in  immovable  property  capable 
of  being  transferred  may  be  mortgaged.^'' 

25  On  a  Crop  yet  to  be  Planted:  Argues  v.  Wasson, 
51  Cal.  620,  21  Am.  Rep.  718;  Lemon  v.  Wolff,  121  Cal. 
272,  53  Pac.  801;  Hall  v.  Glass,  123  Cal.  500,  503,  69 
Am.  St.  Rep.  77,  56  Pac.  336;  Wilkerson  v.  Thorpe, 
128  Cal.  221,  226,  60  Pac.  679. 

Thus  a  mortgage  may  be  given  on  a  crop  yet  to 
be  planted  to  secure  future  advances:  Lemon  v. 
Wolff,  121  Cal.  272,  53  Pac.  801. 

26  See  section  251,  subdivision  18,  below. 

27  Every  Interest  in  Immovable  Property  Mortgage- 
able.— Compare  the  following  sections  of  the  Civil 
Code. 

Section  2947:  ''Any  interest  in  real  property  which 
is  capable  of  being  transferred  may  be  mortgaged.'- 

What  Interest  may  he  Trans ferred.—Seetion  1044: 
"Property  of  any  kind  may  be  transferred,  except  as 
otherwise  provided  by  this  article.'' 

Section  1045:  ''A  mere  possibility,  not  coupled  with 
an  interest,  cannot  be  transferred." 

Section  1046:  ''A  right  of  re-entry,  or  of  reposses- 
sion for  breach  of  condition  subsequent,  can  be 
transferred. ' ' 

Section  1047:  ''Any  person  claiming  title  to  real 
property  in  the  adverse  possession  of  another  may 
transfer  it  with  the  same  effect  as  if  in  actual  pos- 
session. ' ' 

Hence  it  follows: 

Section  2921:  "A  mortgage  may  be  created  on  prop- 
erty   held    adversely    to    the    mortgagor." 

Thus  a  vested  future  interest  in  lands  is  mortgage- 
able: Dunn  V.  Schell,  122  Cal.  626,  55  Pac.  595. 


L 


§    251  NATURE    THEREOF.  439 

251.     Enumeration    of    Mortgageable    Movable 
Property.^^ 

The  following  kinds  of  movable  property,  and 
none  other,  are  mortgageable: 

Under  United  States  Eevised  Statutes,  sections 
2262  and  2263,  the  pre-emptor  of  land  must  pre-empt 
with  a  purpose  in  good  faith  to  appropriate  the  land 
to  his  exclusive  use,  or  otherwise  he  forfeits  all  in- 
terest therein;  and  any  agreement  by  which  the  title 
should  inure  to  any  other  person  in  whole  or  in  part 
is  void;  and  the  right  of  pre-emption  is  unassignable. 
But  as  a  mortgage  passes  no  title,  a  mortgage  exe- 
cuted by  a  pre-emption  claimant  before  final  proof  and 
payment  to  secure  the  repayment  of  money  loaned  to 
pay  for  the  land,  or  in  any  manner  to  aid  such  claim- 
ant in  perfecting  his  title,  is  not  in  contravention  of 
the  pre-emption  laws,  but  will  be  sustained:  Whitney 
V.  Buckman,  13  Cal.  536;  Stewart  v.  Powers,  98  Gal. 
514,  516,  521,  33  Pac.  486. 

Movable  property  which,  by  being  affixed  to  land 
by  the  owner,  has  become  a  part  thereof  may  never- 
theless be  mortgaged  by  the  owner  separately  from 
any  other  interest  in  the  land  by  an  immovable  prop- 
erty mortgage  executed  as  such:  Brodrick  v.  Kil- 
patrick,  82  Fed.   (D.  C.)   138. 

Under  a  contract  for  the  sale  and  purchase  of  land, 
the  vendor  retaining  the  title  which  was  to  be  con- 
veyed to  the  vendee  upon  payment  of  the  price,  the 
vendee  has  a  mortgageable  interest  in  the  land: 
Houghton  V.  Allen  (Cal.),  14  Pac.  641,  642. 

A  leasehold  interest  is  mortgaged  as  real  estate: 
Commercial  Bank  v.  Pritchard,  126  Cal.  600,  603,  59 
Pac.  130;  McLeod  v.  Barnum,  131  Cal.  605,  606,  63 
Pac.  924.  See,  also,  Johnson  v.  Sherman,  15  Cal.  287, 
293,  76  Am.  Dec.  481. 

Likewise  a  possessory  interest  in  lands  of  the  Uni- 
ted States  under  a  claim  of  title:  Houseman  v.  Chase, 
12  Cal.  290;  HafSey  v.  Maier,  13  Cal.  13. 

28  Enumeration  of  Mortgageable  Movable  Property. 


440  MORTGAGE.  §    251 

(1)  Locomotives,  engines,  and  other  rolling  stock 
of  a  railroad, 

(2)  steamboat  machinery,  the  machinery  used  by 
machinists,  foiindrymen,  and  mechanics, 

(3)  steam  engines  and  boilers, 

(4)  mining  machinery, 

(5)  printing  presses  and  material. 

Civil  Code,  section  2955:  *^  Mortgages  may  be  made 
upon  \-  95n  j-  the  following  personal  property  and  none 
other  ^  n95 ]  : 

(1)  Locomotives,  engines,  and  other  rolling  [a]  stock 
of  a  railroad; 

(2)  steamboat     machinery,    the    machinery     used    by 
[-03f  [[h]    machinists,   foundrymen,   and^  f  03  ^  me- 
chanics; 

(3)  steam  engines  and  boilers; 

(4)  mining  machinery; 

(5)  printing  presses  and  material; 

(6)  professional  libraries; 

(7)  instruments  of  [  87m  j-  surveyors,  ■{  m87  -|  [c]  phy- 
sicians and  dentists; 

(8)  upholstery,  furniture  [9oo]  [d],  and  [- 95n  }- house- 
hold goods -j  n95^  ; 

(9)  }■  93n  }■  oil    paintings,    pictures,    and    works    of    art 

(10)  }-93n  \-  all^  n93-{  growing  crops  }- 93n  [-including 
grapes  and  fruit  ■{  n93  ■{  ; 

(11)  vessels  of  more  than  five  tons  burden; 

(12)  1-  75-6n  \-  instruments,  negatives,  furniture,  and 
fixtures   of  a  photograph  gallery  ■{  n75-6  ■{  ; 

(13)  |-77-8n}-the  machinery,  casks,  pipes,  tubes  [e] 
and  utensils  used  in  the  manufacture  j-  87n  \-  or 
storage  -|  n87  -j  of  wine,  fruit  brandy,  f rmt  syrups 
or  sugar  ^  n77-8  -j  ;  [►  87n  |-  also  wines,  fruit  brandy, 
fruit  syrup,  or  sugar  with  the  cooperage  in  which 
the  same  are  contained  ■{  n87  -j  ; 

(14)  j- 87n  [►pianos  and  organs^  n87-|  ; 


§    251  T^ATURE    THEREOF.  441 

(6)  professional  libraries^ 

(7)  instruments  of  surveyors,  physicians,  and 
dentists, 

(8)  upholstery,  furniture,  and  household  goods, 

(9)  oil  paintings,  pictures,  and  works  of  art, 

(10)  all  growing  crops,  including  grapes  and 
fruit, 

(11)  vessels  of  more  than  five  tons  burden, 

(12)  instruments,  negatives,  furniture,  and  fix- 
tures of  a  photograph  gallery, 

(15)  [-9311  [-iron  and  steel  safes  ^  n93 -[  ; 

(16)  }>93n}"  [03o]  [f]  cattle,  horses,  mules,  swine, 
sheep,  and  goats,  and  the  increase  thereof  ]  n93  -j  ; 

(17)  5- 95n  }►  harvesters,  threshing  outfits,  hay-presses, 
[>  97n  V  wagons,  -j  n97  {  farming  implements,    ■{  n95  -{ 

[  97n  [  and  the  equipments  of  a  livery-stable,  in- 
cluding buggies,  carriages,  harness,  robes   -j  n97-{  ; 

(18)  [  95n  ]-  abstract  systems,  books,  maps,  papers, 
and  slips  of  searchers  of  records -{  n95-j  ; 

(19)  }►  97n  y  raisins  and  dried  fruits,  cured  or  in  pro- 
cess of  i)eing  cured;  also,  all  boxes,  fruit-graders, 
drying  trays,  and  fruit-ladders  J,  n97  ■{  . 

(a)  The  word  '^rolling''  was  omitted  from  Febru- 
ary 28,  1887,  to  March  16,  1895. 

(b)  Before  March  9,  1897,  this  provision  read  sub- 
stantially as  above.  In  1897,  the  '^s'^  was  omitted 
from  ^  ^  machinists, ' '  and  the  commas  left  out. 

(c)  Former  reading,  ^'a  surgeon.'' 

(d)  Here  followed:  (March  9,  1893,  to  March  16, 
1895)  ^'used  in  hotels  and  lodging-houses'';  (be- 
fore Marck  9,  1893)  ^^used  in  hotels, }  77-8n  }- 
lodging  ■{  n77-8  ■{  or  boarding-houses,  when  mort- 
gaged to  secure  the  purchase  money  of  the  articles 
mortgaged."  Blaisdell  v.  McDowell,  91  Cal.  285, 
25  Am.  St.  Rep.  178,  27  Pac.  6*56,  discusses  this 
subdivision  as  it  existed  before  the  amendment  of 
1893. 


442  MORTGAGE.  §    251 

(13)  the  machinery,  casks,  pipes,  tubes,  and 
utensils  used  in  the  manufacture  or  storage  of 
wine,  fruit  brandy,  fruit  syrups  or  sugar;  also 
wines,  fruit  brandy,  fruit  syrup,  or  sugar,  with 
the  cooperage  in  which  the  same  are  contained, 

[(14)  wines  in  the  wineries  or  wine  c*ellars  of  the 
owners  or  makers  thereof,  or  other  persons 
having  possession,  care,  and  control  of  the 
same,  and  thfe  pipes,  casks,  and  tanks  in  which 
the  said  wines  are  contained,]^® 

(e)  Before  February  28,   1887,   'Hubs''   instead   of 
''tubes.'' 

(f)  Here  was  omitted  "neat." 

Original  section  in  effect  January  1,  1873;  amended 
Stats.  1875-76,  p.  79,  in  effect  April  3,  1876;  Stats. 
1877-78,  p.  88,  in  effect  April  1,  1878;  Stats.  1887,  d. 
5,  in  effect  February  2,  1887;  Stats.  1893,  p.  84,  in  ef- 
fect March  9,  1893;  Stats.  1895,  p.  57,  in  effect  March 
16,  1895;  Stats.  1897,  p.  95,  in  effect  March  9,  1897; 
Stats.  1903,  March  3,  p.  78,  c.  70. 

29  Wines  in  Wineries,  etc.— This  subdivision  is  not 
found  in  the  section  which  enumerates  what  movable 
property  is  mortgageable,  but  a  proviso  is  found  in 
Civil  Code,  section  3440,  which  makes  this  property 
mortgageable  almost  in  the  same  manner  as  other 
mortgageable  movable  property.  Civil  Code,  section 
3440,  proviso,  declares:  "The  provisions  of  this  sec- 
tion shall  not  apply  to  the  transfers  of  wines  in  the 
wineries  or  wine  cellars  of  the  owners  or  makers  there- 
.  of,  or  other  persons  having  possession,  care,  and  con- 
trol of  the  same,  and  the  pipes,  casks,  and  tanks  in 
which  the  said  wines  are  contained,  which  transfers 
shall  be  made  in  writing,  and  certified  [03o]  [a]  and 
verified  in  the  same  form  as  provided  for  chattel 
mortgages,  and  which  shall  be  recorded  in  the  book 
of  miscellaneous  records  in  the  office  of  the  county 
recorder  of  the  county  in  which  the  same  are  situ- 
ated." 


§    251  NATURE    THEREOF.  443 

(15)  pianos  and  organs, 

(16)  iron  and  steel  safes, 

(17)  cattle,  horses,  mules,  swine,  sheep,  and 
goats, 

(18)  the  increase  of  such  animals, ^^ 

(19)  harvesters,  threshing  outfits,  hay-presses, 
wagons,  farming  implements,  and  the  equip- 
ments of  a  livery-stable,  including  buggies,  car- 
riages, harness,  robes, 

(20)  abstract  systems,  books,  maps,  papers,  and 
slips  of  searchers  of  records, 

(21)  raisins  and  dried  fruits,  cured  or  in  process 
of  being  cured;  also,  all  boxes,  fruit-graders, 
drying  trays,  and  fruit  ladders. 

252.     Enumeration  to  be  Liberally  Construed. 

The  provisions  as  to  what  movable  property 
is  mortgageable  should  be  reasonably  and  lib- 

(a)     Here  was  omitted  '^and  acknowledged/' 

30  The    Increase    of  Such    Animals    Mortgageable, 

The  term  *' increase ' '  means  the  offspring,  progeny, 
or  young  of  such  animals,  and  nothing  more.  It  can- 
not refer  to  wool  clipped  from  sheep,  or  milk  or 
butter  or  cheese  obtained  from  cows:  Alferitz  v,  Borg- 
wardt,  126  Oal.  201,  58  Pac.  460. 

The  provision  authorizing  a  mortgage  of  ''sheep 
....  and  the  increase  thereof/'  does  not  extend  the 
operation  of  a  mortgage  against  sheep  to  the  increase 
thereof,  but  implies  that  unless  the  increase  is  cov- 
ered by  the  terms  of  the  mortgage,  it  is  not  included 
therein:  Shoobert  v.  De  Motta,  112  Cal.  215,  53  Am. 
St.  Eep.  207,  44  Pac.  487;  First  Nat.  Bank  v.  Erreca, 
116  Cal.  81,  58  Am.  St.  Eep.  133,  47  Pac.  926. 


444  MORTGAGE.  §    252 

erally  construed  with  a  view  to  executing  the  evi- 
dent design  of  the  legislature.^^ 

Subdivision  5.     Possession. 

253.     Possession  of  Mortgaged  Property  may  be 
Conferred  on  Mortgagee. 

The  present  or  future  possession  of  mortgaged 
property  may  be  conferred  upon  the  mortgagee 
by  the  express  terms  of  the  mortgage,  or  by  a 
subsequent  agreement  without  a  new  considera- 
tion,^^ except  where  a  third  party  has  a  para- 
mount right  to  the  possession.^^ 

31  **The  section  of  the  code  in  question  should 
have  a  reasonable  construction  with  a  view  of  exe- 
cuting the  evident  design  of  the  legislature  in  enact- 
ing it.  While  the  language  used  should  not  be  strained 
to  include  cases  clearly  not  embraced  by  it,  the  mean- 
ing to  be  given  to  it  should  not  be  so  narrowly  cir- 
cumscribed as  to  exclude  cases  clearly  within  it.  The 
evident  intent  of  the  legislature  was  to  encourage 
certain  kinds  of  business  by  allowing  persons  to  pro- 
cure certain  personal  property  necessary  to  the  busi- 
ness by  giving  a  mortgage  lien  upon  the  property  it- 
self'':  Blaisdell  v.  McDowell,  91  Cal.  285,  287,  2d 
Am.  St.  Eep.  178,  27  Pac.  656. 

But  compare  the  statement  in  Alf eritz  v.  Borgwardt, 
126  Cal.  201,  205,  58  Pac.  460,  that  the  presumption  is 
against  the  right  to  mortgage  movable  property.  Does 
this  statement  have  any  reference  to  the  amendment  of 
1895  that  certain  property  '^and  none  other''  shall 
be  mortgaged? 

32  Civil  Code,  section  2927:  '^A  mortgage  does 
not  entitle  the  mortgagee  to  the  possession  of  the 
property,  unless  authorized  by  the  express  terms  of 
the  mortgage;  but  after  the  execution  of  the  mort- 
gage, the  mortgagor  may  agree  to  such  a  change  of 
possession  without  a  new  consideration." 


§    254  NATURE    THEREOF.  445 

254.  Upon    Change    of    Possession  of  Movable 
Property  Transaction  Deemed  Pledge. 

Upon  the  actual  change  of  possession  of  mort- 
gaged movable  property  from  the  mortgagor  to 
the  mortgagee,  the  transaction  is  deemed  a 
pledge.^^ 

Svbdivision  6.    Power  of  Sale. 

255.  Mortgage  may  Confer  Power  of  Sale. 

A  power  of  sale  may  be  conferred  by  a  mort- 
gage upon  a  mortgagee  or  any  other  person,  to  be 

Possession  may  be  conferred  upon  the  mortgagee 
after  the  execution  of  the  mortgage  by  parol  agree- 
ment: Fogarty  v.  Sawyer,  17  Cal.  589,  592,  593  j  Spect 
V.  Spect,  88  Cal.  437,  440,  22  Am.  St.  Eep.  314,  26  Pac. 
203. 

A  mortgage  may  give  the  mortgagee  the  right  of 
possession  upon  default  in  the  payment  of  interest: 
Bank  of  Woodland  v.  Duncan,  117  Gal.  412,  416,  49 
Pac.  414;  Elinn  v.  Ferry,  127  Cal.  648,  652,  60  Pac. 
434. 

A  provision  giving  a  movable  property  mortgagee 
the  right  of  possession  of  the  mortgaged  property  upon 
the  happening  of  a  certain  event  is,  upon  the  happen- 
ing thereof,  equally  binding  upon  the  executor  of  the 
mortgagor  after  the  mortgagor's  decease:  Mathew  v. 
Mathew,  138  Cal.  334,  71  Pac.  344. 

3J5  Thus  ine  mortgagee  of  the  interest  of  one  part- 
ner in  movable  partnership  property  has  no  right 
to  take  possession  of  such  property,,  as  the  other 
partner  is  entitled  thereto  (See  Civ.  Code,  sec.  2405); 
Sheehy  v.  Graves,  58  Cal.  449,  456. 

34  Civil  Code,  section  2924:  ^^  Every  transfer  of 
an  interest  in  property  ....  when  in  the  case  of 
personal  property  it  is  accompanied  by  actual  change 
of  possession  ....  is  deemed  a  pledge.'' 

Eohrbough  v.  Johnson,  107  Cal.  144,  148,  40  Pac.  37. 


446  MORTGAGE.  §   255 

exercised  after  a    breach  of    the  obligation   for 
which  the  mortgage  is  as  security.^^ 

35  Mortgage  may  Confer  Power  of  Sale:  Civ.  Code, 
sec.  2932. 

Cormerais  v.  Genella,  22  Cal.  116,  123,  124;  Bate- 
man  V.  Burr,  57  Cal.  480,  482;  Fogarty  v.  Sawyer,  17 
Cal.  589.  See,  also,  Wilson  v.  Brannan,  27  Cal.  258, 
272. 

In  Godfrey  v.  Monroe*  101  Cal.  224,  227,  35  Pac. 
761,  it  was  said  that  ^^this  form  of  security  is  no 
longer  looked  upon  with  disfavor.''  But  in  Sacra- 
mento Bank  v.  Alcorn,  121  Cal.  379,  384,  53  Pac.  813, 
the  court  said  that  *Hhe  continuance  of  this  power  in 
a  mortgage  is  as  inconsistent  with  the  general  policy 
of  requiring  all  forced  sales  to  be  subject  to  redemp- 
tion as  are  trust  deeds.'' 

A  mortgage  conferring  a  power  of  sale  authorizes 
the  mortgagee  to  execute  a  conveyance  to  the  pur- 
chaser at  the  sale  without  an  express  provision  to  that 
effect,  as  such  authority  is  necessarily  incident  to  the 
power  to  sell:  Fogarty  v.  Sawyer,  17  Cal.  589,  591. 

An  agreement  between  a  movable  property  mort- 
gagor and  his  mortgagee  permitting  a  sale  of  the 
property  in  satisfaction  of  the  mortgage  otherwise 
than  as  provided  bv  law  is  valid:  Harlan  v.  Elv,  68 
Cal.   522,   9   Pac.   947,   949. 

Agreements  Held  to  he  Mortgages  with  Power  of  Sale,— 
*^An  absolute  conveyance  of  property  by  a  debtor  to 
his  creditor,  in  trust,  that  he  may  sell  the  same,  and 
out  of  the  proceeds  discharge  the  debt,  is,  in  effect, 
only  a  mortgage  with  a  power  of  sale,  and  the  grantee 
may  treat  it  as  such,  and,  instead  of  making  a  sale 
under  the  power,  may  go  into  a  court  of  equity  for 
a  foreclosure  and  sale  under  its  decree;  and  whenever 
such  course  is  pursued,  his  relation  to  the  property  is 
the  same  as  that  of  the  mortgagee  in  the  foreclosure 
of  the  ordinary  mortgage":  Felton  v.  Le  Breton,  92 
Cal.  457,  465,  28  Pac.  490. 

^'Even  where  there  is  a  power  of  sale,  it  has  been 
held  that,  if  the  trustee  be  one  of  the  creditors  se- 


t 


§    256  NATURE    THEREOF.  447 

256.  Power  of  Sale  Deemed  Part  of  Security. 

A  power  to  sell  immovable  property,  given  to 
a  mortgagee  or  other  encumbrancer  in  an  instru- 
ment intended  to  secure  the  payment  of  money,  is 
deemed  a  part  of  the  security,  and  vests  in  any 
person  who,  by  assignment,  becomes  entitled  to 
the  money  so  secured  to  be  paid,  and  may  be 
executed  by  him  whenever  the  assignment  is  duly 
executed  and  recorded.^^ 

SiA division  7.     Insurance. 

257.  Mortgage  may  Confer  Power  to  Insure. 

A  mortgage  may  confer  upon  the  mortgagee 
the  power    to  insure    the  mortgaged    property 

cured,  the  transaction  will  be  held  to  be  a  mortgage'': 
Banta  v.  Wise,  135  Cal.  277,  280,  67  Pac.  129. 

A  deed  given  ^Ho  secure  the  payment  of  an  in- 
debtedness'' which  provided  that  as  soon  as  the 
grantees  had  *^  received  their  pay  in  full  ....  pay- 
able out  of  the  receipts  of  the  sale  of  the  conveyed 
lands  ....  the  balance  of  the  property  remaining  un- 
sold" shall  be  reconveyed  to  the  grantor,  constitutes 
a  mortgage  with  a  power  of  sale:  Godfrey  v.  Monroe, 
101  Cal.  224,  227,  35  Pac.  761. 

In  Southern  Pacific  E.  Co.  v.  Doyle,  11  Fed.  253, 
259,  260,  principally  in  view  of  Civil  Code,  section  2932, 
the  circuit  court  held  an  instrument  conveying  prop- 
erty to  second  parties  on  a  trust  to  be  sold  only  in 
case  of  a  default  of  the  first  party  in  the  payment  of 
a  series  of  obligations  due  certain  third  parties  to  be 
a  mortgage  and  not  a  deed  of  trust.  But  see  section 
414,  below. 

36  See  Civ.  Code,  sec.  858. 


448  MORTGAGE.  §    257 

upon    default  of    the  mortgagor  so    to  do,  the 
premiums  paid  to  be  secured  by  the  mortgage.^'' 

Subdivision  8.     Interpretation, 

258.     Mortgage    Construed    in  Connection  with 
Other  Related  Writings. 

An  instrument  of  mortgage  must  be  construed 
together  with  any  written  obligation  thereby  se- 
cured, and  with  other  writings  contemporane- 
ously made.^^ 

37  Where  a  mortgage  gives  the  mortgagee  such 
power,  the  premiums  paid  to  be  secured  by  the  mort- 
gaged property,  and  the  mortgagee  seeks  to  fore- 
close the  mortgage  for  such  sums,  the  complaint  must 
aver 

(1)  failure  of  the  mortgagor  to  insure  as  agreed, 

(2)  insurance   by   the   mortgagee   conformable   to   the 
power, 

(3)  the  payment  of  the  insurance  money: 
Washburn  v.  Wilson,  59  Cal.  538. 

38  Note  and  Mortgage  Must  be  Construed  Together: 
Phelps  V.  Mayers,  126  Cal.  549,  550,  58  Pac.  1048; 
Meyer  v.  Weber,  133  Cal.  681,  684,  65  Pac.  1110. 

Historical.— In  Eobinson  v.  Smith,  14  Cal.  94,  before 
the  adoption  of  sections  385-388  and  390-392  below,  an 
action  was  permitted  on  the  secured  note  according  to 
its  terms,  without  reference  to  the  terms  of  the  instra- 
ment  of  mortgage,  but  this  could  not  be  done  under 
the  present  law. 

Illustrations  of  Interpretation. 

Mortgages  foreclosaUe  for  the  principal  sum  upon  de- 
fault in  payment  of  interest. 

Where  a  note  provided  for  its  payment  in  monthly 
installments,  and  was  secured  by  a  mortgage  in  mov- 
able property  providing  '  ^  that  if  the  mortgagor  should 
fail  to  make  any  payment  as  in  the  note  provided,  the 


§    258  NATURE    THEREOF.  449 

mortgagee  ....  may  immediately  proceed  to  sell  the 
property  in  the  manner  provided  by  law,  and  from  the 
proceeds  pay  the  whole  amount  in  such  note  specified," 
the  mortgagee  was  entitled  to  foreclose  for  the  whole 
amount  of  all  unpaid  installments  upon  any  default: 
Maddox  v.  Wyman,  92  Cal.  674,  28  Pac.  838;  Clemens 
V.  Luce,  101  Cal.  432,  434-436,  35  Pac.  1032;  Phelps  v. 
Mayers,  126  Cal.  549,  550,  58  Pac.  1048. 

See,  also,  Brickell  v.  Batchelder,  62  Cal.  623,  630, 
631,  633,  per  Thornton,  J.,  Morrison,  C.  J.,  and  Myrick 
and  Sharpstein,  JJ.;  McKinstry,  McKee,  and  Eoss, 
J  J.,  dissenting. 

Mortgages  foreclosable  for  interest  upon  default  in 
payment  thereof, 

A  promissory  note  payable  two  years  after  date, 
with  interest  thereon  payable  monthly,  when  secured 
by  a  mortgage  providing  that  ^'in  case  of  default  by 
the  mortgagor  in  the  payment  of  said  note  or  interest, 
or  in  the  performance  of  any  of  the  conditions  hereof, 
then  the  mortgagee  may  at  its  option  either  commence 
proceedings  to  foreclose  this  mortgage  in  the  usual 
manner,  or  cause  the  said  premises,  or  any  part  thereof^ 
to  be  sold,''  gives  the  mortgage  merely  the  right  to 
foreclose  for  interest  upon  nonpayment  thereof,  but 
not  for  principal  before  the  maturity  of  the  note: 
Bank  of  San,  Luis  Obispo  v.  Johnson,  53  Cal.  99,  Crock- 
ett, J.,  dissenting. 

A  mortgage  foreclosable  '  ^  in  default  of  Ihe  payment 
of  the  note  by  its  terms,''  and  given  to  secure  a  note 
providing  that  interest  iS  ^* payable  annually,"  may 
be  foreclosed  for  the  amount  of  any  interest  payment 
remaining  unpaid:  Yoakum  v.  White,  97  Cal.  286,  32 
Pac.  238. 

In  Brodribb  v.  Tibbets,  58  C^l.  6,  where  a  mortgage 
was  given  ^'as  security  for  the  payment"  of  a  certain 
sum  on  a  certain  day,  '^with  interest  thereon  accord- 
ing to  the  terms  and  conditions  of  a  certain  promissory 
note,"  which  provided  that  interest  was  payable 
monthly,  but  contained  no  express  provision  for  fore- 
closure upon  the  nonpayment  of  interest,  the  court 
held  that  the  mortgage  could  not  be  foreclosed  until 
the  principal  sum  becomes  due.  Eeferring  to  this  de- 
Liens— 29 


450  MORTGAGE.  §    259 

259.     Ambiguities   to    be    Resolved  in  Favor  of 
Mortgagor. 

Any  doubt  that  fairly  arises  from  the  terms  or 
the  instrument  of  mortgage  and  the  secured  ob- 

cision,  the  court  says,  in  Yoakum  v.  White:  **This 
case  does  not  seem  to  be  in  harmony  with  the  general 
current  of  authority  upon  the  subject;  but  assuming 
it  to  be  correct,  it  is  not,  as  we  think,  in  point  here"; 
in  Van  Loo  v.  Van  Aken,  104  Cal.  269,  37  Pac.  925: 
'^Certainly  that  decision  was  opposed  to  the  current 
of  authority  and  to  the  reasonable  construction  of  the 
Code  of  Civil  Procedure,  sections  726-728";  and  in 
Phelps  V.  Mayers,  126  Cal.  549,  551,  58  Pac.  1048: 
''Brodribb  v.  Tibbets  is  of  doubtful  authority." 

Mortgage  in  no  respect  foreclosahJe  upon  default  in 
payment  of  interest. 

A  mortgage  given  ''as  security  for  the  payment  to 
the  said  mortgagee  of  the  sum  of  five  thousand  dollars 
in  gold  coin  on  the  ninth  day  of  December,  A.  T>.  1895, 
with  interest  at  the  rate  of  eight  per  cent  per  annum, 
according  to.  the  terms  and  conditions  of  a  certain 
promissory  note,"  which  provided  that  *'said  interest 
[was]  payable  annually,  and,  if  not  so  paid,  the  inter- 
est to  draw  interest  the  same  as  the  principal,"  is  not 
foreclosable  for  default  of  payment  of  interest,  as  the 
language  of  the  mortgage  fairly  warrants  the  conclu- 
sion that  the  intention  oi  the  parties  was  that  it 
should  not  be  foreclosed  until  the  principal  of  the  note 
was  due.  It  cannot  be  denied  that  when  a  mortgagee 
is  bargaining  for  the  right  to  sell  the  debtor's  land 
to  satisfy  his  claim,  any  doubt  that  fairly  arises  upon 
the  terms  of  the  note  and  mortgage  should  be  resolved 
against  him:  Van  Loo  v.  Van  Aken,  104  Cal.  269,  37 
Pac.   925. 

Interpretation  of  Reserimtion  as  to  Homestead.— A 
mortgage  which  excepts  and  reserves  to  the  mortgagor 
his  homestead  right  and  claim  in  re»x)ect  to  the  mort- 
gaged property,  although  the  declaration  of  homestead 
was  invalid,  operates  only  on  the  excess  of  the  prem- 
ises  over    the    statutory   exemption   ^i   five   thousand 


§    259  NATURE    THEREOF.  451 

ligation,  if  in  writing,  as  to  the  rights  of  the 
mortgagee  is  to  be  resolved  in  favor  of  the  mort- 
gagor.^^ 

260.     Mortgage    Only    Secures    Obligations    Ex- 
pressly Secured  Thereby. 

Excepting  expenses  necessarily  incurred  by  the 
mortgagee  for  the  preservation  of  the  mortgaged 
property,  which  are  chargeable  against  the  prop- 
erty/^ a  mortgage  only  secures  such  obligations 
owing  the  mortgagee  as  the  instrument  of  mort- 
gage by  its  express  terms  makes  a  charge  against 
the  mortgaged  property.^^  Thus,  when  not  ex- 
dollars— that  being  the  clear  intention  of  the  parties: 
Grogan  v.  Thrift,  58  Cal.  378. 

39  Van  Loo  v.  Van  Aken,  104  Cal.  269,  271,  37  Pac. 
927. 

40  Obligation  Necessarily  Incurred  by  Mortgagee 
for  Preservation  of  Mortgaged  Property  Chargeable 
Thereagainst.— So  if  the  mortgagee  pays  money  due 
the  state  by  the  mortgagor  on  the  purchase  price  of 
the  mortgaged  property  in  order  to  prevent  a  foref eit- 
ure  of  the  mortgagor's  rights,  the  money  so  paid  be- 
comes a  portion  of  the  mortgage  obligation:  Hill  v. 
Eldred,  49  Cal.  398,  401. 

41  Mortgage  Only  Secures  Obligations  Expressly 
Made  Charges  Against  the  Property.— Civil  Code,  sec- 
tion 2923,  provides:  ^'The  lien  of  a  mortgage  is  special 
unless  otherwise  expressly  agreed.'' 

See  note  42  below. 

Thus  in  the  absence  of  an  express  agreement,  costs 
of  suit  are  not  covered  bv  a  mortgage:  Russell  v.  Fin- 
ley,  122  Cal.  478,  68  Am.  St.  Rep.  50,  55  Pac.  143. 

But  by  an  express  agreement  a  mortgage  may  cover 
an  insurance  premium:  Humboldt  Sav.  etc.  Soc.  v. 
Burnham,  111  Cal.  343,  346,  43  Pac.  971. 


452 


MORTGAGE.  §    260 


pressly  made  a  charge  against  the  mortgaged 
property,  an  attorney's  fee  cannot  be  declared  by 
the  court  a  charge  against  the  property,  although 
contracted  for  by  the  parties.^^     y^eve  an  at- 

Yet  a  mortgage  given  to  secure  the  principal  and 
interest  of  a  promissory  note,  the  amount  of  the  note 
being  stated  in  the  instrument  of  mortgage,  but  the 
rate  of  interest  not  being  stated,  covers  whatever  in- 
terest at  whatever  rate  is  in  fact  provided  for  in  the 
note,  there  being  no  presumption  as  to  what  the  rate 
was:  KicketsoA  v.  Eichardson,  19  Cal.  330,  350,  351. 

42  Attorney's  fee,  when  not  expressly  secured  b}^ 
property,  cannot  be  charged  thereagainst :  Sichel  v. 
Carillo,  42  Cal.  493,  508;  Monroe  v.  Fohl,  72  Cal.  568, 
14  Pac.  514;  Clemens  v.  Luce,  101  Cal.  432,  436,  437, 
35  Pac.  1032;  Sainsevain  v.  Luce  (Cal.),  35  Pac.  1033; 
Lee  V.  McCarthy  (Cal.),  35  Pac.  1034;  Chase  v.  High 
(Cal.),  35  Pac.  1035;  Boob  v.  Hall,  107  Cal.  160,  162, 

40  Pac.  117;  Cooper  v.  McCarthy  (Cal.),  36  Pac.  2; 
Barnett  v.  Mulkins  (Cal.),  40  Pac.  115;  Mason  v.  Luce, 
116  Cal.  232,  238,  48  Pac.  72;  Eafferty  v.  High  (Cal.), 

41  Pac.  489;  Irvine  v.  Perry,  119  Cal.  352,  357,  51  Pac. 
544;  Eoberts  V.  Fitzallen,  120  Cal.  482,  484,  485,  52  Pac. 
818;  Eussell  v.  Findlev,  122  Cal.  478,  68  Am.  St.  Eep. 
50,  55  Pac.  143;  Klokke  v.  Escailler,  124  Cal.  297,  298, 
56  Pac.  1113;  Taylor  v.  Ellenberg,  128  Cal.  411,  414, 
60  Pac.  1034;  Cortelyou  v.  Jones,  132  Cal.  131,  64  Pac. 
119;  Orange  Growers'  Bank  v.  Duncan,  133  Cal.  254, 
257,  65  Pac.  469. 

Illustrations.— Where  a  promissory  note  provided 
for  the  payment  of  the  amount  thereof  with  interest, 
and  in  case  of  action  a  counsel  fee  was  secured  by  a 
mortgage  expressly  given  to  secure  the  payment  of  the 
principal  sum  of  the  note  with  interest  thereon  accord- 
ing to  the  terms  of  the  note,  the  counsel  fee  is  not 
secured  by  the  mortgage  and  cannot  be  declared  a 
mortgage  charge  against  the  property  by  the  court: 
Clemens  v.  Luce,  101  Cal.  432,  436,  35  Pac.  1032; 
Cooper  V.  McCarthy  (Cal.),  36  Pac.  2;  Barnett  v.  Mul- 
kins (Cal.),  40  Pac.  115;  Eafferty  v.  High  (Cal.),  41 
Pac.  489;  Mason  v.  Luce,  116  Cal.  232,  238,  48  Pac.  72. 


§    260  NATURE    THEREOF.  453 

But  in  such  case  a  personal  judgment  may  be  ren- 
dered for  the  attorney's  fee  against  the  person  liable 
therefor:  Clemens  v.  Luce,  101  Cal.  432,  436,  35  Pac. 
1032;  Mason  v.  Luce,  116  Cal.  232,  238,  48  Pac.  72. 

Nor  are  counsel  fees  a  mortgage  charge  where  a 
similar  note  was  secured  by  a  mortgage  given  ^^for 
the  purpose  of  securing  the  payment  of  a  promissory 
note,  a  copy  of  which  is  as  follows '':  Irvine  v.  Perry, 
119  Cal.   352,   357,   51   Pac.   544. 

Where  an  instrument  of  mortgage  provides  that  a 
judgment  may  be  entered  for  a  reasonable  counsel 
fee,  which  it  does  not,  however,  purport  to  make  a 
charge  against  the  mortgaged  property,  the  fee  is 
merely  a  personal  charge  against  the  mortgagor,  and 
is  not  secured  by  the  mortgage,  and  the  court  cannot 
declare  it  to  be  so  secured:  Eussell  v.  Finley,  122  Cal. 
478,  68  Am.  St.  Eep.  60,  55  Pac.  143;  Klokke  v.  Escail- 
ler,  124  Cal.  297,  298,  56  Pac.  1113;  Haensel  v.  Pacific 
States  Sav.  etc.  Co.,  135  Cal.  41,  44-45,  67  Pac.  38; 
Loewenthal  v.  Coonan,  135  Cal.  381,  384,  87  Am.  St. 
Eep.  115,  67  Pac.  1033;  Luddy  v.  Pavkovich,  137  Cal. 
284,  70  Pac.  177. 

By  an  express  provision  a  mortgage  may  cover  an 
attorney's  fee  upon  foreclosure:  German  Sav.  etc.  Soc. 
V.  Hutchinson,  68  Cal.  52,  8  Pac.  627;  O'Neal  v.  Hart, 
116  Cal.  69,  47  Pac.  926;  Sun  Ins.  Co.  v.  White,  123 
Cal.  196,  203,  204,  55  Pac.  902;  County  Bank  of  San 
Luis  Obispo  v.  Goldtree,  129  Cal.  160,  163,  61  Pac.  785; 
Peachy  v.  Witter,  131  Cal.  316,  319,  63  Pac.  468. 

Where  the  instrument  of  mortgage  provides  for  cer- 
tain attorney's  fees  upon  foreclosure,  the  fact  that  the 
note  did  not  provide  for  nor  mention  them  is  entirely 
immaterial.  The  judgment,  ''so  far  as  it  relates  to 
the  attorney's  fee,  is  based  upon  the  agreement  in  the 
mortgage,  of  which  the  note  was  a  part":  Hellier  v. 
Eussell,  136  Cal.  143,  68  Pac.  581. 

An  instrument  of  mortgage  providing  for  ''counsel 
fees  and  charges  of  attorneys  and  counsel  employed 
in  such  foreclosure  suit  not  exceeding"  a  certain 
amount  secures  an  attorney's  fee:  Alden  v.  Pryal,  60 
Cal.  215,  220. 

A  mortgage  by  its  terms  securing  "counsel  fees  and 
charges   of   attorneys   and   counsel   employed   in   such 


454  MORTGAGE.  §    260 

torney^s  fee  is  made  an  express  charge  in  case 
of  foreclosure^  the  fee  becomes  a  charge  imme- 
diately upon  the  commencement  of  the  foreclos- 
ure action,^^  but  if  the  mortgage  obligation  is 
otherwise  collected  is  not  chargeable  against  the 
property.^^ 

foreclosure  suit  not  exceeding /'  or  '*  counsel 

fees,  at  the  rate  of per  cent  upon  the  amount 

which  may  be  found  to  be  due/'  secures  reasonable 
attorney's  fees:  Alden  v.  Pryal,  60  Cal.  215,  220; 
Bonestell  v.  Bowie,  128  Cal.  511,  516,  61  Pac.  78. 

Constitutionality.— \n  allowing  an  attorney's  fee 
where  thus  provided  for,  the  constitutionality  of  a 
statute  permitting  the  court  to  allow  attorney's  fees 
is  not  involved,  for  the  fee  is  allowed  by  the  terms  of 
a  valid  agreement  contained  in  the  instrument  of 
mortgage:  Hellier  v.  Eussell,  136  Cal.  143,  68  Pac.  581. 

43  Fee  Becomes  Charge  Immediately  upon  Com- 
mencement of  Action.— So  it  is  not  discharged  by  the 
dismissal  of  the  action  upon  the  payment  to  the  plain- 
tiff therein  of  the  principal,  interest  and  costs,  and  the 
execution  of  an  agreement  to  pay  the  fee:  Stockton 
Sav.  etc.  Soc.  v.  Donnelly,  60  Cal.  481. 

44  So  where  a  trust  deed  in  the  nature  of  a  mort- 
gage secured  the  payment  of  a  counsel  fee  in  case 
of  foreclosure  by  proceedings  in  court,  but  the 
secured  demand  was  presented  and  allowed  by  the 
bankruptcy  court  upon  the  bankruptcy  of  the  trustor, 
the  beneficiary  is  not  entitled  to  recover  the  counsel 
fee  provided  for,  as  such  presentation  and  allowance 
was  not  a  foreclosure:  In  re  Koche,  101  Fed.  956,  959- 
961,  42    C.  C.  A.  115. 


I 


261  RECORDATION     OF     INSTRUMENT.  455 


AETICLE  2. 
EECOEDATION  OF  INSTEUMENT  OF  MOETGAGE. 

Subdivision  1.     As  to  Immovable  Property  Mortgages. 

261.  Immovable  property  mortgage,  how  recorded. 

262.  Crop    mortgage    must    be    recorded    as    movable 

property  mortgage. 

Subdivision  2.    As  to  Movable  Property  Mortgages. 

263.  Movable  property  mortgages,  how  recorded. 

264.  What  deemed  location  of  property  in  transit. 

265.  What  deemed  location  of  property  of  common 

carrier. 

266.  Eecordation  in  additional  counties  by  filing  cer- 

tified copy. 

267.  General   rules    as    to    recordation    applicable   to 

movable  property  mortgages. 

Subdivision    1,     As    to     Immovable     Property 
Mortgages. 

261.     Immovable   Property    Mortgage,  How  Re- 
corded.^ 

Immovable    property  mortgages  may    be  ac- 

1  Immovable   Property  Mortgage,   How  Recorded: 

See  Civ.  Code,  sec.  2952. 

Historical.— Jlnder  the  law  as  it  stood  in  1851,  a 
mortgage  not  under  seal  was  not  entitled  to  be  record- 
ed, nor  did  the  record  thereof  impart  constructive  no- 
tice to  anvone:  Eacouillat  v.  Sansevain,  32  Cal.  376, 
389;  Eacouillat  v.  Eene,  32  Cal.  450,  452. 


456  MORTGAGE.  §    261 

Imowledged^  or  proved^  certified,  and  recorded/** 
in  like  manner  and  with  like  effect  as  grants  of 
real  property. 

Before  the  enactment  of  the  code,  a  mortgage  of  a 
leasehold  or  other  chattel  interest  in  land  did  not 
come  within  the  provisions  for  mortgaging  land:  Com- 
pare Houseman  v.  Chase,  12  Cal.  290;  HafBey  v.  Maier, 
13  Cal.  13. 

When  the  Civil  Code  was  enacted,  there  was  a  pro- 
vision numbered  section  2937,  granting  a  time  allow- 
ance for  recordation  which  varied  with  the  distance  of 
the  parties  from  the  place  of  recordation,  but  in  Odd 
Fellows^  Sav.  Bank  v.  Banton,  46  Cal.  603,  this  was 
held  to  be  in  conflict  with  the  rules  of  Civil  Code;  sec- 
tions 1213-1215  and  2952  as  to  recordation,  and  hence 
under  Political  Code,  sections  4480-4484,  to  be  void. 

The  act  concerning  county  recorders  (Stats.  1851,  p. 
199,  c.  191,  sees.  12  and  13),  provided  that  certain 
classes  of  instruments  therein  enumerated  were,  upon 
the  payment  of  the  proper  fees,  to  be  recorded  each 
class  in  a  separate  book.  The  first  subdivision  of  sec- 
tion 12  enumerates  deeds,  mortgages,  powers  of  at- 
torney to  convey  real  estate,  and  leases.  Under  this 
statute  all  the  instruments  enumerated  in  a  single  sub- 
division belong  to  the  same  class,  so  that  a  mortgage 
with  a  power  of  sale  need  be  recorded  but  once:  Fo- 
garty  v.  Sawyer,  23  Cal.  570.  A  similar  provision  is 
found  in  the  County  Government  Act,  Stats.  1897,  c. 
277,  sec.  120. 

Query.— Will  a  recorded  deed  executed  pursuant  to 
an  unrecorded  power  to  execute  it  impart  notice?  Fo^ 
garty  v.  Sawyer,  23  Cal.  570. 

2  May  "be  Acknowledged.— ^' The  acknowledgment 
is  the  only  mode  provided  by  law  for  authenticating 
the  act  of  the  parties,  so  as  to  entitle  the  instrument 
to  record  and  make  it  notice  to  subsequent  purchas- 
ers, and  to  entitle  it  to  be  read  in  evidence  without 
other  proofs.  If  purchasers  neglect  to  have  their 
deeds  properly  authenticated  and  recorded,  they  will 
be  liable  to  have  their  title  devested  by  subsequent 


§    262  RECORDATION     OF     INSTRUMENT.  457 

262.     Crop  Mortgage  must  be  Eecorded  as  Mova- 
ble Property  Mortgage. 

A  mortgage  of  growing  crops  must  be  executed 
and  recorded  in  the  manner  of  a  movable  prop- 
erty mortgage,  and. when  recorded  has  the  effect: 
thereof.* 

conveyances  to  innocent  parties,  and  to  the  further 
inconvenience  of  being  compelled  to  prove  their  exe- 
cution when  called  upon  to  put  them  in  evidence'^: 
Landers  v.  Bolton,  26  Cal.  393,  405;  Grant  v.  Oliver, 
91  Cal.  158,  163,  27  Pac.  596,  861. 

'^The  only  object  of  an  acknowledgment  is  that 
the  instrument  may  be  recorded,  unless  the  acknowl- 
edgment is  by  statute  made  essential  to  the  validity 
of  the  instrument:  Farmers'  Exch.  Bank  v.  Purdy, 
130  Cal.  455,  457,  62  Pac.  738. 

3  May  be  Recorded.— There  is  no  law  in  this  ^  state 
requiring  convevances  or  mortgages  to  be  recorded: 
Commercial  Bank  v.  Pritchard,  126  Cal.  600,  604,  59 
Pac.  130.  v.^ompare  Bank  of  Ukiah  v.  Petaluma  Sav. 
Bank,  100  Cal.  590,  35  Pac.  i70. 

An  instrument  is  deemed  to  be  recorded  when  prop- 
erly filed  for  record:  See  Civ.  Code,  sec.  1170;  Me- 
herin  v.  Oaks,  67  Cal.  57,  a  case  of  a  movable  prop- 
erty mortgage. 

4  Crop  Mortgage  must  be  Recorded  as  Movable 
Property  Mortgage:  Simpson  v.  Ferguson,  112  Cal. 
180,  184,  191,  40  Pac.  104,  53  Am.  St.  Rep.  201,  44 
Pac.  484;  Scott  v.  Hotchkiss,  115  Cal.  89,  93,  47  Pac. 
45.  Compare  Ferguson  v.  Murphy,  117  Cal.  134,  138, 
139,  48  Pac.  1018;  Bishop  v.  McKillican,  124  Cal.  321, 
327,  328,  71  Am.  St.  Rep.  68,  57  Pac.  76. 

While  growing  crops  may,  under  some  circum- 
stances, be  regarded  as  realty  and  under  others  as 
personalty,  yet  it  is  manifest  that  the  legislature 
intended  to  provide  an  exclusive  mode  for  the  mort- 
gaging of  growing  crops,  and  to  declare  that  for  such 
purpose  this  species  of  property  should  be  regarded 
as    personalty.     For    it    is    evident    that    before    the 


458  MORTGAGE.  §   263 

Subdivision  2,     As  to  Movable  Property  Mort- 


263.     Movable    Property    Mortgages,  How    Re- 
corded.*^ 

Every  movable  property  mortgage 
(a)   accompanied  by  the  affidavit  of  all  the  par- 
ties^ thereto  that  it  is  made  in  good  faith  with- 

appointment  of  a  receiver  or  the  foreclosure  of  a 
mortgage  of  immovable  property  the  mortgagee 
thereof  can  by  no  means  get  the  control  of  the  crops, 
even  though  such  a  mortgage  covers  them,  so  that 
it  follows  that  to  mortgage  them  as  movable  prop- 
erty is  the  only  method  of  causing  them  to  become 
a  security:  Simpson  v.  Ferguson,  112  Cal.  180,  184, 
53  Am.  St.  Eep.  201,  44  Pac.  484. 

''As  I  understand  Simpson  v.  Ferguson,  supra,  it  is 
there  held  that  such  a  mortgage  does  not  constitute 
a  lien  upon  the  growing  crops,  even  as  against  the 
mortgagor'^:  Modesto  Bank  v.  Owens,  121  Cal.  223, 
226,  53  Pac.   552. 

Historical. — Before  the  enactment  of  the  Civil  Code, 
a  mortgage  of  growing  crops  was,  under  the  act  of 
May  19,  1850,  "concerning  fraudulent  conveyances 
and  contracts,''  sec.  17  (as  amended  Stats.  1856,  p. 
87,  in  effect  April  9,  1856),  executed  like  an  im- 
movable property  mortgage.  The  mortgage,  however, 
continued  only  until  the  crop  was  severed  from  the 
land,  whereupon  it  was  lost  as  against  subsequent  pur- 
chasers in  good  faith  unless  the  crop  was  then  actu- 
ally delivered  to  the  mortgagee,  and  retained  in  his 
possession:  Quiriaque  v.  Dennis,  24  Cal.  154;  Good- 
year V.  Williston,  42   Cal.  11,  17. 

^  Movable  Property  Mortgages,  How  Recorded.— 
Civil  Code,  section  2957,  provides:  **A  mortgage  of 
personal  property  is  void  as  against  creditors  of  the 
mortgagor    and    subsequent    purchasers    and    encum- 


§    263  RECORDATION     OF     INSTRUMENT.  459 

braneers  of  the  property  in  good  faith  and  for  value, 
unless 

(1)  it  is  accompanied  by  the  affidavit  of  all  the  par- 
ties thereto  that  it  is  made  in  good  faith  and  with- 
out any  design  to  hinder,  delay,  or  defraud  credi- 
tors; 

(2)  it  is  acknowledged  or  proved,  certified  and  re- 
corded, in  like  manner  as  grants  of  real  property." 
A  mortgage  of  the  rolling  stock  and  the  other  mov- 
able property  of  a  railway  must  be  executed  and  re- 
corded in  accordance  with  this  and  the  following 
sections.  Section  456  of  the  Civil  Code  merely  con- 
fers upon  railway  corporations  the  power  of  mort- 
gaging their  property,  but  does  not  establish  the  mode 
nnd  manner  of  mortgaging:  Southern  Cal.  Motor  Eoad 
Co.  V.  Union  Loan  etc.  Co.,  64  Fed.  450,  12  C.  C.  A. 
215,  interpreted  in  Illinois  Trust  etc.  Bank  v.  Seattle 
R.  R.  Co.,  82  Fed.  941,  27  C.  C.  A.  268,  holding 
the  contrary,  is  not  followed,  the  court  saying:  '*We 
think  that  our  state  has  settled  the  matter  in  the 
provisions  of  the  code  referred  to  [Civil  Code,  sees. 
2955-2973],  and  that  it  is  the  duty  of  this  court 
to  follow  the  law  as  there  laid  down":  Bishop  v. 
McKillican,  124  Cal.  321,  327-330,  71  Am.  St.  Rep.  68, 
57  Pac.   76. 

(In  Union  Loan  etc.  Co.  v.  Southern  Cal.  Motor 
Road  Co.,  above,  when  in  the  circuit  court,  51  Fed. 
840,  851,  a  conclusion  had  been  reached  in  agreement 
with  Bishop  v.  McKillican.) 

As  to  mortgages  of  vessels  engaged  in  commerce 
or  navigation  the  power  of  Congress  when  exercised 
is  exclusive,  and  having  been  exercised  the  laws  of 
the  state  in  regard  thereto  are  of  no  effect:  Mitchell 
V,  Steelman,  8  Cal.  363. 

Thus  Civil  Code,  section  2958,  is  without  the  scope 
of  state  legislation. 

In  Schallard  v.  Eel  River  Steam  Nav.  Co.,  70  Cal. 
144,  11  Pac.  590,  a  mortgage  on  a  vessel  in  process 
of  construction  was  enforced  in  the  state  courts, 
it  not  appearing  that  the  vessel  was  to  be  completed 
so  as  to  be  engaged  in  commerce  or  navigation. 

6  Accompanied  by  Affidavit  of  All  the  Parties.— 
Where  one  of  the  parties  to  a  mortgage  is  a  partner- 


460  MORTGAGE.  §    263 

out  any  design    to    hinder,  delay,  or  defraud 

creditors,  and 
(b)   acknowledged  or  proved,  and  certified''  in 

like  manner  as  grants  of  real  property, 
must  be 
(1)  immediately  recorded^  in  the  office  of  th(3 

recorder  of    the  county    in  which    the  mort- 

sMp  or  corporation,  one  partner  or  an  agent  of  the 
corporation  can  make  the  affidavit  for  that  party: 
Modesto  Bank  v.  Owens,  121  Cal.  223,  226,  53  Pac. 
552;  Alferitz  v.  Scott,  130  Cal.  474,  477,  62  Pac.  735. 

7  Certified. — A  certificate  showing  in  its  body  that 
the  person  signing  it  was  secretary  of  the  bank  named 
therein  as  mortgagee  is  not  defective  when  signed  by 
such  secretary  in  his  own  name  with  the  word  '*  sec- 
retary'^ appended:  Yost  v.  Commercial  Bank  of  Santa 
Ana,   94   Cal.  494,  496,   29   Pac.   858. 

8  Must  be  Immediately  Recorded.— ''I  think, 
that  it  was  intended  that  the  mortgage  should  be 
recorded  at  once,  and  in  such  case,  it  would  be  re- 
corded where  the  mortgagor  then  resided  and  where 
the  property  was  then  situated.  But  even  if  the 
mortgagee  were  to  use  due  diligence  in  the  recordation 
of  his  mortgage,  still,  if  two  records  are  required, 
both  cannot  be  made  at  once,  and  it  has  elsewhere 
been  held  that,  even  if  not  recorded  at  once,  it  is 
not  void  but  becomes  operative,  as  against  creditors 
and  others,  when  it  is  recorded  as  required  bv  law'': 
Fassett  v.  Wise,  115  Cal.  316,  320,  47  Pac.  1095  (47 
Pac.  47). 

Immediate  recordation  is  required,  the  same  as 
immediate  change  of  possession  in-  case  of  sale  or 
pledge:  Euggles  v.  Cannedy,  127  Cal.  290,  59  Pac. 
827,  per  Henshaw,  Temple,  and  McFarland,  JJ.,  and 
Beatty,  C.  J.;  Garoutte,  Van  Dyke,  and  Harrison,  JJ., 
dissenting. 

What  Deemed  Recordation:  See  section  261,  note  3, 
second    paragraph. 


§    263  KECORDATION     OF     INSTRUMENT.  401 

gagor  resides^  at  the  time  of  the  execution  of 
the  mortgage^  and 
(2)  with  due  diligence  recorded^^  in  each  county 
in  which  any  part  of  ^^  the  mortgaged  property 

9  At  Mortgagor's  Residence  and  Situation  of  Prop- 
erty at  Time  of  Recordation.— Civil  Code,  section 
2959:  ''A  mortgagee  of  personal  property  must  be 
recorded  in  the  office  of  the  county  recorder  of  the 
county  in  which  the  mortgagor  resides,  and  also  of 
the  county  in  which  the  property  mortgaged  is  situ- 
ated, or  to  which  it  may  be  removed.'' 

Interpreting  the  phrase,  *'and  also  of  the  county  in 
which  the  property  is  situated,  or  to  which  it  may 
be  removed,''  the  court  said: 

'^I  am  inclined  to  agree  with  the  construction  to  the 
extent  of  holding  that  ....  'is  situated'  refer [s]   to 

the  time  of  the   execution  of  the  mortgage It 

is  not  easy  to  give  a  definite  meaning  to  the  clause 
'or  to  which  it  may  be  removed.'  If  I  am  right 
in  the  position  that  it  cannot  refer  to  a  removal  after 
the  mortgage  has  once  been  recorded  so  as  to  be  in 
force  as  against  creditors,  then  it  must  refer  to  a 
removal  after  the  execution  of  the  mortgage,  but 
before  it  has  been  properly  recorded.  It  means,  I 
think,  simply  this:  'Or,  if  the  property  has  been 
removed  to  another  county,  then  in  the  recorder  ^s 
office  of  that  county.'  That  is  to  say,  if  the  prop- 
erty has  been  removed  to  another  county  after  the 
execution  of  the  mortgage,  and  before  it  has  been 
recorded  in  the  county  where  the  property  was  situ- 
ated at  the  time  of  its  execution,  then  it  must  be 
recorded  in  the  county  to  which  the  property  has 
been  removed":  Fassett  v.  Wise,  115  Cal.  316,  320, 
47  Pac.  1095  (47  Pac.  47),  per  Temple,  Harrison,  Hen- 
shaw,  JJ.;  Yan  Fleet,  McFarland,  and  Garoutte,  JJ., 
dissenting. 

10  Must  be  Recorded  with  Due  Diligence.— See  note 
8    above,    first    paragraph    thereof. 

11  Must  be  Recorded  in  Each  County  in  "WTiich  Any 
Part  is  Found  or  Removed.— Civil  Code,  section  2962, 


462  MORTGAGE.  §    263 

may  be  situated  at   the  time  of    the  recorda- 
tion^ of  the  mortgage  thereof,  and 
(3)   within  thirty  days  after  a  removal/^  in  each 
county  to  which  any  part^^  thereof  may  there- 
after he  removed  with  the  consent  of  the  mort- 
gagor. 
A  valid  recordation  cannot    be    had  unless  the 
mortgage  is  accompanied  by  a  valid  affidavit  and 
acknowledged  or  proved  and  certified.^* 

provides:  ^^A  single  mortgage  of  personal  property, 
embracing  several  things  of  such  character  or  so  situ- 
ated that  by  the  provisions  of  this  article  separate 
mortgages  upon  them  would  be  required  to  be  re- 
corded in  'different  places,  is  only  valid  in  respect  to 
the  things   as  to  which  it  is  duly  recorded.'' 

12  Eecord  After  Removal.— Civil  Code,  section  2965, 
provides:  ^'When  personal  property  mortgaged  is 
thereafter  by  the  mortgagor  removed  from  the  county 
in  which  it  is  situated,  it  is,  except  as  between  the 
parties  to  the  mortgage,  exempted  from  the  opera- 
tion   thereof,    unless    either 

(1)  the  mortgagee,  within  thirty  days  after  such  re- 
moval, causes  the  mortgage  to  be  recorded  in  the 
county  to  which  the  property  has  been  removed;  or, 

(2)  the  mortgagee,  within  thirty  days  after  such  re- 
moval, takes  possession  of  the  property,  as  pre- 
scribed  in   the   next    section.'' 

(See  section  330  below,  and  Civil  Code,  section 
2966.) 

^'Section  2965  adds  a  sort  of  condition  subsequent, 
which,  if  not  complied  with,  may  defeat  the  mort- 
gage after  it  has  been  recorded  so  as  to  be  operative 
against  creditors":  Fassett  v.  Wise,  115  Cal.  316, 
320,  47  Pac.  1095  (47  Pac.  47),  per  Temple,  Harrison, 
Henshaw,  and  McFarland,  JJ.;  Van  Fleet  and 
Garoutte,   JJ.,   dissenting. 

:i3  See  note  11,  above. 

14  Requisites  of  Valid  Recordation.— Where  a  mort- 


§    264  RECORDATION     OF     INSTRUMENT.  463 

264.  What    Deemed    Location    of  Property  in 

Transit. 

For  the  purpose  of  recordation^  property 
in  transit  from  the  possession  of  the  mortgagee 
to  the  county  of  the  residence  of  the  mortgagor, 
or  to  a  location  for  use,  is,  during  a  reasonable 
time  for  such  transportation,  to  be  taken  as  situ- 
ate in  the  county  in  which  the  mortgagor  resides, 
or  where  it  is  intended  to  be  used.^^ 

265.  What  Deemed  Location  of  Property  of  Com- 
mon Carrier. 

For  a  like  purpose,  movable  property  used  in 
conducting  the  business  of  a  common  carrier  is 
to  be  taken  as  situate  in  the  county  in  which 
the  principal  office  or  place  of  business  of  the 
carrier  is  ioeated.*^ 

gage  is  recorded  without  the  affidavit  of  one  of  the 
parties  thereto,  the  recordation  is  ineffectual,  and 
the  defect  is  not  cured  by  subsequently  making  the 
lacking  affidavit  and  attaching  it  to  the  instrument 
of  mortgage.  The  mortgage  would  then  have  to  be 
recorded  anew  to  give  it  validity  against  third  par- 
ties: Alferitz  v.  Scott,  130  Cal.  474,  477,  62  Pac.  735. 

A  Mortgage  is  not  Duly  Recorded. 

When  accompanied  with  the  proper  affidavit  and  re- 
corded but  not  certified:  Harms  v.  Silva,  91  Cal.  636, 
27  Pac.   1088. 

Nor  when  recorded  without  either  acknowledgment 
or  proof  or  certification:  Adlard  v.  Eogers,  105  Cal. 
327,  332,  38  Pac.  889. 

15  See  Civ.  Code,  sec.  2960. . 

16  Civ.    Code,    sec.    2961. 


464  MORTGAGE.  §    266 

266.  Recordation  in  Additional  Counties  by  Fil- 
ing Certified  Copy. 

A  certified  copy  of  a  mortgage  of  movable 
property  once  recorded  may  be  recorded  in  any 
other  county^  and  when  so  recorded,  the  record 
thereof  has  the  same  force  and  effect  as  though 
it  was  the  original  mortgage.^'' 

267.  General  Rules  as  to  Recordation  Applicable 
to  Movable  Property  Mortgages. 

Except  as  is  otherwise  in  this  subdivision  pro- 
vided, mortgages  of  movable  property  may  be  ac- 
knowledged or  proved,  certified  and  recorded  in 
like  manner  and  with  like  effect  as  grants  of  real 
property;  but  they  must  be  recorded  in  books 
kept  for  mortgages  of  movable  property  exclus- 
ively.^^ 

17  Civ.    Code,    sec.    2964.    > 

:I8  See  Civ.  Code,  sec.  2963. 

A  transfer  of  wines  in  wineries  or  wine  cellars  had 
the  effect  (see  section  251,  subdivision  14,  and  note, 
above)  of  a  movable  property  mortgage,  when  re- 
corded ^^in  the  book  of  miscellaneous  records  in  the 
office  of  the  countj  recorder  of  the  county  in  which 
the    same   are   situated.'' 


OPERATION    OF    MORTGAGE.  465 


AETICLE  3. 
OPEEATION  or  MOETGAGE. 

SuMivision  1.    In   General. 

268.  Mortgage  does  not  transfer  title. 

269.  After-acquired    title    of    mortgagor    only    inures 

to  mortgagee. 

270.  After-acquired  property  does  not  inure  to  mort- 

gagee. 

271.  Mortgage  made  for  accommodation. 

272.  Validity  of  mortgage  of  both  movable  and  im- 

movable   property. 

273.  Validity    of   mortgage    misrepresenting    transac- 

tion. 

274.  Mortgage  made  to  defraud  mostly  void. 

275.  Mortgage   given   for   greater   sum   than   due   to 

certain  extent  void. 

276.  Third   parties   may   rely   upon   apparent   expira- 

tion of  mortgage. 

277.  Provision  accelerating  time  of  payment  in  case 

of  default. 

278.  Eights    among    themselves    of    holders    of    notes 

secured  by  the  same  mortgage. 

279.  Mortgages    made    in    conformity     with     concur- 

rent  executory  agreements  on  equality. 

Subdivision    2,     Of    Immovable    Property    Mortgages 
Executed  as  Such. 

280.  Validity   in   general. 

281.  Of  mortgage  by  absolute  deed. 

282.  Mortgage   covers   fixtures   and   appurtenances. 

Liens— 30 


466  OPERATION    OF    MORTGAGE. 

283.  Fixture    when    severed    and    removed    is    disen- 

cumbered   of   mortgage. 

284.  Mortgage  taken  subject  to  existing  burdens  on 

mortgaged    property. 

285.  Mortgage  of  land  recorded  as  such  but  hypoth- 

ecating      crops — Effect     when     mortgagor     in 
possession.  ' 

286.  Same— When  mortgagee   in   possession. 

287.  Same— As  against  various  third  parties. 

Subdivision  3.     Of  Movable  Property  Mortgages. 

288.  Eecordation  a  substitute  for  change   of  posses- 

sion. 

289.  Mortgage  valid  only  in  counties  where  duly  re- 

corded. 

290.  Unrecorded  mortgage  void  as  against  creditors. 

291.  Void  as  against  bona  fide  purchaser. 

292.  Gains  validity  upon  recordation. 

293.  Valid  between  parties. 

294.  Valid  against  mere  trespasser. 

295.  Mortgage  against  exempt  property  valid. 

296.  Kemoval  of  property  terminates  mortgage  after 

thirty  days. 

297.  Crop  mortgage  continues  after   severance  with- 

out removal. 

298.  Time  of  attachment  of  mortgage  on  crop  to  be 

planted. 

299.  Offspring  of  mortgaged  animals  not  necessarily 

mortgaged. 

300.  Income  and  profits  not  covered  by  mortgage. 

301.  Mortgage    not    impaired    by   affixment    of   prop- 

erty to  immovable  property. 

302.  As    to    creditors,    substitution   with    consent    of 

mortgagee    of    other    for    mortgaged    property 
is  release  to  extent  of  substitution. 

303.  Substitution  without  effect  as  between  parties. 

304.  Mortgage  covering  both  mortgageable  and  non- 

mortgageable  property  valid   as  to  mortgage- 
able. 


OPERATION    OF    MORTGAGE.  467 

805.     Attempted   mortgage   of   nonmortgageable   prop- 
erty valid  between  parties,  but  mostly  void. 

306.  Measure   of    damages    caused   by    conversion    of 

mortgaged    property. 

Suhdivision     4-     Of     Mortgages     to     Secure     Future 
Advances. 

307.  Validity  limited  when   object   of   mortgage  not 

stated. 

308.  When   object   stated,   extent    of   secured   obliga- 

tion need  not  be  shown. 
S09.     Concerning  the  advances. 

310.  Third  parties  may  rely  upon  apparent  maturity 

of  mortgage. 

311.  Advances  made  before  notice  of  subsequent  en- 

cumbrance  secure  priority. 

312.  Obligatory    advances    thereafter    made     secure 

priority. 

313.  No    priority    for    optional    advances    thereafter 

made. 

314.  Failure  to   make  advances  creates  liability  for 

damages. 

Suhdivision   5.     Of   Mortgages    of    the   Homestead. 

315.  Homestead,  how  far  mortgageable. 

316.  Krecorded     mortgage     superior     to     subsequent 

•homestead. 

317.  Unrecorded  immovable  property  mortgage  when 

superior    to    homestead. 

318.  Mortgage  when  postponed  to  homestead. 

319.  Penalty  for  making  void  mortgage. 

320.  Not   rendered  valid  by  subsequent   termination 
.    of   homestead. 

Siihdwision  6.    Levy  upon  Mortgaged  Movable  Property, 

321.  Mortgaged     movable     property    leviable     under 

certain    conditions. 

322.  Seizure   of   property  without   performing   condi- 

tions a  conversion. 

323.  Distribution  of  proceeds  of  sale  of  levied  prop- 

erty. 


468  OPERATION    OF    MORTGAGE.  §    268 

Subdivision  1,     In  General. 

268.     Mortgage  does  not  Transfer  Title. 

^0  mortgage  can  transfer  any  title  to  the 
mortgaged  property.* 

1  Mortgage  does  not  Transfer  Title.— Civil  Code, 
section  2888,  provides:  ^^Notwithstanding  any  agree- 
ment to  the  contrary,  a  lien,  or  a  contract  for  a  lien, 
transfers  no  title  to  the  property  subject  to  the  lien.'' 

Code  of  Civil  Procedure,  section  744  (Practice  Act, 
sec.  260),  provides:  ''A  mortgage  of  real  property 
shall  not  be  deemed  a  conveyance,  whatever  its  terms, 
so  as  to  enable  the  owner  of  the  mortgage  to  recover 
i:)Ossession  of  the  property  without  a  foreclosure  and 
sale.'' 

^^In  this  state,  under  the  provisions  of  section  260 
of  the  Practice  Act,  enacted  April  29,  1851,  it  has 
been  uniformly  held  that  a  ^mortgage  creates  a  mere 
lien  for  the  purpose  of  security,  and,  as  in  other  cases 
of  lien  upon  real  property,  can  only  be  foreclosed 
by  judicial  proceedings.'  ....  Nor,  indeed,  can  the 
provision  be  otherwise  construed.  Its  terms  are  that 
*a  mortgage  of  real  property  shall  not  be  deemed  a 
conveyance,  whatever  its  terms,  so  as  to  enable  the 
owner  of  the  mortgage  to  recover  possession  "of  the 
real  property  without  foreclosure  and  sale'  (Practice 
Act,  sec.  260),  which  is  but  to  say,  in  effect,  that  it 
shall  not  be  deemed  a  conveyance  so  as  to  pass  the 
title.  For  title  is  but  'the  means  whereby  the  owner 
of  lands  hath  the  just  possession  of  his  property'  ": 
Adams  v.  Hopkins  (Cal.),  69  Pac.  228,  231B. 

Many  other  cases  hold  that  an  immovable  property 
mortgage  does  not  pass  title:  Guy  v.  Ide,  6  Cal.  99, 
65  Am.  Dec.  490;  Belloc  v.  Kogers,  9  Cal.  123,  125; 
Nagle  V.  Macy,  9  Cal.  426,  428;  McMillan  v.  Eichards, 
9  Cal.  365,  411,  70  Am.  Dec.  655;  Haffley  v.  Maier, 
13  Cal.  13;  Johnson  v.  Sherman,  15  Cal.  287,  293,  76 
Am.  Dec.  481;  Goodenow  v.  Ewer,  16  Cal.  464,  467, 
468,    76    Am.    Dec.    540;  Boggs   v.    Hargrave,    16    Cal. 


§    208  OPERATION    OF    MORTGAGE.  469 

r.59,  563,  76  Am.  Dec.  561;  Fogarty  v.  Sawyer,  17 
Cal.  589,  592;  Lord  v.  Morris,  18  Cal.  482,  488;  Dut- 
ton  V.  Warschauer,  21  Cal.  609,  623,  82  Am.  Dec.  765; 
Low  V.  Allen,  26  Cal.  141;  Bkidworth  v.  Lake  (No. 
1),  33  Cal.  255,  264;  Carpentier  v.  Brenham,  40  Cal. 
221,  234;  Healy  v.  O'Brien,  66  Cal.  517,  519,  6  Pac. 
386;McGurren  v.  Garrity,  68  Cal.  566,  568,  9  Pac. 
839;  Tapia  v.  Demartini,  77  Cal.  383,  388,  11  Am. 
St.  Eep.  288,  19  Pac.  641;  Eandall  v.  Duff,  79  Cal. 
115,  126,  19  Pac.  532,  21  Pac.  610;  Savings  etc.  Soc. 
V.  McKoon,  120  Cal.  177,  179,  52  Pac.  305;  Williams 
v.  Santa  Clara  Min.  Assn.,  66  Cal.  193,  201,  5  Pac. 
85. 

And  the  fact  that  an  immovable  property  mort- 
gage is  defined  as  a  conveyance  for  the  purpose  of 
certain  sections  of  the  recording  act  (see  Civil  Code, 
sec.  1215)  does  not  imply  that  it  transfers  title: 
Stewart  v.  Powers,  98  Cal.  514,  518,  33  Pac.  486. 

Nor  does  a  movable  property  mortgage  convey  the 
title:  Shoobert  v.  De  Motta,  112  Cal.  215,  219,  53  Am. 
St.  Eep.  207,  44  Pac.  487;  Maier  v.  Freeman,  112 
Cal.  8,  12,  53  Am.  St.  Eep.  151,  44  Pac.  357;  Alferitz 
V.  Borgwardt,  126  Cal.  201,  207,  58  Pac.  460. 

Compare  Bank  of  Ukiah  v.  Moore,  106  Cal.  673, 
681,  39  Pac.  1071. 

In  Alferitz  v.  Borgwardt,  the  case  of  Berson  v. 
Nunan,  63  Cal.  550,  which  held  the  contrary,  was 
overruled. 

(Before  the  enactment  of  the  code,  a  movable 
property  mortgage  vested  title  in  the  mortgagee: 
Heyland  v.  Badger,  35  Cal.  404.) 

No  breach  of  the  conditions  of  a  mortgage  can 
possibly  vest  the  title  in  the  mortgagee:  Godeffroy 
V.  Caldwell,  2  Cal.  489,  492,  493,  56  Am.  Dec.  360; 
Kagle  V.  Macy,  9  Cal.  426,  428;  McMillan  v.  Eich- 
ards,  9  Cal.  365,  409,  410,  70  Am.  Dec.  655;  Haffley 
V.  Maier,  13  Cal.  13;  Johnson  v.  Sherman,  15  Cal. 
287,  293,  76  Am.  Dec.  481;  Goodenow  v.  Ewer,  16 
Cal.  464,  467,  76  Am.  Dec.  540;  Dutton  v.  Warschauer, 
21  Gal.  609,  621,  82  Am.  Dec.  765;  Bludworth  v.  Lake 
(No.  1),  33  Cal.   255,   264;  Mack  v.  Wetzlar,  39   Cal. 


470  OPERATION    OF    MORTGAGE.  §    269 

269.     After-acquired  Title  of  Mortgagor  Only  In- 
ures to  Mortgagee.^ 

A  mortgage  of  an  unlimited  interest  in  any 
property  mortgages  every  interest  thereafter  ac- 
quired^ by  the  mortgagor  therein  [as  of  the  date 

247,  254,  holding  that  this  doctrine  apiplies  to  mort- 
gages executed  "before  the  enactment  of  the  Practice 
Act  in  1851;  McGurren  v.  Garrity,  68  Cal.  566,  568, 
9  Pac.  839;  Malone  v.  Eoy,  107  Cal.  518,  523,  524, 
40  Pac.  1040;  Savings  etc.  Soc.  v.  McKoon,  120  Cal. 
177,  179,  52  Pac.  305. 

An  absolute  deed  given  as  a  mortgage  does  not 
transfer  the  title:  Cunningham  v.  Hawkins,  27  Cal. 
603;  Jackson  v.  Lodge,  36  Cal.  28,  39;  Taylor  v.  Me- 
Lain,  64  Cal.  513,  514,  2  Pac.  399;  Healy  v.  O'Brien. 
66  Cal.  517,  519,  6  Pac.  386;  Eaynor  v.  Drew,  72  Cal. 
307,  309,  13  Pac.  866;  Smith  v.  Smith,  80  Cal.  323, 
325,  21  Pac.  4,  22  Pac.  186,  549;  Hall  v.  Arnott,  80 
Cal.  348,  352,  22  Pac.  200;  Hyde  v.  Mangan,  88  Cal. 
319,  325,  326,  26  Pac.  180;  Murdock  v.  Clarke,  90 
Ca].  427,  442,  27  Pac.  275;  Brandt  v.  Thompson,  91 
Cal.  458,  461,  27  Pac.  763;  Moisant  v.  McPhee,  92 
Cal.  76,  79,  28  Pac.  46;  Locke  v.  Moulton,  96  Cal. 
21,  32,  30  Pac.  957;  Wenzel  v.  Schultz,  100  Cal.  250, 
255,  34  Pac.  696;  Vance  v.  Anderson,  113  Cal.  532, 
538,  45  Pac.  816;  Byrne  v.  Hudson,  127  Cal.  254,  256, 
59  Pac.  597. 

In  Taylor  v.  McLain,  the  cases  of  Hughes  v.  Davis, 
40  Cal.  117,  and  Espinosa  v.  Gregory,  40  Cal.  58, 
holding  the  contrary  doctrine,  were  overruled.  The 
doctrine  of  the  Hughes  case  is  pushed  to  its  logical 
conclusion  in  Allen  v.  Allen,  106  Cal.  137,  39  Pac. 
436. 

Nor  does  possession  by  the  mortgagee  vest  the  title 
in  him:  Johnson  v.  Sherman,  15  Cal.  287,  293,  76  Am. 
Dec.  481;  Dutton  v.  Warschauer,  21  Cal.  609,  62o, 
626,  82  Am.  Dec.  765;  Cunningham  v.  Hawkins,  24 
Cal.  403,  409,  85  Am.  Dec.  73;  Jackson  v.  Lodge,  36 
Cal.  28,  40:  Murdock  v.   Clarke,   90   Cal.  427,  442,   27 


I 


§    209  OPERATION    OF    MORTGAGE.  471 

Pac.  275;  Peninsular  etc.  Co.  v.  Pacific  S.  W.  Co.,  123 
Cal.  689,  695,  56  Pac.   604. 

2  After-acquired  Title  Inures  to  Mortgagee.— Civil 
Code,  section  2930:  '^  Title  acquired  by  the  mortgagor 
subsequently  to  the  execution  of  the  mortgage  inures 
to  the  mortgagee  as  security  for  the  debt,  in  like 
manner  as  if  acquired  before  its  execution.'^ 

Thus,  the  act  of  a  party  in  giving  a  movable  prop- 
erty mortgage  raises  a  presumption,  as  against  him 
and  his  successors^  that  he  is  the  owner  of  the  prop- 
erty: Mathew  v.  Mathew,   138   Cal.  334,   71  Pac.   344. 

3  Every  Interest  Thereafter  Acquired  by  the  Mort- 
gagor Inures  to  Mortgagee:  Tartar  v.  Hall,  3  Cal. 
263;  Hafiiey  v.  Maier,  13  Cal.  13;  Whitney  v.  Buck- 
man,  13  Cal.  536,  539;  Clark  v.  Baker,  14  Cal. 
612,  76  Am.  Dec.  449;  Clark  v.  Boyreau,  14  Cal.  634, 
C36;  Kirkaldie  v.  Larrabee,  31  Cal.  455,  89  Am.  Dec. 
205;  Christy  v.  Dana,  34  Cal.  548,  554,  42  Cal.  174, 
179;  Parry  v.  Kelley,  52  Cal.  334;  Camp  v.  Grider,  62 
Cal.  20;  Sherman  v.  McCarthy,  57  Cal.  507,  515; 
Trope  V.  Kerns  (Cal.),  20  Pac.  82,  83,  84;  Stewart  v. 
Powers,  98  Cal.  "514,  518,  33  Pac.  486;  Stewart  v. 
Powers  (Cal.),  33  Pac.  489;  Eobrecht  v.  Eeid,  114 
Cal.  356,  362,  46  Pac.  101. 

See,  also,  cases  cited  under  note  5,  below. 

Thus  a  mortgagor  of  the  fee  is  estopped  to  deny 
his  ownership  of  the  entire  interest  in  the  property: 
Trope  V.  Kerns  (Cal.),  20  Pac.  82,  83,  84. 

Rationale.— The  mortgagor  is  under  obligation, 
from  the  nature  of  the  mortgage  contract,  to  pre- 
serve the  property  hypothecated  for  the  purposes  of 
the  original  security;  and  hence,  on  grounds  of  pub- 
lic policy,  to  insure  good  faith  and  fair  dealing,  he 
is  estopped,  independent  of  any  covenants  of  war- 
ranty, ^from  denying  the  existence  of  the  encum- 
brance which  he  has  attempted  to  create,  or  defeating 
its  enforcement  upon  the  property  upon  which  it  was 
placed,  and  those  claiming  under  the  mortgage  are 
equally  estopped:  Clark  v.  Baker,  14  Cal.  612,  632- 
634,  76  Am.  Dec.  449. 

Illustrations.— Where  a  mortgagor  covenants  that 
he  is  lawfully  seised  in  fee  of  the  mortgaged  premises, 


472  OPERATIOI^  OF  MORTGAGE.  §  269 

of  the  mortgage],'*  although,  acquired  after  the 
foreclosure  of  the  mortgage;^  but  any  interest 
in  the  property  which  at  an}^  time  is  acquired  by 

that  they  are  free  from  all  encumbrances,  that  such 
mortgagor  has  a  good  right  to  sell,  grant,  and  mort- 
gage the  same,  that  he  will  forever  warrant  and  de- 
fend the  same  to  the  mortgagee,  his  heirs  and  as- 
signs, against  the  lawful  claims  and  demands  of  all 
persons,  any  after-acquired  title  would  inure  to  the 
benefit  of  the  mortgagee:  Stewart  v.  Powers,  98  Cal. 
534,  518,  33  Pac.  486. 

Where  the  mortgagor  mortgages  all  his  interest  in 
a  possessory  claim  under  the  California  or  United 
States  pre-emption  laws,  and  thereafter  acquires  a 
title  to  such  claim  from  the  government,  such  title 
inures  to  the  mortgagee:  Christy  v.  Dana,  42  Cal. 
174,  179;  Orr  v.  Stewart,  67  Cal.  275,  7  Pac.  693. 

Where,  however,  ^'an  undivided  fourth  interest'* 
was  mortgaged,  it  is  error  for  the  court  to  order  the 
sale  of  the  entire  interest  of  the  mortgagor:  Schwartz 
V.  Palm,  65  Cal.  54,  2  Pac.  735. 

4  Relates  to  Date  of  Mortgage:  McMillan  v.  Eich- 
ards,  9  Cal.  365,  412,  70  Am.  Dec.  6o5,  note;  Sands  v. 
Pfeiffer,  10  Cal.  258,  265;  Montgomery  v.  Middlemiss, 
21  Cal.  103,  108,  81  Am.  Dec.  146;  Grattan  v.  Wig- 
gins, 23  Cal.  16,  35;  Horn  v.  Jones,  28  Cal.  194,  202, 
203;  People's  Sav.  Bank  v.  Hodgdon,  64  Cal.  95,  98, 
27  Pac.  863;  Dixon  v.  Schermeier,  110  Cal.  582,  585, 
42  Pac.   1091. 

This  statement  does  not  seem,  howe-ver,  to  be 
strictly  correct,  for  intervening  encumbrances  are  not 
affected  by  the  fact  that  the  title  inures  to  the  mort- 
gagee:  Tolman  v.  Smith,  85  Cal.  280,  285,  24  Pac.  743. 

The  correct  statement  seems  to  be  that  the  title 
inures  to  the  mortgagee  as  of  the  time  it  was  ac- 
quired by  the  mortgagor. 

5  Title  acquired  by  the  mortgagor  after  the 
foreclosure  and  judicial  sale  of  the  mortgaged  prop- 
erty inures  to  the  purchaser  at  such  sale:  Belloc  v. 
Eogers,   9   Cal.   123,   125;  Boggs  v.   Hargrave,   16   Cal. 


§    269  OPERATION     OF     MORTGAGE.  473 

independent  title  by  a  successor  in  interest  of 
the  mortgagor  in  the  whole  or  any  part  of  the 
property  is  not  covered  by  the  mortgage.^ 

270.     After-acquired  Property  does  not  Inure  to 
Mortgagee. 

In  the  absence  of  an  express  agreement,  a 
mortgage  is  limited  to  the  property  described  in 
the  instrument  of  mortgage,  and  does  not  cover 
other  property  of  the  same  character  which  the 

559,  564,  76  Am.  Dec.  561;  Vallejo  Land  Assn.  v. 
Viera,'48  Cal.  572;  Orr  v.  Stewart,  67  Cal.  275,  7  Pac. 
093;  Barnard  v.  Wilson,  74  Cal.  512,  16  Pac.  307; 
Trope  V.  Kerns,  83  Cal.  553,  557,  23  Pac.  693;  Sich- 
ler  V.  Look,  93  Cal.  600,  610,  29  Pac.  220. 

«  Interest  Acquired  by  Independent  Title  not  Cov- 
ered.— Whatever  interest  the  purchasers  of  mortgaged 
pi'op/erty  may  acquire  therein  from  the  mortgagor  is 
covered  by  the  mortgage,  and  so  far  as  the  purchasers 
claim  under  him  they  are  estopped  equally  with  him 
from  denying  the  efficacy  of  the  mortgage.  But  so 
far  as  they  claim  by  an  independent  title,  they  are 
not  bound  by  the  mortgage,  but  can  assert  any  rights 
which  they  may  possess  from  that  source  against  the 
mortgagor  and  the  conveyance  received  from  the 
mortgagor,  whether  they  acquired  the  independent 
title  before  the  purchase  of  the  interest  of  the  mort- 
gagor (San  Francisco  v.  Lawton,  18  Cal.  465,  477, 
478,  79  Am.  Dec.  187;  Grattan  v.  Wiggins,  23  Cal.  16, 
39);  or  after  such  purchase  (Bull  v.  Shaw,  48  Cal. 
455;   Kreichbaum  v.   Melton,   49   Cal.   50). 

Where  a  preemption  claimant  mortgaged  his  claim, 
and  afterward  perfected  his  title  and  sold  the  prop- 
erty, as  the  after-acquired  title  inured  to  the  mort- 
gagee, the  interest  of  the  purchaser  was  subject  to 
the  mortgage:  Stewart  v.  Powers   (Cal.),  33  Pac.  489. 


474  OPERATION    OF    MORTGAGE.  §    270 

mortgagor  may  afterward  acquire  and  place  with 
the  mortgaged  property.'' 

271.     Mortgage  Made  for  Accominodation. 

A  mortgage  given  as  security  for  an  ante- 
cedent obligation  of  a  third  person  is  not  obliga- 
tory in  the  absence  of  a  new  consideration,®  and 

7  If  the  mortgagor  retains  possession  of  the  mort- 
gaged property,  he  is  at  liberty  to  deal  with  it  and 
use  it  as  an  owner,  and  whatever  income  or  profit 
may  be  derived  from  such  use  belongs  to  him^  and 
not  to  the  mortgagee.  If,  in  the  case  of  sheep,  the 
use  to  which  he  puts  the  ewes  is  for  breeding  lambs, 
there  can  be  no  suificient  reason  why  the  lambs  that 
are  dropped  by  the  ewes  should  belong  to  the  mort- 
gagee, any  more  than  the  wool  that  is  clipped  from 
their  backs;  Shoobert  v.  De  Motta,  112  Cal.  215,  219, 
53  Am.  St.  Eep.  207,  44  Pac.  487. 

See,   also,    section   299   and   notes,   below. 

s  Not  Obligatory  Without  New  Consideration.— 
Civil  Code,  section  2792:  ^^  Where  a  guaranty  is  en- 
tered into  at  the  same  time  with  the  original  obli- 
gation, or  with  the  acceptance  of  the  latter  by  the 
guarantee,  and  forms  with  that  obligation  a  part  of 
the  consideration  to  him,  no  other  consideration  need 
exist.  In  all  other  cases  there  must  be  a  consider- 
ation distinct  from  that  of  the  original  obligation." 

Where  the  wife  joins  with  the  husband  in  a  mort- 
gage of  the  homestead  to  secure  the  debts  of  the 
husband,  who  afterward  died,  and  the  claim  was  not 
presented  to  the  administratrix  of  his  estate,  but  not- 
withstanding that  the  surviving  wife  executed  a  new 
m.ortgago  to  secure  them,  this  new  mortgage  was 
without  consideration,  as  there  was  neither  a  legal 
nor  moral  obligation  upon  her  to  pay  her  husband's 
debts,  and  hence  was  void. 

A  mortgage  given  by  a  wife  upon  her  separate  prop- 
erty to  secure  her  husband's  antecedent  debts  with- 
out any  new  consideration  being  received  by  the  hus- 


§    271  OPERATION     OF     MORTGAGE.  475 

if  made  for  adequate  consideration  is  discharged 
by  anything  which  would^  under  similar  circum- 
stances^ discharge  an  individual  guarantor.^ 
The  presumption,  however,  is  that  a  parson  ap- 
pearing on  the  face  of  an  instrument  of  mort- 
gage as  a  principal  obligor  is,  in  fact,  bound  as 

band,  or  by  the  wife,  or  moving  from  the  creditor,  is 
not  obligatory  upon  her:  Chaffee  v.  Brown,  109  Cal. 
211,  220,  221,  41  Pac.  1028. 

Compare  Macdonald  v.  Cool,  134  Cal.  '502,  504,  66 
Pac.    727. 

But  conceding  that  a  mortgage  whereby  a  nego- 
tiable promissory  note  was  secured  was  executed 
without  consideration,  the  mortgage,  while  unenforce- 
able by  the  mortgagee,  was  nevertheless  enforceable 
when  held  by  a  bona  fide  indorsee  for  value  of  the 
secured  note:  McDonald  v.  Eandall,  Cal.,  June  9,  1903, 

i>  For  Adequate  Consideration  Discharged  as  Guar- 
antor.— ^*When  property  of  any  kind  is  mortgaged  or 
pledged  by  the  owner  to  answer  for  the  default  or 
miscarriage  of  another  person,  such  propierty  occupies 
the  position  of  a  surety  or  guarantor,  and  anything 
which  would  discharge  an  individual  surety  or 
guarantor  who  was  personally  liable  will,  under  similar 
circumstances,  discharge  such  property^':  Parke  & 
Lacy  Co.  v.  White  Eiver  Lumber  Co.,  110  Cal.  658, 
663,  43  Pac.  202. 

Where  a  mortgage  for  five  hundred  dollars  was 
executed  as  a  guaranty  for  the  payment  of  a  sum 
upon  a  note  which  was  secured  by  another  mortgage, 
the  first  mortgage  is  discharged  upon  the  first  pay- 
ment by  the  obligor  of  an  amount  equal  to  that 
secured  by  the  guaranty,  in  the  absence,  at  least,  of 
a  reasonably  clear  expression  to  make  the  guaranty  a 
continuing  one,  until  the  whole  debt  should  be  paid: 
Carson  v.  Eeid,  137  Cal.  253,  70  Pac.  89. 

But,  where  a  deed  was  given,  which  recited  that 
the   conveyance  was  made  to   the   transferee   for   the 


476  OPERATION    OF    MORTGAGE.  §    271 

such/^  and  the  burd'en  is  upon  such  person  if  in 
fact  the  other. parties  to  the  transaction  knew 
that  he  was  a  surety  and  consented  to  deal  with 
him  as  such  to  show  such  fact  by  affirmative 
proof.^^ 

purpose  of  securing  all  amounts  which  shall  hereafter 
become  due  from  a  third  party  to  the  transferee,  and 
that  on  payment  of  all  such  amounts  the  transferee 
should  reconvey  the  property  to  the  transferor,  there 
was  created  a  continuing  liability  on  the  part  of  the 
transferor  to  the  transferee  as  security  for  the  pay- 
ment of  all  amounts  due,  without  respect  to  the  man- 
ner in  which  they  were  evidenced,  unlimited  as  to 
original  or  successive  transactions  between  the 
creditor  and  debtor,  unrestricted  as  to  number, 
a.mount,  or  time.  As  this  mortgage  provided  gen- 
erally for  all  amounts  due,  it  applied  as  well  to  re- 
newals of  the  notes  whereby  the  secured  obligation 
was  evidenced  as  to  the  creation  of  the  original  in- 
debtedness. The  mortgagor  was  a  surety,  not  a 
guarantor,  as  a  guaranty  imports  a  personal  liability 
exclusively:  Sather  Banking  Co.  v.  Arthur  E.  Briggs 
Co.  (Cal.),  72  Pac.  352. 

10  Party    Presumed    to    be    Principal     Obligor.— 

'Where,  by  the  terms  of  a  written  instrument,  a  p<er- 
son  appears  as  a  principal  obligor,  the  mere  fact  that 
the  creditor  knew  that  as  between  such  person  and 
a  third  person,  the  first  person  was  a  mere  surety, 
does  not,  in  itself,  show  that  the  creditor  consented 
to  deal  with  the  first  person  as  a  surety,  but  the 
presumption  is  that  he  is  a  principal  obligor:  Aud  v. 
Magruder,  10  Cal.  282;  Shriver  v.  Lovejoy,  32  Cal. 
574,  576;  Damon  v.  Pardow,  34  Cal.  278;  Harlan  v. 
Elv,  55  Cal.  340,  342;  Chase  v.  Evoy,  58  Cal.  348,  353; 
Farmers'  Nat.  Gold  Bank  v.  Stover,  60 "Cal.  387,  392; 
Leeke  v.  Hancock,  76  Cal.  127,  129,  130,  17  Pac.  937; 
California  Nat.  Bank  v.  Ginty,  108  Cal.  148,  150,  151, 
41  Pac.  38;  Casey  v.  Gibbons,  136  Cal.  368,  371,  68 
Pac.  1032. 


§  272  OPERATION  OF  MORTGAGE.  477 

272.     Validity  of  Mortgage  of  Both  Movable  and 
Immovable  Property. 
A  mortgage  covering  both  movable  and  im- 

^^It  would  be  strange  if  he  could  not  waive  his 
right  to  be  treated  as  a  surety,  and  agree  that  he 
should  be  bound  as  upon  his  unconditional  promise'': 
Harlan  v.  Ely,  55  Cal.  340,  342;  Aud  v.  Magruder,  10 
Cal.  282. 

So  where  a  person  gives  his  individual  promise, 
secured  by  mortgage  on  his  own  property,  as  security 
for  the  payment  of  a  loan  made  to  a  third  person, 
the  prcsum-ption  is  that  the  mortgagee  dealt  with  the 
mortgagor  as  principal  debtor:  Casey  v.  Gibbons,  136 
Gal.  368,  68  Pac.  1032. 

Where  a  wife  executed  a  mortgage  on  her  separate 
property  as  security  for  a  debt  of  her  husband,  and 
appeared  on  the  face  of  the  transaction  as  a  principal 
debtor,  and  the  mortgagee  dealt  with  her  as  such, 
she  is  bound  as  a  principal  debtor:  Farmers'  etc. 
Bank  v.  De  Shorb,  137  Cal.  685,  70  Pac.  771. 

11  Burden  is  Upon  Such  Person  to  Show  that  He 
was  Dealt  with  as  Surety.— ^^  If,  in  fact,  the  bank 
[mortgagee]  dealt  with  them  [the  owners  of  the 
mortgaged  property]  in  a  different  capacity — as 
sureties,  and  not  as  principals — it  is  incumbent  upon 
them,  where  they  seek,  under  section  2832  of  the  Civil 
Code,  to  set  up  as  defense  to  an  action  upon  the  note 
that  they  executed  it  as  suseties,  to  aver  and  prove 
that  the  payee  of  the  note  not  only  knew  the  fact  of 
suretyship  between  them  and  their  co-obligor,  bat 
consented  to  deal  with  them  in  that  capacity": 
Farmers'  Nat.  Gold  Bank  v.  Stover,  60  Cal.  392. 
(Civil  Code,  section  2832,  provides:  ^^One  who  ap- 
pears to  be  a  principal,  whether  by  the  terms  of  a 
written  instrument  or  otherwise,  may  show  that  he 
is  in  fact  a  surety,  except  as  against  persons  who 
have  acted  on  the  faith  of  his  apparent  character  of 
puincipaL") 


478  OPERATION    OF   MORTGAGE.  §    272 

movable  property  is  valid  for  all  property  in  re- 
spect to  which  it  is  duly  executed  and  recorded.*^ 

273.  Validity     of     Mortgage    Misrepresenting 

Transaction. 
The  failure  to  disclose  the  real  nature  of  the 
transaction  on  the  face  of  the  mortgage  does  not 
render  it  invalid  except  as  against  a  person  preju- 
diced by  the  misrepresentation.^^ 

274.  Mortgage  Made  to  D.efraud  Mostly  Void. 

Every  instrument  whereby  an  encumbrance  is 
created  against  any  immovable  property,  or  the 
rents  and  profits  thereof,  when  made  with  in- 
tent to  defraud  prior  or  subsequent  purchasers 
or  encumbrancers  of  the  same  property,  is  void 
as  against  every  purchaser  or  encumbrancer  for 

12  Tregear  v.  Etiwanda  Water  Co.,  76  Cal.  537, 
540,  9  Am.  St.  Eep.  245,  18  Pac.  658;  San  Francisco 
Breweries  v.  Schurtz,  104  Cal.  420,  426,  38  Pac.  92. 

13  So  where  a  mortgage  was  given  to  secure 
a  certain  named  sum,  and  ^^such  additional  sums  as 
may  be  loaned  by  said  mortgagee  to  said  mortgagor 
before  the  discharge  hereof,  and  the  interest  thereon, 
each  additional  loan  to  be  evidenced  by  the  promis- 
sory note  of  said  mortgagor \^;  and  afterward  other 
promissory  notes  were  given  purporting  to  secure 
future  advances  to  the  mortgagor,  when,  in  fact,  the 
whole  indebtedness  represented  by  them  was  sub- 
sisting at  the  time  of  the  execution  of  the  mortgage; 
the  mortgage,  nevertheless,  secured  the  other  promis- 
sory notes  as  against  a  judgment  debtor  becoming 
such  after  their  execution:  D'Oyly  v.  Capp,  99  Cal. 
153,  33  Pac.  736. 


§    274  OPERATION     OF     MORTGAGE.  479 

value  of  such  property,  or  the  rents  and  profits 
thereof.** 

275.     Mortgage  Given  for  Greater  Sum  than  Due 
to  Certain  Extent  Void. 

As  against  third  parties,  a  mortgage  inten- 
tionally given  and  taken  for  a  greater  sum  than 
is  due,  when  not  to  secure  future  advances,  so 
far  as  the  excess  is  concerned  is  void  in  any 
event,  and  in  toto  unless  satisfactorily  ex- 
plained.*^ 

[276.  Third  Parties  may  Rely  upon  Apparent  Ex- 
piration of  Mortgage. 

Subsequent  purchasers  and  encumbrancers  for 
value  without  notice  may  rely  upon  the  apparent 
expiration  of  a  mortgage  by  lapse  of  time,  and 
cannot  be  prejudiced  by  a  continuance  or  re- 
newal of  the  secured  obligation  beyond  its  statu- 
tory life.]*« 

14  See  Civ.  Code,  sec.  1227. 

15  Tully  V.  Harloe,  35  Cal.  302,  306,  309,  95  Am. 
Dec.  102.     Compare  Withers  v.  Little,  56  Cal.  370,  373. 

16  Hall  V.  Glass,  123  Cal.  500,  504,  69  Am.  St.  Rep. 
77,   56  Pac.   336. 

Contra,  Newhall  v.  Hatch,  134  Cal.  269,  275,  66  Pac. 
266,  the  court  holding  that  as  the  consequent  purchaser 
had  notice  of  the  mortgage,  he  also  knew  that  it  was 
subject  to  renewal,  and  was  put  on  inquiry  concerning 
that  fact.  To  the  same  effect,  see  Lent  v.  Morrill, 
25   Cal.   492,  501. 


I 


480  OPERATION    OF    MORTGAGE.  §    277 

277.     Provision  Accelerating  Time  of  Payment  in 
Case  of  Default. 

A  provision  in  a  note  secured  by  mortgage,  or 
in  an  instrument  of  mortgage,  declaring  that  up- 
on default ■'^''  in  the  payment  of  any  amount 
due  thereon  the  principal  sum  shall  immediately 
become^^  due  is  a  mere  penalty  for  the  benefit 

17  What  Amounts  to  Default.— On  a  mortgage  pur- 
porting to  obligate  the  mortgagor  to  pay  taxes  and 
assessments,  interest  is  not  a  sum  which  may  be 
collected  under  the  constitution  (see  section  350,  be- 
low), and  hence  the  nonpayment  thereof  is  not  a 
default  in  the  payment  of  any  amount  due  thereon, 
and  cannot  operate  to  accelerate  the  maturity  of 
the  debt:  Burbridge  v.  Lemmert,  99  Cal.  493,  32  Pac. 
310. 

Where  a  mortgage  given  to  secure  future  advances 
provided  that  in  default  of  payment  of  interest  as 
agreed,  the  pirincipal  would  immediately  become  due 
at  the  option  of  the  mortgagee,  and  certain  sums  had 
not  been  advanced  as  agreed,  while  retaining  in  its 
hands  more  of  such  sums  than  the  amount  of  accrued 
interest,  the  mortgagee  could  not  declare  the  mort- 
gage due  for  lack  of  payment  of  interest:  Sav.  Bank 
of  Southern  Cal.  v.  Asbiiry,  117  Cal.  96,  104,  105,  48 
Pac.   1081. 

3  8  Immediately  Due.— The  phrase  in  a  mortgage 
that  upon  default  the  principal  sum  becomes  ^/  ^  imme- 
diately due  at  the  option  of  the  holder,^  means  imme- 
diately upon  or  after  his  election,  and  not  immediately 
upon  his  default,  provided  he  immediately  elects'': 
Hewitt  V.  Dean,  91  Cal.  5,  10,  27  Pac.  423;  Pacific  Mut. 
Life  Ins.  Co.  v.  Shepardson,  77  Cal.  -345,  19  Pac.  583. 
But  compare  Crossmore  v.  Page,  73  Cal.  213,  2  Am. 
St.  Rep.  789,  14  Pac.  787,  where  the  phrase  *^  im- 
mediately due  at  the  option  of  the  holder''  was  held 
to  mean  ''due  immediately  upon  the  default  at  the 
oi)tion  ot  the  holder,"  and  where,  after  seven  months^ 


§    277  OPERATION     OF     MORTGAGE.  481 

of  the  holder^^  which  may  be  asserted  without 
other  notice  of  election  being  given  or  demand 
of  payment^^  made  than  is  involved  in  commenc- 
ing a  foreclosure  action^  and  which^  although  a 

inaction,  an  action  was  not  maintainable  under  such 
provision  as  against  an  inrlorser.  This  case  was 
distinguished  in  Pacific  Mut.  Life  Ins.  Co.  v.  Shepard- 
son,  as  referring  to  an  indorser. 

39  Is  a  Mere  Penalty  for  Benefit  of  Holder:  See 
note   to    section   393,    note    18,   below. 

20  Neither  Notice  of  Election  nor  Demand  of  Pay- 
ment is  necessary  prior  to  commencing  action:  Hewitt 
v.  Dean,  91  Cal.  5,  8,  27  Pac.  423;  Bank  of  Commerce 
V.  Scofield,  126  Cal.  156,  158,  58  Pac.  451.  See,  also, 
Maddox  v.  Wyman,  92  Cal.  674,  676,  28  Pac.  838  (a 
case  of  a  movable  property  mortgage  containing  such 
a  provision);  Clemens  v.  Luce,  101  Cal.  432,  435,  35 
Pac.  1032. 

^^The  provision  of  the  note  that  upon  such  default 
tlie  whole  sum  of  principal  and  interest  should  become 
immediately  due  and  payable,  at  the  option  of  the 
holder  thereof,  was  an  absolute  agreement  on  the 
pfart  of  the  defendants,  depending  solely  upon  the 
option  of  the  plaintiff  [mortgagee],  and  did  not  re- 
quire any  notice  from  him  that  he  elected  or  intended 
to  exercise  such  option,  in  order  to  make  this  agree- 
nsent  binding  upon  the  defendants.  The  fact  of 
their  default  was  particufarly  within  their  own  knowl- 
edge, and  they  also  knew  that  by  the  provisions  of 
the  note  they  had  agreed  that  upon  such  default  the 
plaintiff  might,  within  a  reasonable  time  thereafter, 
consider  the  principal  sum  named  in  the  note  as  due, 
and  institute  proceedings  for  the  foreclosure  of  the 
mortgage.  It  was  competent  for  them  to  include  in 
their  note  or  mortgage  a  provision  requiring  notice 
of  such  election  as  a  condition  precedent  to  in- 
stituting the  suit;  but  instead  thereof  they  have 
agreed  that,  upon  the  mere  fact  of  the  default,  the 
plaintiff  may,  at  his  option,  treat  the  whole  amount 
Liens— 31 


482  OPERATION    OF    MORTGAGE.  §    277 

waiver  may  be  made  by  an  appropriate  aet^^^  is 
not  waived  by  mere  inaction  or  delay^^  in  its 
assertion;   and,  until  asserted,  the  maturity  of 

as  clue,  and  foreclose  the  mortgage.  To  add  to  this 
agreement  the  requirement  that  the  plaintiff  should 
give  notice  of  his  election  would  be  for  the  court  to 
add  to  the  agreement  of  the  parties  a  condition  which 
they  have  not  themselves  chosen  to  make'^:  Hewitt 
V.  Dean,  91  Cal.  5,  8,  27  Pac.  423. 

Thus  the  commencement  of  the  action  is  sufficient 
notice:  Whitcher  v.  Webb,  44  Cal.  127;  Sichler  v.  Look, 
93  Cal.  600,  611,  29  Pac.  220;  Woodward  v.  Brown, 
119  Cal.  283,  302,  63  Am.  St.  Eep.  108,  51  Pac.  2. 

Compare  Leonard  v.  Tyler,  60  Cal.  299. 

But  where  the  note  provides  that  upon  the  default 
of  payment  the  principal  and  interest  should  im- 
mediately become  due  at  the  option  of  the  holder, 
and  that  after  the  exercise  of  the  option  the  principal 
should  bear  a  certain  higher  rate  of  interest,  the 
mortgage  holder  cannot  secretly  exercise  the  option, 
but  in  order  to  be  entitled  to  the  higher  rate  of 
interest  must  openly  manifest  it  as  by  commencing 
a  foreclosure  action,  or  by  written  or  oral  notice  to 
the  mortgagor:  Dean  v.  Applegarth,  65  Cal.  391,  4 
Pac.   375. 

21  Waived  by  Appropriate  Act.— The  unconditional 
acceptance  of  the  interest  in  default  amounts  to  a 
waiver  of  the  default:  California  Sav.  etc.  Soc.  v. 
Culver,  127  Cal.  107,  113,  '59  Pac.  292. 

22  Mere  Forbearance  or  Inaction  in  commencing  a 
foreclosure  action  does  not  amount  to  a  waiver: 
Clemens  v.  Luce,  101  Cal.  432,  435,  436,  35  Pac.  1032; 
Glas  V.  Glas,  114  Cal.  566,  569,  55  Am.  St.  Eep.  90, 
46  Pac.  667.  See,  also,  Hewitt  v.  Dean,  91  Cal.  5.  10, 
27  Pac.  423. 

Although  the  default  may  be  waived  as  to  the 
option  to  foreclose  upon  the  first  default,  it  may  be 
exercised  at  any  subsequent  default.  Any  other 
construction   would   forbid   the    creditor   allowing   the 


§    277  OPERATION    OF    MORTGAGE,  483 

the  note  is  not  hastened  thereby .^^  Such  n 
covenant  inures  to  the  benefit  of  any  assignee^* 
of  the  mortgagee. 

278.    Eights   Amon^  Themselves  of  Holders  of 
Notes  Secured  by  the  Same  Mortgage.^^ 

In  the  absence  of  a  special  agreement  to  the 
contrary,^^  each  bona  fide  holder  for  value  of 

debtor  any  grace  at  all  except  at  the  peril  of  waiving 
all  his  rights:  Campbell  v.  West,  86  Cal.  197,  201,  202, 
24  Pac.  1000. 

23  Until  Asserted,  Maturity  not  Hastened:  See 
section  393,  below.  But  its  assertion  puts  the  statute 
of  limitations  in  motion:  California  Sav.  etc.  Soc.  v. 
Culver,  127  Cal.  107,  112,  59  Pac.  292. 

24  Covenant  Inures  to  Benefit  of  Assignee:  Eedman 
V.  Purrington,  65  Cal.  271,  3  Pac.  883. 

25  Phelan  v.  OIney,  6  Cal.  478;  Grattan  v.  Wig- 
gins, 23  Cal.  16,  30;  Eedman  v.  Purrington,  65  Cal. 
271,    3   Pac.    883. 

This  principle  holds  good  whether  the  notes  are 
payable!  contemporaneously  (Phelan  v.  Olney)  or 
in  a  series  (Grattan  v.  Wiggins  and  Eedman  v.  Pur- 
rington.) 

Rationale.— Equity  delights  in  equality:  Grattan  v. 
Wiggins,   23   Cal.   16,   30. 

Illustrations.— Where  the  purchaser  of  the  second 
of  two  notes  secured  by  the  same  mortgage  was  the 
assignee  of  the  instrument  of  mortgage,  but  with 
notice  that  the  first  note  had  already  been  indorsed 
for  value,  as  the  instrument  itself  declared  that  it 
was  given  as  security  for  two  notes  of  equal  amount, 
neither  of  which  was  due,  the  holders  of  the  two 
notes  were  on  an  equality:  Phelan  v.  Olney,  6  Cal. 
478,   483. 

26  What  Amounts  to  Agreement  to  the  Contrary.— 
The  assignment  and  delivery  of  an  instrument  of 
mortgage    along  with  the  indorsement  of  one  of  sev- 


484  OPERATION    OF    MORTGAGE.  §    278 

any  of  several  promissory  notes  of  even  date  se- 
cured by  the  same  mortgage  is  entitled  to  the 
benefit  of  the  security  pro  rata. 

279.  Mortgages  Made  in  Conformity  with  Con- 
current Executory  Agreements  on  Equality. 

Mortgages  against  the  same  property  made  to 
different  persons  at  different  times,  but  pursuant 
to  executory  agreements  entered  into  with  each 
of  them  at  the  same  time,  each  having  knowledge 
of  the  agreement  with  the  other,  in  the  absence 
of  a  special  agreement  to  the  contrary  stand  upon 
an  equality,  notwithstanding  when  executed  or 
recorded.^''' 

Subdivision   2,     Of   Immovable    Property   Mort- 
gages Executed  as  Such, 

280.  Validity  in  General. 

An  unrecorded  immovable  property  mortgage 
is  valid  against  everyone  except  certain  persons 
more  particularly  specified  in  section  10, 
above,^^  and  if  afterward  recorded  binds  every- 
one from  that  time  forth.^^ 

eral  notes  secured  thereby,  shows  a  special  agreement 
between  the  mortgagee  or  holder  of  the  notes  and 
the  indorsee  by  which  the  latter  was  to  be  given 
priority:    Grattan   v.    Wiggins,    23    Cal.    16,    31. 

27  Daggett  V.  Eankin,  31  Cal.  321,   327,  328. 

28  Query. — Where  a  second  mortgagee  has  actual 
notice  of  the  existence  of  a  prior  unrecorded  mort- 
gage, does  his  bona  fide  assignee  for  value  before  the 


§    281  IMMOVABLE    PKOPERTY.  485 

281.     Of  Mortgage  by  Absolute  Deed .^o 

Where^^  a  mortgage  is  evidenced  merely  by 
a  duly  recorded  instrument  of  conveyance, 
the  m.ortgagee  may,  by  a  transfer  of  the 
mortgaged  property  to  a  bona  fide  purchaser  or 

recordation  thereof  have  auy  rights  sui^erior  to  his 
assignor? 

29  Recorded  Mortgage  Binds  Everyone.— Thus  the 
purchaser  of  immovable  property  affected  by  a  valid 
recorded  mortgage  takes  his  interest  subject  to  the 
mortgage,  and  any  interest  in  such  property  derived 
from  such  purchaser  is  likewise  subject,  any  agreement 
between  the  purchaser  and  the  person  deriving  the 
interest  from  him  to  the  contrary  notwithstanding: 
Foster  v.  Bowles,  138  Cal.  346,  71  Pac.  494. 

.30  Civil  Code,  section  2950:  ^^When  a  grant  of  real 
property  purports  to  be  an  absolute  conveyance, 
but  is  intended  to  be  defeasible  on  the  performance 
of  certain  conditions,  such  grant  is  not  defeated  or 
affected  as  against  any  person  other  than  the  grantee, 
his  heirs,  or  devisees,  or  persons  having  actual  notice, 
unless  an  instrum.ent  of  defeasance,  duly  executed 
and  acknowledged,  shall  have  been  recorded  in  the 
office  of  the  county  recorder  of  the  county  where  the 
property   is    situated. '  ^ 

31  Where  a  mortgage  is  made  by  a  deed  abso- 
lute in  form,  and  a  duly  executed  and  acknowl- 
edged defeasance  of  the  property  is  not  recorded,  a 
sale  of  the  property  to  a  bona  fide  purchaser  for 
value  is  valid:  Jackson  v.  Lodge,  36  Cal.  28,  43; 
Carpenter  v.  Lewis,  119  Cal.  18,  21,  50  Pac.  925. 

Where  a  mortgage  of  the  homestead  is  given  by 
an  absolute  deed  executed  by  both  husband  and  wife, 
the  apparent  effect  of  the  proceeding  is  an  abandon- 
ment of  the  homestead;  hence,  a  subsequent  bona  fide 
mortgagee  of  the  property  for  value  under  mortgage 
executed  by  the  husband  alone  will  be  protected 
against  the  homestead:  Mabury  v.  Euiz,  58  Cal.  11,  16. 


486  OPERATION    CF    MORTGAGE.  §    281 

encumbrancer  for  value^^^  defeat  the  estate  of 
the  mortgagor  therein;  but  if  an  instrument  of 
defeasance  is  also  recorded^  or  it  otherwise  ap- 

32  Who  Bona  Fide  Purchaser.— That  a  person  is  a 
boua  fide  purchaser  or  encumbrancer  for  value  is  a 
fact  which  must  be  affirmatively  averred  and  estab- 
lished by  the  person  claiming  to  be  such:  Long  v. 
Dollarhide,  24  Cal.  218,  227;  Withers  v.  Little,  56 
Cal.  370,  373.  See,  also.  Pell  v.  McElroy,  36  Cal.  208, 
271;  Scheerer  v.  Cuddy,  85  Cal.  270,  273,  24  Pac.  713. 

Elements  Involved  in  Claim.— A  defense  (made  in 
an  action  to  foreclose  a  vendor's  lien),  that  the  de- 
fendant is  a  bona  fide  purchaser  for  value,  involves 
proof  (1)  that  he  purchased  in  good  faith  without 
notice,  and  (2)  that  he  paid  for  the  land  before  re- 
ceiving notice  of  the  vendor's  lien:  Combination  Land 
Co.  V.  Morgan,   95   Cal.   548,  552,  30  Pac.   1102. 

Payment  as  well  as  purchase  must  be  made  without 
notice.  '^  Notice  before  payment  is  equivalent  to 
notice  before  purchase,  and  ....  when  there  has 
been  a  partial  payment  before  notice  to  a  second 
vendee  of  the  original  vendor's  lien,  he  is  affected 
pro  tanto  as  to  the  residue":  Combination  Land  Co. 
V.  Morgan,  95  Cal.  548,  552,  30  Pac.  1102. 

'^To  entitle  a  party  to  protection  as  such  a  pur- 
chaser, he  must  aver  and  prove  the  possession  of  his 
grantor,  the  purchase  of  the  premises,  the  payment  of 
the  purchase  money  in  good  faith,  and  without  notice, 
actual  or  constructive,  prior  to  and  down  to  the  time 
of  its  payment,  for  if  he  had  notice,  actual  or  con- 
structive, at  any  moment  of  time  before  the  payment 
of  the  money,  he  is  not  a  bona  fide  purchaser": 
Eversdon  v.  Mayhew,  65  Cal.  163,  167,  3  Pac.  641. 

Possession  of  the  Property  is  Evidence  of  Notice.— 
Open,  notorious,  and  exclusive  possession  of  immov- 
able property  is  evidence  tending  to  prove  notice,  not 
conclusive  of  notice,  of  the  claim  of  the  possessor 
thereof  to  a  purchaser  of  the  property:  Daubenspeck 
V.  Piatt,  22  Cal.  330;  Landers  v.  Bolton,  26  Cal.  393^ 
419;  Fair  v.  Stevenot,  29  Cal.  486;  Pell  v.  McElroy, 


§    281  IMMOVABLE    PP.OPERTY.  487 

36  Cal.  268,  273,  274;  Pico  v.  Gallardo,  52  Cal.  206; 
Em  eric  v.  Alvarado,  90  Cal.  444,  472,  473,  27  Pac. 
^56;   Austin  v.  Pulschen   (Cal.),  39  Pac.  799,  800B. 

''The  open,  notorious  possession  of  real  estate,  by 
one  having  an  unrecorded  deed  for  it,  is  evidence  of 
notice  to  a  subsequent  purchaser  of  the  first 
vendee's  title'':  Hunter  v.  Watson,  12  Cal.  363,  376, 
73  Am.  Dec.  543. 

''The  fact  of  open,  notorious,  and  exclusive  pos- 
session and  occupation  of  lands  by  a  stranger  to  a 
vendor's  title,  as  of  record,  at  the  time  of  a  purchase 
from  and  conveyance  by  such  vendor  out  of  posses- 
sion, is  sufficient  to  put  such  purchaser  upon  inquiry 
as  to  the  legal  and  equitable  rights  of  the  party  so 
in  possession"  (p.  271).  "The  continued  exclusive 
|iossession  of  a  vendor  after  his  formal  conveyance 
of  the  legal  title  is  a  fact  in  conflict  with  the  legal 
effect  of  his  deed,  and  is  presumptive  evidence  that 
he  still  retains  an  interest  in  the  premises,  and  is 
sufficient  to  put  a  purchaser  upon  inquiry"  (p.  277"^: 
Pell  V.  McElroy,  36  Cal.  268. 

"The  possession  of  a  tenant  is  notice  of  the  land- 
lord's title;  that  is  to  say,  such  possession  is  suflS.- 
eient  to  put  a  person  dealing  with  the  property  upon 
inquiry;  and  the  law  will  charge  him  with  notice  of 
all  those  facts  which  he  might  have  ascertained,  had 
he  pursued  the  inquiry  with  proper  diligence"; 
O'Eourke  v.  O'Connor,  39  Cal.  442,  446,  447;  Dutton 
V.  Warschauer,  21  Cal.  609,  628,  82  Am.  Dec.  765. 

Such  possession  is  sufficient  to  put  the  piurchaser 
on  inquiry:  Bauer  v.  Pierson.  46  Cal.  293;  Scheerer  v. 
Cuddy,  85  Cal.  270,  272,  24  Pac.  713;  Hyde  v.  Man- 
gan,  88  Cal.  319,  327,  26  Pac.  180. 

But    where,    on    the    same    day    that    a    vendor    de- 

llivered   the   conveyance    of   certain   land   to   his   ven- 

Idee,  the  vendee  mortgaged  it  to  a  third  party,   and 

[the   mortgagee    did    not    know    that    the   vendee    had 

■  not  paid  the  piurchase  price  in  full,  nor  did  the  vendor 

know  that  the  vendee  was  mortgaging  the  property, 

the  mortgagee  i^  a  bona  fide  purchaser  for  value.     As 

the    transactions    were    practically    simultaneous,    the 


488  OPERATION    OF    MORTGAGE.  §    281 

pears  upon  the  face  of  the  record  that  the  trans- 
action amounts  to  a  mortgage^  the  mortgagor's 
estate  cannot  be  so  defeated.^^ 

fact  that  the  vendor  was  in  possession  did  not  put  the 
mortgagee  on  inquiry,  as  it  is  the  usual  condition  of 
things  that  the  grantor  should  be  in  possession  when 
he  makes  his  deed.  A  third  party  cannot  be  put  on 
inquiry  until  the  possession  has  continued  long 
enough  to  indicate  to  one  who  knows  only  the  fact 
of  possession  that  the  grantor  has  remained  in  pos- 
session: Austin  V.  Pulsehen,  112  Cal.  528,  531,  532, 
44  Pac.  788  (the  supreme  court  had  previously 
reached  the  opposite  conclusion  in  department,  39 
Pac.  799). 

Purchaser  Must  Address  Inquiry  to  Possessor, — 
'^The  defendant  was  in  the  open,  notorious,  and  ex- 
clusive possession  and  occupation  of  the  premises, 
hnving  valuable  and  lasting  improvements  thereon. 
This  possession  and  occupation  were  sufficient  to  put 
the  plaintiff  upon  inquiry  as  to  the  interest,  legal  or 
equitable,  which  the  defendant  held  in  the  premises, 
and  that  inquiry  should  have  been  made  of  the  de- 
fendant thus  in  possession  and  occupation.  If  he 
failed  to  make  this  inquiry,  he  is  not  entitled  to  any 
more  protection  in  his  purchase  than  if  he  had  in- 
quired and  ascertained  the  real  facts  of  the  case": 
Lestrade  v.  Barth,  19  Cal.  660,  676. 

''When  the  location  of  the  lands  is  such  as  to 
render  personal  application  to  and  inquiry  of  the  oc- 
cupant practicable,  a  purchaser  failing  to  make  such 
application  and  inquiry  is  no  more  entitled  to  be  re- 
garded  as  a  purchaser  in  good  faith  than  if  he  had 
so  inquired  and  ascertained  the  real  facts  of  the 
case":  Pell  v.  McElroy,  36  Cal.  268,  271;  Scheerer  v. 
Cuddy,  85  Cal.  270,  273,  24  Pac.  713.  " 

33  Where  it  appears  upon  the  face  of  papers 
which  have  been  duly  recorded  that  a  transaction 
amounts  to  a  mortgage,  constructive  notice  of  the 
real  nature  of  the  transaction  is  given  to  everyone: 
Baker  v.  Fireman's  Fund  Ins.  Co.,  79  Cal.  34,  41,  2] 
Pac.  357. 


§    282  IMMOVABLE    PROPERTY.  489 

282.  Mortgage    Covers    Fixtures  and  Appurte- 
nances. 

An  immovable  property  mortgage  binds  every- 
thing that  would  pa&s  by  a  grant  of  the  property 
subject  to  it.^^ 

283.  Fixture    When    Severed    and    Removed  is 

Disencumbered  of  Mortgage. 

A  fixtiire^^  severed  and  removed^  whether  by 
vis  major  or  the  act  of  man^  before  the  sale  at 
foreclosure  of  mortgaged  land  to  which  it  was 
affixed  is  disencumbered  of  the  Inortgage.     When 

34  See    Civ.    Code,   sec.   2926. 

What  are  fixtures  and  appurtenances:  See  Civ.  Code, 
sees.   660-662. 

Thus  the  fixtures  on  a  leasehold,  being  covered  by 
a  mortgage  of  it,  are  not  released  therefrom  by  be- 
ing sold  to  a  third  party  without  actual,  but  with 
constructive,  notice  of  the  mortgage:  Commercial 
Bank   v.   Pritchard,    126   Cal.   600,   59   Pac.    130. 

A  mortgage  of  a  leasehold  interest  covers  the  fix- 
tures attached  to  the  leasehold  until  they  are  sev- 
ered, and  in  foreclosure  they  are  sold  as  part  of  the 
realty:  Boyle  Ice  Machine  Co.  v.  Gould,  73  Cal.  153, 
14  Pac.  609;  San  Francisco  Breweries  v.  Schurtz,  104 
Cal.  420,  427,  38  Pac.  92. 

35  Fixture  Severed  and  Removed  Disencumbered  of 
Mortgage:  Buckout  v.  Swift,  27  Cal.  432,  438,  87 
Am.  Dec.  90;  Hill  v.  Gwin,  51  Cal.  47,  50;  Lavenson 
V.  Standard  Soap  Co.,  80  Cal.  245,  247,  13  Am.  St. 
Rep.  147,  22  Pac.  184.  Compare  Simpson  v.  Ferguson, 
112  Cal.  180,  185,  53  Am.  St.  Rep.  201,  44  Pac.  484. 

Rationale.— This  follows  from  the  operation  of  the 
same  principle  as  that  under  which  a  building 
erected  on  lands  after  the  giving  of  a  mortgage  is 
subjected  to  the  encumbrance.     In  the  first  case  the 


490  OPERATION    OF   MORTGAGE.  §    283 

severed^^  by  a  third  party  with  notice  of  tlie 
mortgage^  if  the  sale  of  the  property  results  in. 
a  deficiency,  such  party  is  liable  for  its  value  iti 
damages  to  the  mortgagee. 

284.     Mortgage  Taken  Subject  to  Existing  Bur- 
dens on  Mortgaged  Property. 

The  mortgagee  of  the  part  of  a  larger  tract  of 
land,  or  of  one  of  two  or  more  tenements  owned 
by  the  mortgagor,  takes  his  mortgage  subject  to 
all  the  benefits  and  burdens  in  respect  to  the 
mortgaged  property  that  appear  at  the  time  of 
the  execution  of  the  mortgage  to  belong  to  such 

building  is  withdrawn  from  the  operation  of  the 
mortgage,  for  the  reason  that  it  has  ceased  to  be  a 
thing  real;  in  the  other  mere  materials  are  brought 
under  the  encumbrance,  for  the  reason  that  they 
have  become  a  structure  by  combination,  and  the 
structure  has  become  a  thing:  real  by  position:  Buck- 
out  V.  Swift,  27  Cal.  432,  438,  87  Am.  Dec.  90. 

Illustrations.— A  house  upon  mortgaged  land,  re- 
moved therefrom  by  a  flood,  is  disencumbered  of  the 
mortgage,  and  may  be  sold  by  the  mortgagor:  Buck- 
out  V.  Swift,  27  Cab  432,  87  Am.  Dec.  90. 

A  stamp  in  a  stamp-mill  affixed  to  a  mortgaged 
mine,  when  removed  from  the  mill  and  the  premises, 
is  likewise  disencumbered:  Hill  v.  Gwin,  51  Cal.  47. 

Bark  growing  upon  trees  upon  mortgaged  land, 
when  stripped  from  the  trees  p.nd  removed  from  th§ 
land,  is  likewise  disencumbered:  Moisant  v.  McPhee, 
92  Cal.  76,  79,  28  Pac.  46. 

36  Lavenson  v.  Standard  Soap  Co.,  80  Cal.  245, 
13  Am.  St.  Eep.   147,  22  Pac.  184. 


§    284  IMMOVABLE    PROPERTY.  491 

property^  as  between  it  and  the  remainder  of  the 
property  of  the  mortgagor.^'' 

37  ** Where  the  owner  of  two  tenements  sells 
one  of  them,  or  the  owner  of  an  entire  estate  sells 
a  portion  of  it,  the  purchaser  takes  the  tenement 
or  portion  sold  with  all  the  benefits  and  burdens 
that  appear  at  the  time  of  sale  to  belong  to  it  and 

the    property    which    the    vendor    retains No 

easement  exists  so  long  as  the  unity  of  possession  re- 
mains, because  the  owner  of  the  whole  may  at  any 
time  rearrange  the  quality  of  the  several  servitudes; 
but  upon  severance  by  the  sale  of  a  part,  the  right 
of  the  owner  to  redistribute  ceases,  and  easements  or 
servitudes  are  created  corresponding  to  the  benefits 
or  burdens  existing  at  the  time  of  sale^':  Cave  v. 
Crafts,  53  Cal.  135,  139;  Quinlan  v.  Noble,  75  Cal. 
250,  252,  17  Pac.  69. 

Where  an  artificial  watercourse,  as  a  ditch,  was 
appurtenant  to  two  mining  claims  owned  by  the 
s?ime  person,  and  such  owner  mortgaged  the  upper 
claim  and  appurtenances  over  which  the  watercourse 
passed  to  reach  the  lower  claim,  by  implication  of 
law  an  easement  of  way  for  the  ditch  over  the 
mortgaged  claim  is  reserved  in  the  mortgage  in 
favor  of  the  lower  claim:  Dixon  v.  Schermeier,  110 
Cal.   582,  42   Pac.   1091. 

AVhere  the  owner  of  a  large  tract  of  land  to  which 
a  canal  and  water  right  are  appurtenant  mortgages 
a  portion  of  such  land  upon  which  the  water  has  in 
part  been  habitually  used,  the  mortgage  and  sub- 
sequent foreclosure  deed  operate  to  create  an  ease- 
ment in  the  m^ortgagee  and  purchaser  at  foreclosure 
;sale  to  the  use  of  the  mortgagor's  canal  and  water 
right  on  the  lands  which  are  not  mortgaged;  but 
beyond  this  the  mortgagee  and  purchaser  can  justly 
daim  nothing  further:  Pendola  v.  Ramm,  138  Cal. 
517,  71  Pac.  624. 


492  OPERATION    OF    MORTGAGE.  §    285 

285.  Mortgage  of  Land  Recorded  as  Such  but 
Hypothecating  Crops — Effect  When  Mort- 
gagor in  Possession. 

Although  an  immovable  property  mortgage^, 
executed  and  recorded  merely  as  such,  by  its  ex- 
press terms  hypothecates  the  rents  and  profits  of 
the  mortgaged  property  to  the  mortgagee,  the 
mortgagor  is  nevertheless  entitled,  at  all  times 
before  the  appointment  of  a  receiver  or  the  other 
rightful  entry  of  the  mortgagee  into  possession 
or  the  sale  of  the  property  in  satisfaction  of  the 
mortgage,  to  receive  and  apply  to  his  own  use  the 
rents  and  profits  thereof.^^ 

38  Freeman  v.  Campbell,  109  Cal.  360,  42  Pae. 
35;  Simpson  v.  Ferguson,  112  Cal.  180,  188,  53  Am.  St. 
Eep.  201,  40  Pac.  104,  44  Pac.  484;  Locke  v.  Klunker, 
123  Cal.  231,  235-238,  55  Pac.  993;  Scott  v.  Hotch- 
kiss,  115  Cal.  89,  93,  94,  47  Pac.  45. 

Such  a  mortgage  does  not  constitute  an  encum- 
brance upon  the  growing  crops  even  as  against  the 
mortgagor:  Modesto  Bank  v.  Owens,  121  Cal.  223, 
226,  53  Pac.  552;  Gregory  v.  Clabrough's  Executors, 
129   Cal.  475,  477,  478,   62  Pac.   72. 

A  mortgagee  entered  into  possession  of  and  leased 
to  a  tenant  certain  mortgaged  property  upon  the 
death  of  the  mortgagor.  The  mortgage  included  the 
rents  as  well  as  the  land.  Held,  such  mortgagee  was 
not  a  ''mortgagee  in  possession^'  in  the  meaning  of 
that  term  as  used  in  legal  phraseolog;^',  and  conse- 
quently was  not  entitled  to  receive  the  rents  of  the 
land.  As  the  cause  of  action  for  the  recovery  of 
these  rents  from  the  mortgagee  did  not  arise  from 
the  transaction  set  forth  in  the  complaint  of  fore- 
closure, the  representative  of  the  mortgagor  could 
maintain  an  independent  action  for  their  recovery: 
Freeman  v.  Campbell,  109  Cal.  360,  42  Pac.  35. 


§    286  IMMOVABLE    PIXPERTY.  493 

286.  Same — When  Mortgagee  in  Possession. 

In  the  absence  of  any  intervening  rights  of 
third  parties^  a  mortgagee  whose  rights  are  se- 
cured by  snch  an  immovable  property  mortgage 
is  entitled  at  all  times  after  the  appointment  of 
a  receiver^^  or  his  other  rightfnl  entry  into  pos- 
session^^ to  have  snch  rents  and  profits  applied 
to  the  liquidation  of  the  mortgage  obligation. 

287.  Same — As  Against  Various  Third  Parties.^^ 

As  against  any  tenant^^^  or  creditor  at  large  or 

30  As  to  appointment  of  receiver,  see  sections  332 
and  397. 

40  As  to  possession  by  mortgage,  see  sections  253, 
324,  and  352-361. 

41  Simpson  v.  Ferguson,  112  Cal.  180,  185,  188, 
191,  53  Am.  St.  Eep.  201,  40  Pac.  104,  44  Pac.  484; 
Scott  v.  Hotchldss,  115  Cal.  89,  47  Pac.  45;  Bank 
of  Woodland  v.  Heron,  120  Cal.  614,  618,  52  Pac.  1006; 
Modesto  Bank  v.  Owens,  121  Cal.  223,  226,  53  Pac. 
552;  Locke  v.  Klunker,  123  Cal.  231,  235-238,  55  Pac. 
993. 

In  Simpson  v.  Ferguson,  112  Cal.  180,  188,  189,  53 
Am.  St.  Eep.  201,  40  Pac.  104,  44  Pac.  484,  Mont- 
gomery V.  Merrill,  6'5  Cal.  432,  4  Pac.  414,  and  Treat 
V.  Donovan,  100  Cal.  623,  35  Pac.  86,  were  considered. 
The  latter  decision  was  not  deemed  to  be  worth  much 
consideration.  In  the  former  case  the  growing  crop 
involved  was  in  the  hands  of  a  receiver  of  the  land, 
and  had  not  been  sold  or  disposed  of  by  the  mort- 
gagor, and  the  right  of  the  mortgagor  and  mortgagee 
alone  were  involved.  The  court  held  that  the  mort- 
gage was  an  encumbrance  upon  the  crop  then  grow- 
inu"  upon  the  premises,  and  that  the  proceeds  of  its 
sale  should  be  applied-  to  the  payment  of  the  defi- 
ciency. 

43  Such    a   provision     in    a   mortgage     is    void     as 


494  OPERATION    OF    MORTGAGE.  §    287 

otherwise,  of  the  mortgagor  whose  rights  accrue 
before  the  appointment  of  a  receiver  or  the 
other  rightful  entry  of  the  mortgagee  into  pos- 
session or  the  sale  of  the  property  in  satisfaction 
of  the  mortgage,  or  as  against  any  purchaser  or 
encumbrancer^^  for  value  without  notice  of  the 
entry  into  possession  or  the  sale  of  the  property, 
such  hypothecation  of  the  rents  and  profits  is 
void. 

against  a  tenant  of  the  mortgagor:  Scott  v.  Hotch- 
kiss,  115  Cal.  89,  47  Pac,  45. 

43  A  Mortgage  was  made  of  certain  land,  ^  to- 
gether with  all  and  singular  the  tenements,  heredita- 
ments, and  appurtenances  thereto  belonging,  and  the 
rents,  issues,  and  profits  thereof.''  Subsequently  the 
mortgagor  duly  made  a  movable  property  mortgage  of 
the  crop  of  oranges  then  growing  and  to  be  produced 
during  the  next  season.  The  mortgagee  of  the  land 
foreclosed  his  mortgage,  and  an  order  of  sale  was  made 
while  the  mortgaged  crop  of  oranges  was  still  grow- 
ing. Held,  the  order  of  sale  should  provide  that  the 
growing  crop  be  sold  separately,  and  the  proceeds 
axjplied  to  the  satisfaction  of  the  movable  property 
mortgage:  Simpson  v.  Ferguson,  112  Cal.  180,  40  Pac. 
104,  4  Pac.   484. 

Such  a  mortgage  does  not  cover  the  cropi,  but  con- 
stitutes an  encumbrance  upon  the  land  only,  and 
therefore  it  did  not  matter  whether  a  subsequent 
movable  property  mortgagor  of  the  crop  knew  of  it 
or  not.  No  amount  of  notice  could  make  such  mort- 
gage a  movable  property  mortgage:  Modesto  Bank  v. 
Owens,   121  Cal.  223,  226,  53  Pac.  552. 


h 


§    288  MOVABLE    PROPERTY.  495 

Subdivision  S.  Of  Movable  Property  Mortgages."^* 

288.     Recordation  a  Substitute    for    Change    of 
Possession.4» 

As  the  recordation  of  a  movable  property  mort- 
gage is  deemed  a  substitute  for  the  delivery  and 
change    of   possessions^   required   to   validate   a 

44  As  to  mortgages  of  vessels,  see  section  263,  note 
5,    above. 

45  Where  a  crop  was  hauled  to  a  warehouse  by  the 
mortgagor  at  the  request  of  the  mortgagee,  and 
stored  in  ^le  mortgagee's  name,  and  thereupon  sold 
to  the  mortgagee,  the  sale  is  valid  as  against  an  at- 
taching creditor:  Byrnes  v.  Hatch,  77  Cal.  241,  244, 
245,  19  Pac.  482. 

The  fact  that  against  the  mortgagor's  express  di- 
rections a  warehouseman  stored  a  mortgaged  crop 
in  the  mortgagor's  name  instead  of  the  mortgagee's 
does  not  destroy  the  mortgage  as  against  an  as- 
signee in  insolvency  of  the  mortgagor:  Campodonico  v. 
Oregon  Imp.   Co.,   87   Cal.   566,   25  Pac.   763. 

When  the  mortgagee  has  obtained  possession  of 
a  mortgaged  crop  with  the  consent  of  the  mortgagor, 
a  mere  creditor  at  large  without  process  for  the  col- 
lection of  his  debt  cannot  question  the  sufficiency  of 
a  mortgage  which  is  valid  between  the  parties:  Lemon 
V.  Wolff,  121  Cal.  272,  274,  275,  53  Pac.  801. 

As  to  the  general  validity  of  crop  mortgages,  see 
section  297,  below. 

46  Recordation  is  the  equivalent  of  the  imme- 
diate delivery  and  actual  and  continued  change  of 
possession  required  in  case  of  pledge:  Martin  v. 
Thompson,  63  Cal.  3;  Person  v.  Nunan,  63  Cal.  550; 
552;  Beamer  v.  Freeman,  84  Cal.  554,  557,  24  Pac. 
169;  Eohrbough  v.  Johnson,  107  Cal.  144,  147,  40 
Pac.  37;  Cardenas  v.  Miller,  108  Cal.  250,  258,  49  Am. 
St.  Rep.  84,  39  Pac.  783;  Ruggles  v.  Cannedy,  127 
Cal.  290,  296,  311,  59  Pac.  827. 

See  sections  191  and  201,  above. 


496  OPERATION    OF    MORTGAGE.  §    288 

pledge,  whenever  the  mortgaged  movable  property 
passes  into  the  possession  of  the  mortgagee,  the 
effect  is  equivalent  to  due  recordation,  and  the 
property  and  the  parties  thenceforth  become 
clothed^''  with  the  rights  and  liabilities  of  the 
parties  to  a  pledge. 


Mortgage  Valid  Only  in    Counties    Where 
Duly  Recorded. 

A  single  movable  property  mortgage,  embrac- 
ing several  things  of  such  character  gr  so  situ- 
ated that  separate  mortgages  of  them  would  be 
required  to  be  recorded  in  different  counties,  is 
fully  operative  only  in  respect  to  the  things  as  to 
which  it  is  duly  recorded.^^ 

290.     Unrecorded    Mortgage    Void    as    Against 
Creditors. 

A  movable  property  mortgage  is  void  as  against 
all  creditors  of  the  mortgagor,  whether  at  large 
or  secured,  whose  claims  arise  during  such  time 
as  it  is  not  duly  recorded.^^     A  creditor  at  large 

47  See  section  254,  above. 

48  See  Civil  Code,  section  2962;  also  section  263 
and  note  11  thereto,  above. 

49  Void  Against  Creditors  Whose  Claims  Arise  Dur- 
ing Time  When  not  Duly  Recorded.— Civil  Code,  sec- 
tion 2957,  pTovides:  '^A  mortgage  of  personal  prop- 
erty is  void  as  against  creditors  of  the  mortgagor  and 
subsequent  purchasers  and  encumbrancers  of  the 
property  in  good  faith  and  for  value,  unless: 


§    290  MOVABLE    PROPERTY.  497 

whose  claim  arises  during  any  of  the  time  that 
the  mortgage  is  withheld  from  due  recordation 
may^  after  the  due  recordation  of  the  mortgage, 
maintain  an  equitable  action  to  avoid  the  mort- 
gaged^ 

(1)  it  is  accompanied,  by  the  affidavit  of  all  the 
parties  thereto  that  it  is  made  in  good  faith  and 
without  any  design  to  hinder,  delay,  or  defraud, 
creditors; 

(2)  it  is  acknowledged  or  proved,  certified  and  re- 
corded, in  like  manner  as  grants  of  real  property.'' 
As  to  creditors  who  have  acquired  a  hold  against 

the  mortgaged  property  by  virtue  of  some  legal  pro- 
cess or  who  are  armed  with  some  process  authorizing 
a  seizure  of  the  property,  such  mortgage  when  not 
duly  recorded  is  void  without  qualification.  The 
question  of  notice  is  wholly  inapplicable.  Civil  Code 
having  no  bearing  upon  the  case;  Beamer  v.  Freeman, 
84  Cal.  554,  557,  24  Pac.  169;  Cardenas  v.  Miller,  108 
Cal.  250,  49  Am.  St.  Eep.  84,  39  Pac.  783,  41  Pac. 
472. 

As  against  a  creditor  at  large  whose  claim  arises 
during  the  time  that  a  movable  property  mortgage 
is  withheld  from  due  recordation,  such  mortgage  is 
void:  Euggle«  v.  Cannedy,  127  Cal.  290,  299-302,  59 
Pac.  827,  per  Henshaw,  Temple,  and  McFarland,  JJ., 
and  Beatty,  C.  J.;  Garoutte,  Van  Dyke,  and  Harrison, 
JJ.,  dissenting. 

lUicstration.— Where  a  mortgage  of  a  crop  was  ex- 
ecuted on  June  8th,  and  recorded  on  June  12th,  it 
was  invalid  as  against  an  attachment  duly  levied  on 
June  10th:  Eudolph  v.  Saunders,  111  Cal.  233,  234, 
43   Pac.   619. 

Historical.— In  Fetta  v.  Lane  (Cal.),  37  Pac.  914, 
916A,  916B,  however,  it  was  held  that  an  unrecorded 
crop  mortgage  was  valid  as  against  a  creditor 
(pledgee),  into  whose  possession  the  crop  had  passed. 
50  Ruggles  V.  Cannedy,  127  Cal.  290,  303,  59  Pae. 
827,  per  Henshaw,  J.,  Beatty,  C.  J.,  and  McFarland 
Liens— 32 


498  OPERATION    OF    MORTGAGE.  §    291 

291.  Void  as  Against  Bona  Fide  Purchaser.^* 

As  against  bona  fide^^  purchasers  and  encum- 
brancers for  value^  a  movable  property  mortgage 
so  long  as  not  duly  recorded  is  void,  but  as 
against  a  purchaser  or  encumbrancer  with  notice 
is  valid.^^ 

292.  Gains  Validity  upon  Recordation. 

As  against  every  creditor,  purchaser,  or  encum- 
brancer whose  claim  arises  after  due  recordation, 
a  movable  property  mortgage,  though  not  duly 
recorded  with  due  expedition,  is  valid."^^ 

293.  Valid  Between  Parties. 

Between  the  parties  themselves,  a  movable 
property  mortgage,  though  not  duly  verified  nor 
acknowledged  nor  certified  nor  recorded,  is 
valid.^^ 

and  Temple,  JJ.;  Garoiitte,  Harrison,  and  Van  I>yke, 
JJ.,  dissenting. 

51  See  Civil  Code,  section  2957,  quoted  under  sec- 
tion 263,  above.  Also,  Euggles  v.  Cannedy,  127  Cal. 
290,  299,  59  Pac.  827. 

53  The  question  of  notice  is  vital:  Cardenas  v. 
Miller,  108  Cal.  250,  252,  49  Am.  St.  Eep.  84,  41  Pac. 
472. 

53  So  an  encumbrancer  with  notice  of  a  prior,  but 
defectively  recorded,  movable  property  mortgage  upon 
the  same  property,  takes  his  rights  subject  thereto: 
Harms  v.  Silva,  91  Cal.  636,  639,  27  Pac.  1088. 

54  Euggles  V.  Cannedy,  127  Cal.  290,  299,  59  Pac. 
827.  See  Alferitz  v.  Scott,  130  Cal.  474,  477,  62  Pac. 
735. 

55  Adlard  v.  Eogers,  105  Cal.  327,  334,  38  Pac. 
889;    Lemon    v.    Wolff,    121    Cal.    272,    03    Pac.    801; 


§    294  MOVABLE    PROPERTY.  499 

294.  Valid  Against  Mere  Trespasser. 

As  against  a  mere  trespasser,  a  movable  prop- 
erty mortgage,  although  not  duly  recorded,  ^s 
valid.^^ 

295.  Mortgage  Against  Exempt  Property  Valid. 

A  movable  property  mortgage  against  property 
exempt  from  forced  sale  has  the  same  force  and 
effect  as  a  mortgage  against  any  other  property.^''' 

296.  Removal    of    Property    Terminates    Mort- 
gage after  Thirty  Days. 

If,  within  thirty  days  after  the  removal  with 
the  consent  of  the  mortgagor  of  mortgaged  prop- 
erty (except  the  rolling  stock  of  a  common  car- 
rier) from  the  county  in  which  it  was  situated  at 
the  time  of  the  recordation  of  the  mortgage,  the 
mortgagee  does  not  cause  the  mortgage  to  be 
recorded  in  the  county  to  which  the  property  has 
been  removed,  the  property  is,  except  as  between 
the  parties,  released  from  the  operation  thereof, 

Euggles  V.  Cannedy,  127  Cal.  290,  299,  59  Pac.  827. 
Compare  Modesto  Bank  v.  Owens,  121  Cal.  223,  226, 
53  Pac.   552. 

56  Ruggles  v.  Cannedy,  127  Cal.  290,  299,  59  Pac. 
827. 

57  Code  of  Civil  Procedure,  section  690,  last  sen- 
tence, after  having  enumerated  the  species  of  prop- 
erty exempt  from  forced  sale,  provides:  '^No  ar- 
ticle, however,  or  species  of  property  mentioned  in 
this  section  is  exempt  from  execution  issued  upon 
....  a  judgment  of  foreclosure  of  a  mortgage  .  .  -  . 
thereon. '^ 


500  OPERATION    OF    MORTGAGE.  §    296 

unless  taken  possession  of  by  the  mortgagee  aa 
permitted  by  section  330,  below.  ^^ 

297.     Crop  Mortgage  Continues  After  Severance 
Without  Removal. 

A  crop^^  is  bound  by  a  mortgage  thereon  after 
severance,  so'  long  as  the  crop  remains  upon  the 
land  where  raised,  although  severed,  and  whether 
in  its  original  state  or  converted  into  another 
product ;  but  as  to  any  bona  fide  purchaser  or  en- 
cumbrancer for  value,  and  as  to  any  creditor,^^ 
the  crop  is  presumptively  released^*  from  the 
mortgage  by  its  removal  from  such  land.  The 
tortious  removal^^  of  the  crop  from  the  land  by 

S8  See  Civil  Code,  section  2965,  quoted  under  sec- 
tion 263,  note  8,  above;   also,  section  330,  -below. 

50  Civil  Code,  section  2972:  '^The  lien  of  a  mort- 
gage on  a  growing  crop  continues  on  the  crop  after 
severance,  whether  remaining  in  its  original  state  or 
converted  into  another  product,  so  long  as  the  same 
remains  on  the  land  of  the  mortgagor.'^ 

60  Section  2972  m.erely  provides  that,  upon  removal, 
the  mortgage  shall  cease  as  to  creditors  and  bona  fide 
purchasers:  Martin  v.  Thompson,  63  Cal.  3. 

<*l  The  removal  of  the  crop  from  the  land  upon 
which  it  was  raised  prima  facie  extinguishes  the 
mortgage:  Waterman  v.  Green,  59  Cal.  142;  Horgan 
V.  Zanetta,  107  Cal.  27,  29,  30,  40  Pac.  22. 

02  Tortious  Removal  Rebuts  Presumption.— The 
removal  of  the  crop  from  the  land  by  a  third  person 
without  paying  the  mortgage  is  a  wrongful  interfer- 
ence, which  renders  him  liable  to  the  mortgagee  in 
tort,  or  at  his  election  in  quasi  contract,  and  does  not 
extinguish  his  lien:  Martin  v.  Thompson,  63  Cal.  3; 
Wilson  V.  Prouty,  70  Cal.  196,  11  Pac.  608;   Chitten- 


§    297  MOVABLE    PROPERTY.  501" 

a  third  person  without  the  consent  of  a  vigilant^'^ 
mortgagee  rebuts  this  presumption. 

298.     Time  of  Attachment   of    Mortgage    upon 
Crop  to  be  Planted. 

A  mortgage  on  a  crop  to  be  planted  attaches 
as  of  the  time  of  the  recordation  thereof,  and  not 
of  the  time  when  the  property  comes  into  ex- 
istence.^"* 

den  V.  Pratt,  89  Cal.  178,  183,  184,  26  Pac.  626;  Bank 
of  Woodland  v.  Duncan,  117  Cal.  412,  416,  49  Pac. 
414. 

G3  Mortgagee  must  be  Vigilant.— But  where  tlio 
mortgagee  does  not  consent  to  the  removal,  but  uses 
no  care  nor  diligence  in  looking  after  the  crop,  the 
mortgage  is  lost  by  the  removal  as  against  all  cred- 
itors: Horgan  v.  Zanetta,  107  Cal.  27,  31,  32,  40  Pac. 
22. 

64  Arques  v.  Wasson,  51  Cal.  620,  21  Am.  Eep.  718; 
Hall  V.  Glass,  123  Cal.  500,  505,  69  Am.  St.  Eep.  77, 
56  Pac.  336. 

Rationale.— '^  There  is  in  such  cases  a  potential  ex- 
istence, which  sustains  the  lien  of  the  mortgage ' ' : 
Hall  V.  Glass,  123  Cal.  500,  505,  69  Am.  St.  Eep.  77, 
56  Pac.  336. 

''Establish  the  fact  that  there  is  a  sufacient  poten- 
tial existence  in  the  coming  crops  to  sustain  a  legal 
or  equitable  lien  upon  them,  and  the  lien  must  prevail 
against  subsequent  purchasers  of  every  kind''  (p. 
507).  Thus  it  prevails  over  a  homestead  declared 
subsequently  to  the  execution  of  the  mortgage  (p. 
507).  Nor  is  it  affected  by  proceedings  in  insolvency 
(p.  505) :  Hall  v.  Glass,  123  Cal.  500,  69  Am.  St.  Eep. 
77,  56  Pac.  336. 


502  OPERATION    OF    MORTGAGE.  §    299 

299.  Offspring  of  Mortgaged  Animals  not  Neces- 
sarily Mortgaged. 

In  the  absence  of  an  express  agreement,  a  mort- 
gage of  animals  does  not  hypothecate  their  off- 
spring.^^ 

300.  Income  and  Profits  not   Covered  by  Mort- 

gage. 

A  movable  property  mortgage  does  not  cover 
the  income  and  profits  of  the  mortgaged  prop- 
erty.^^ 

65  Offspring  not   Necessarily  Mortgaged. 

A  mortgage  of  animals  does  not  cover  their  off- 
spring, begotten  after  the  mortgage  was  made:  Shoob- 
ert  V.  De  Motta,  112  Cal.  215,  53  Am.  St.  Eep.  207,  44 
Pac.   487. 

Nor  their  offspring  in  gestation  at  the  date  of  the 
execution  thereof:  First  Nat.  Bank  v.  Erreca,  116  Cal. 
81,  58  Am.  St.  Eep.  133,  47  Pac.  926. 

The  provision  in  Civil  Code,  section  2955,  authoriz- 
ing the  execution  of  a  movable  property  mortgage 
upon  ^^ sheep,  and  the  increase  thereof,^'  does  not  ex- 
tend the  opieration  of  a  mortgage  upon  ^^sheep^'  to 
the  increase  thereof,  but  implies  that,  unless  the  in- 
crease is  covered  by  the  terms  of  the  mortgage,  it  is 
not  included  therein:  Shoobert  v.  De  Motta,  112  Cal. 
215,  53  Am.  St.  Rep.  207,  44  Pac.  487;  First  Nat.  Bank 
V.  Erreca,  116  Cal.  81,  58  Am.  St.  Rep.  133,  47  Pac. 
926. 

So  the  owners  of  mortgaged  sheep  may  sell  their 
offspring,  and  the  mortgagee  cannot  maintain  an 
action  against  the  mortgagor  in  consequence  thereof: 
Shoobert  v.  De  Motta,  112  Cal.  215,  53  Am.  St.  Rep. 
207,  44  Pac.  487. 

66  So  a  mortgage  on  ^' sheep  and  the  increase 
thereof,'^  does  not  cover  wool  clipped  from  their 
backs,  the  term  ^^ increase^'  being  equivalent  to   off- 


§    301  MOVABLE    PROPERTY.  603 

301.     Mortgage  not  Impaired    by    Affixment    of 
Property  to  Iminovable  Property. 

The  affixment  of  mortgaged  movable  property 
to  immovable  property  covered  by  an  antecedent 
mortgage  likewise  executed  with  the  formalities 
requisite  in  a  movable  property  mortgage,  does 
not  postpone  the  mortgage  created  against  the 
movable  property  before  its  affixment  to  the 
mortgage  against  the  immovable  property  to 
which  it  was  affixed.^'' 

spring:  Alferitz  v.  Borgwardt,  126  Cal.  201,  58  Pac. 
460. 

See,   also,   section   324,   below. 

In  Alferitz  v.  Ingalls,  83  Fed.  964,  973,  974,  the 
circuit  court  held  that  the  term  ^^  sheep,  and  the  in- 
crease thereof  covered  the  products  of  the  sheep,  as 
wool,  clipped  from  their  backs,  as  well  as  their  off- 
spring; but,  in  the  above  California  case,  this  de- 
cision was  overruled. 

67  Ordinarily,  the  encumbrance  on  property  af- 
fixed to  mortgaged  land  would  relate  back  to  the 
date  of  the  mortgage  on  the  land,  but  this  rule  will 
not  be  applied  to  defeat  intermediate  rights  and 
liens  lawfully  acquired.  The  act  of  affixing  does  not 
amount  to  a  confusion  of  the  property:  Tibbetts  v. 
Moore,   23   Cal.   208,   216-219. 

So,  where  certain  duly  mortgaged  movable  prop- 
erty was  affixed  to  certain  lands  which  were  covered 
by  an  antecedent  mortgage  also  duly  executed  to 
cover  movable  property,  the  original  mortgage  on 
the  movable  property  will  prevail  as  to  that:  Tib- 
betts V.  Moore,  23  Cal.  208. 


504  OPERATION  OF  MORTGAGE.  §  302 

302.  As  to  Creditor's  Substitution  with  Consent 
of  Mortgagee  of  Other  for  Mortgaged 
Property  is  Release  to  Extent  of  Substitu- 
tion. 

Where  the  mortgagor,  with  the  consent  of  the 
mortgagee,  substitutes  for  a  portion  of  the  mort- 
gaged propert}^,  other  property  indistinguishable 
therefrom  after  reasonable  inquiry,  a  creditor  at 
large  may  cause  a  portion  of  such  property  not 
greater  than  the  portion  substituted  to  be  ap- 
propriated for  the  satisfaction  of  his  debt.^® 

303.  Substitution  Without  Effect  as  Between 
Parties. 

Where  such  a  substitution  is  made,  as  between 
the  parties  themselves,  all  the  property  remains 
subject  to  the  operation  of  the  mortgage.^^ 

68  Where  a  mortgage  was  placed  on  two  thou- 
sand sheep,  and  the  increase  thereof,  and  five  hun- 
dred wethers,  part  of  the  two  thousand  mortgaged 
sheep  were  exchanged  with  a  third  party  for  five 
hundred  ewes,  which  were  commingled  with  the  re- 
maining fifteen  hundred,  and  could  not  be  distin- 
guished therefrom,  and  the  exchange  was  made  with 
the  consent  of  the  mortgagee,  and  one  thousand 
lambs  were  born  to  the  ewes  of  said  band  of  sheep, 
an  attachment  by  a  creditor  of  three  hundred  and 
twenty  of  the  sheep  is  valid:  Alferitz  v.  Perkins,  122 
Cal.  391,  55  Pac.  149. 

69  Alferitz  v.  Perkins,  122  Cal.  391,  394,  55  Pac. 
149. 


§    304  MOVABLE    PROPERTY.  505 

304.  Mortgage  Covering  Both  Mortgageable  and 

Nonmortgageable    Property    Valid   as   to 

Mortgageable. 

A  movable  property  mortgage,  duly  executed 

and  recorded,  which  attempts  to  mortgage  both 

mortgageable  and  nonmortgageable  property,  is 

fully  operative  as  to  the  mortgageable  property.''^ 

305.  Attempted  Mortgage  of  Nonmortgageable 
Property  Valid  Between  Parties,  but  Most- 
ly Void.'^i 

An  attempted  mortgage  of  nonmortgageable 
property  is  valid  as  between  the  parties  them- 
selves/^ and    as    against    a    purchaser    or    en- 

70  In  re  Fischer,  94  Cal.  523,  29  Pac.  961;  San 
Francisco  Breweries  v.  Schurtz,  104  Cal.  420,  426,  38 
Pac.  92. 

Dufiicy  v.  Shields,  63  Cal.  332,  so  far  as  declaring 
a  different  rule,  is  overruled  in  San  Francisco  Brew- 
eries  V.    Schurtz. 

71  What  Property  Mortgageable:  See  section  251, 
above   (Civ.  Code,  sec.  2955). 

This  section  of  the  code  was  amended  in  1895  to 
read  that  the  property  therein  enumerated,  *  '■  and  none 
other,''  is  mortgageable.  The  adoption  of  this  amend- 
ment does  not  seem,  however,  to  have  made  any  al- 
teration in  the  law.  Mortgages  upon  nonmortgage- 
able proper.ty  before  the  adoption  of  this  amendment 
are  discussed  in  Works  v.  Merritt,  105  Cal.  467,  38 
Pac.  1109. 

73  Valid  Between  the  Parties  Themselves:  Tregear 
V.  Etiwanda  Water  Co.,  76  Cal.  537,  540,  9  Am.  St. 
Rep.  245,  18  Pac.  658;  Barker  v.  Maskell,  101  Cal. 
9,  35  Pac.  641;  Works  v.  Merritt,  105  Cal.  467,  38 
Pac.   1109;    Bank   of   Ukiah   v.   Moore,    106    Cal.    673, 


506  OPERATION  OF  MORTGAGE.  §  305 

cumbrancer  without  consideration''^  or  with 
actual  notice  f"*  but  is  void  as  against  every  bona 
fide  purchaser  or  encumbrancer  for  value  of  the 
mortgaged  property/^  and  as  against  any  cred- 
itors^ Eecordation  does  not  impart  construc- 
tive notice  of  such  a  mortgage.''''' 

306.     Measure  of  Damages  Caused  by  Conversion 
of  Mortgaged  Property. 

Where  mortgaged  movable  property  has  been 
wrongfully  converted^  the  mortgagee  may  main- 

680,  39  Pac.  1071;  Bank  of  Ukiah  v.  Gibson,  109  Cal. 
197,  199,  41  Pac.  1008;  McLeod  v.  Barnum,  131  Cal. 
605,   607,  63  Pac.  924. 

To  the  contrary,  see  Dufficy  v.  Shields,  63  Cal.  322. 

73  Without  Consideration.— It  is  valid  as  against 
a  purchaser  or  encumbrancer  without  notice  but  with- 
out consideration:  Bank  of  Ukiah  v.  Moore,  106  Cal. 
673,  681,  39  Pac.  1071;  Bank  of  Ukiah  v.  Gibson,  109 
Cal.  197,  200,  41  Pac.  1008. 

Where  the  consideration  is  not  irrevocably  paid, 
the  purchaser  or  encumbrancer  is  not  for  value:  Bank 
of  Ukiah  V.  Gibson,  109  Cal.  197,  199,  41  Pac.  1008. 

74  With  Actual  Notice:  Works  v.  Merritt,  105  Cal. 
467,  38  Pac.  1109;  Bank  of  Ukiah  v.  Moore,  106  Cal. 
673,  680,  39  Pac.  1071;  Bank  of  Ukiah  v.  Gibson,  109 
Cal.  197,  200,  41  Pac.  1008;  Tomlinson  v.  Ayres,  117 
Cal.  568,  573,  49  Pac.  717. 

76  Void  Against  Bona  Fide  Purchaser:  Bank  of 
Ukiah  V.  Moore,  106  Cal.  673,  681,  39  Pac.  1071; 
Perkins  v.  Maier  &  Zobelein  Brewery,  133  Cal.  496, 
498,  65  Pac.  1030. 

76  Void  Against  Creditor:  Perkins  v.  Maier  &  Zo- 
belein Brewery,  133  Cal.  496,  498,  65  Pac.  1030.  Also 
Eohrbough  v.  Johnson,  107  Cal.  144,  148,  149,  40  Pac. 
37,  a  case  where  the  agreement  under  consideration 
was  in  reality  for  a  pledge. 


§    306  MOVABLE    PROPERTY.  507 

tain  an  action  for  the  recovery  of  damages  for 
such  conversion/^  in  which  action  the  mortgagee 
may,  where  the  property  has  not  been  received 
back  by  him/^  recover 

(1)  in  every  case  a  fair  compensation  for  the 
time  and  money  properly  expended  in  pursuit 
of  the  property 5^^  and 

(2)  in  case  of  a  conversion  by  a  person  having 
a  right  to  the  property  after  the  discharge  of 

77  Recordation  Ineffective:  Bank  of  Ukiah  v. 
Moore,  106  Cal.  673,  680,  39  Pae.  1071. 

78  Action  for  Damages  is  Maintainable.— Thus 
where  the  sheriff  attached  mortgaged  movable  prop- 
erty without  tendering  to  the  mortgagee  the  amount 
of  the  mortgage  obligation,  this  action  for  damages 
is  maintainable  against  him:  Wood  v.  Franks,  56  Cal. 
217. 

79  This  Measure  of  Damages  is  Only  Applicable 
Where  the  Mortgaged  Property  has  not  Been  Received 
Back  by  the  Mortgagee.— Thus,  in  Irwin  v.  McDowell, 
91  Cal.  119,  123,  27  Pae.  601,  the  court  says:  ''The 
levy  of  attachment  and  the  appointment  of  a  keeper 
were  sufficient,  as  we  have  seen,  to  constitute  a  con- 
version; and  the  action  was  commenced  before  the 
release.  What  became  of  the  property  after  it  was 
released  does  not  appear.  The  court  finds  only  that 
it  was  delivered  to  the  mortgagor,  and  was  never  re- 
moved from  the  open  field,  where  it  was  situate,  by 
the  defendant  [sheriff]  or  by  his  authority.  The 
plaintiff  may  have  taken  it  back  and  applied  its  pro- 
ceeds to  the  payment  of  his  debt,  or.  he  may  have 
refused  to  do  so  and  relied  on  his  claim  for  damages. 
If  he  took  it  back,  he  sustained  no  damages;  and  if 
not,  the  damages  could  not  have  exceeded  the  value 
of  the  property.^' 

80  A  Fair  Compensation  for  Time  and  Money  Prop- 
erly Expended  Recoverable:  See  Civil  Code,  section 
3336,  second  subdivision,  as  quoted,  note  82,  below, 
and  Civil  Code,  section  3338,  as  quote^l,  note  81,  below. 


508  OPERATION    OF    MORTGAGE.  §    306 

the  mortgage  superior  to  that  of  the  mort- 
gagee, the  amount  owing  upon  the  secured  ob- 
ligation if  the  property  is  worth  that  amount, 
but  if  worth  less  than  that  amount  only  the 
value  of  the  property;^^  or  in  case  of  a  conver- 

81  Conversion  by  Person  Having  Superior  Right 
After  Discharge  of  Mortgage.— Civil  Code,  section 
3338,  provides:  ^^One  having  a  mere  lien  on  personal 
property  cannot  recover  greater  damages  for  its  con- 
version, from  one  having  a  right  thereto  superior  to 
his,  after  his  lien  is  discharged,  than  the  amount  se- 
cured by  the  lien,  and  the  compensation  allowed  by 
section  3336  for  loss  of  time  and  expenses/' 

'^What  is  the  amount  secured  by  the  lien?  The 
answer  must  be,  the  full  amount  of  the  mortgage 
debt,  if  the  property  is  worth  enough  to  pay  it;  and 
if  not,  then  such  sum  or  amount  as  it  is  worth.  It 
would  seem  absurd  to  say,  if  the  mortgage  debt  was 
a.  thousand  dollars  and  the  mortgaged  property  was 
worth  only  a  hundred  dollars,  that  the  full  amount  of 
the  debt  was  secured'':  Irwin  v.  McDowell,  91  Cal. 
119,  122,  123,  27  Pac.  601;  Troxler  v.  Buckman,  126 
Cal.  288,  290,  58  Pac.  691. 

Where  a  mortgaged  crop  of  hay  had  been  disposed 
of  by  a  mortgagor,  but  the  secured  obligation  had 
been  partly  paid,  the  court  said:  **In  such  case,-  if 
he  could  not  recover  the  identical  hay  he  was  en- 
titled to  no  greater  sum,  as  damages,  against  the 
owner,  or  one  in  privity  with  him,  than  the  balance 
due  him":  Wilkerson  v.  Thorpe,  128  Cal.  221,  226, 
60  Pac.  679. 

Historical.— In  Wood  v.  Franks,  56  Cal.  217,  67  CaJ. 
32,  7  Pac.  50,  and  Sherman  v.  Finch,  71  Cal.  68,  11 
Pac.  847,  the  mortgagee  demanded  the  amount  of 
the  mortgage  obligation  as  damages,'  but  no  objec- 
tion was  taken  to  the  amount  of  the  demand,  and  the 
question  of  the  sufficiency  of  the  mortgaged  prop- 
erty to  pay  the  mortgage  obligation  was  not  consid- 
ered. In  Irwin  v.  McDowell,  91  Cal.  119,  123,  27 
Pac.  601,  this  fact  is  commented  upon,  and  the  cases 
distinguished  upon  this  ground. 


f    306  MOVABLE    PROPERTY.  509 

sion  by  a  person  without  such  right  to  the  prop- 
erty;, the  value  of  the  property  at  the  time  of 
the  conversion  with  interest  from  that  time,  or 
where  the  action  has  been  prosecuted  with 
reasonable  diligence,  the  highest  market  value 
of  the  property  at  any  time  between  the  con- 
version and  the  verdict,  without  interest,  at 
the  option  of  the  injured  party.®^ 

Subdivision  Jf.     Of  Mortgages  to  Secure  Future 
Advances. 

307.     Validity  Limited  When  Object  of  Mortg^age 
not  Stated .83 

A  mortgage  in  good  faith  given  in  whole  or 

S2  Civil  Code,  section  3336,  provides:  ''The  det- 
riment caused  by  the  wrongful  conversion  of  personal 
property  is  presumed  to  be 

(1)  the  value  of  the  property  at  the  time  of  the  con- 
version, with  the  interest  from  that  time;  or,  where 
the  action  has  been  prosecuted  with  reasonable  dili- 
gence, the  highest  market  value  of  the  property 
at  any  time  between  the  conversion  and  the  ver- 
dict, without  interest,  at  the  option  of  the  injured 
party;  and, 

(2)  a  fair  compensation  for  the  time  and  money  prop- 
erly expended  in  pursuit  of  the  property." 

As  amended,  in  effect,  January  22,  1878. 

83  Tully  V.  Harloe,  35  Cal.  302,  309,  95  Am.  Dec. 
102;  Wood  V.  Franks,  67  Cal.  32,  35,  7  Pac.  750.  Com- 
pare D  'Oyly  V.  Capp,  99  Cal.  153,  33  Pac.  736. 

A  mortgage  which  misrepresents  the  transaction  be- 
tween the  mortgagor  and  mortgagee  is  liable  to  sus- 
picion, and  ought  to  be  critically  examined;  but  if, 
upon  investigation,  the  real  transaction  turns  out  to  be 


510  OPERATION    OF    MORTGAGE.  §    307 

in  part  to  secure  future  advances,^^  in  which  the 
true  object  is  not  expressed,  is  enforceable  for  ad- 
vances actually  made  merely  to  the  utmost 
amount  shown  upon  its  face  to  be  secured  there- 
by, and  not  at  all  if  the  amount  of  liability  is  not 
expressly  limited.?*'* 

308.  When  Object  Stated,  Extent  of  Secured  Ob- 
ligation Need  not  be  Shown. 

A  mortgage  showing  on  its  face  that  it  is  given 
in  whole  or  in  part  to  secure  future  advances  is 
not  required  to  set  forth  the  amount  of  the  ad- 
vances thereby  to  be  secured.®^ 

309.  Concerning  the  Advances. 

The  agreement  under  which  the  advances  ar<i 
made  need  not  be  in  writing,®''  although  if  re- 
fair,  and  to  have  been  had  in  good  faith,  it  would 
be  unjust  to  deprive  the  person  claiming  under  it 
of  his  equitable  rights.  It  is  always  better,  for  ob- 
vious reasons,  that  the  mortgage  should  be  drawn 
so  as  to  show  the  true  object  and  purpose  of  the  trans- 
action, for  suspicion  is  engendered  by  misrepresenta- 
tion, but  disarmed  by  a  statement  of  the  truth:  Tully 
V.  Harloe,  35  Cal.  302,  309,  95  Am.  Dec.  102. 

84  Good  Faith  is  a  Question  of  Fact:  Tully  v.  Har- 
loe, 35  Cal.  3U2,  310,  95  Am.  Dec.  102;  V¥ood  v.  Jj'ranks, 
67  Cal.  32,  35,  7  Pac.  750. 

85  Amount  of  liability  to  be  created  must  be  ex- 
pressly limited:  Tapia  v.  Demartini,  77  Cal.  383,  387, 
11  Am.  St.  Eep.  288,  19  Pac.  641. 

86  Tapia  v.  Demartini,  77  Cal.  383,  387,  11  Am.  St. 
Eep.  288,  19  Pac.  641. 

87  Tapia  v.  Demartini,  77  Cal.  383,  386,  11  Am.  St. 
Kep.  288,  19  Pac.  641;  Savings  Bank  of  Southern  Cali- 
fornia V.  Asbury,  117  Cal.  96,  103,  48  Pac.  1081. 


§    309  FUTURE    ADVANCES.  511 

duced  to  writing,  the  terms  of  the  writing  cannot 
be  varied  by  parol,^**  and  it  is  immaterial  whether 
the  advances  are  to  be  made  in  money  or  other 
property,^^  but  the  amount  recoverable  on  fore- 
closure for  advances  made  cannot  exceed  the 
actual  amount  or  value  thereof .^^ 

310  *   Third  Parties  may  Rely  upon  Apparent  Ma- 
turity of  Mortgage. 

Subsequent  purchasers  and  encumbrancers  for 
value  without  notice,  may  rely  upon  the  maturity 
of  such  a  mortgage,  and  cannot  be  prejudiced  by 
advances  made  to  the  mortgagor  after  the  matur- 
ity of  the  secured  obligation,  although  contracted 
for  by  the  mortgagor.^^ 

311.     Advances  Made  Before  Notice    of    Subse- 
quent Encumbrance  Secure  Priority. 

A  mortgage  to  secure  future  advances  secures 
preference  for  advances  actually  made  not  only 

Thus  a  deed  absolute  on  its  face  given  by  way  of 
mortgage  may  secure  future  advances  without  any 
accompanving  written  obligation:  Campbell  v.  Free- 
man, 99  Cal.  546,  548,  549,  34  Pac.  114. 

88  Where,  however,  the  agreement  under  which  the 
advances  secured  by  a  mortgagor  were  to  be  made 
was  reduced  to  writing,  it  cannot  be  varied  by  parol 
proof  that  other  advances  were  to  be  secured:  Barn- 
hart  V.  Edwards  (Cal.),  47  Pac.  251,  252B. 

89  Tapia  v.  Demartini,  77  Cal.  383,  387,  11  Am.  St. 
Eep.  288,  19  Pac.  641. 

90  Vogan  V.  Caminetti,  65  Cal.  438,  4  Pac.  435. 

91  HaU  V.  Glass,  123  Cal.  500,  504,  69  Am.  St.  Eep. 
77,  56  Pac.  336. 


512  OPERATION    OF   MORTGAGE.  §    311 

before  the  recordation  of  a  subsequent  encum- 
brance, but  also  after  the  recordation  before  ac- 
tual notice  of  the  subsequent  encumbrance  is 
given  the  superior  encumbrancer.^^ 

312.  Obligatory  Advances  Thereafter  Made  Se- 
cure Priority. 

Such  mortgage  secures  preference  for  obliga- 
tory advances  made  after  notice  of  a  subsequent 
encumbrance.^^ 

313.  No  Priority  for  Optional  Advances  There- 

after Made.*>* 

A  mortgage  to  secure  future  advances  does  not 
secure  preference  for  optional  advances  made 
after  actual^^  notice  of  a  subsequent  encum- 
brance. 

92  Advances  Made  Before  Notice  of  Subsequent 
Encumbrance  Secure  Priority. 

A  mortgage  to  secure  future  advances,  as  against 
subsequent  encumbrancers,  becomes  an  encumbrance 
for  the  whole  sum  advanced  from  the  time  of  its 
execution,  and  not  for  each  separate  amount  advanced 
from  the  time  of  advancement,  although  the  right  to 
enforce  the  collection  thereof  can  only  arise  upon 
each  advancement  being  made. 

The  recordation  of  a  subsequent  encumbrance  is  not 
constructive  notice  of  its  existence  to  a  prior  encum- 
brancer: Tapia  V.  Demartini,  77  Cal.  383,  387,  11 
Am.  St.  Eep.  288,  19  Pac.  641. 

A  mortgage  given  to  secure  advances  to  the  amount 
of  eighteen  hundred  dollars,  the  mortgage  being  duly 
recorded,  constitutes  a  charge  against  the  mortgaged 
property  prior  to  an  attachment  levied  subsequently 
t'>  the  recordation  against  the  same  property  to  the 


§    314  FUTURE    ADVANCES.  513 

314.  Failure  to  Make  Advances  Creates  Liability 
for  Damages. 

In  the  absence  of  a  rescission  or  attempt  to 
rescind  by  the  mortgagor,  a  mortgage  to  secure 
future  advances  is  not  rendered  unenforceable  by 
the  failure  of  the  mortgagee  to  make  an  obliga- 
tory advance  when  required  to  do  so;  but  the 
mortgagor  is  entitled  upon  a  foreclosure  thereof 
to  a  recoupment  for  the  damages  caused  by  the 
breach  of  this  stipulation  of  the  contract.^^ 

Subdivision  5,     Of  Mortgages  of  the  Homestead, 

315.  Homestead,  How  Far  Mortgageable.^ 

A  homestead  is  mortgageable  to  secure  an  an- 
tecedent  obligation   or   one   contemporaneously 

extent  of  any  balance  due  the  mortgagee  up  to 
eighteen  hundred  dollars:  Bank  of  Oroville  v.  Law- 
rence  (Cal.),   37  Pac.  936,  938B. 

93  Compare  Savings  etc.  Soc.  v.  Burnett,  106 
Cal.  514,  536,  39  Pac.  922  (see  section  313  and  note  94). 

J>4  Tapia  v.  Demartini,  77  Cal.  383,  387,  388,  11 
Am.  St.  Eep.  288,  19  Pac.  641:  Savings  etc.  Soc.  v. 
Burnett,  106  Cal.  514,  532,  533,  39  Pac.  922. 

95  The  notice  must  be  actual.  Constructive  no- 
tice by  the  recording  of  a  subsequent  encumbrance 
is  not  sufficient:  Tapia  v.  Demartini,  77  Cal.  383,  387, 
li  Am.  St.  Kep.  288,  19  Pac.  641;  Savings  etc.  Soc. 
V.  Burnett,  106  Cal.  514,  532,  533,  39  Pac.  922. 

96  Porter  v.  Lassen  Co.  Land  etc.  Co.,  127  Cal.  261, 
273,  59  Pac.  563. 

1  See  Civil  Code,  section  1241,  as  quoted  under  sec- 
tion 317,  note  5,  below. 
Liens— 33 


514  OPERATION    OF    MORTGAGE.  §    315 

mad 6;,  except  that  in  the  case  of  the  homestead 
of  a  married  claimant  the  mortgage  thereof  must 
be  jointly  and  concurrently  executed  and  deliv- 
ered^ by  both  husband  and  wife.  If^  possible 
at  all,  a  mortgage  of  a  homestead  to  secure  future 
advances  can  only  be  accomplished  by  an  instru- 
ment which  expressly  declares  its  purpose. 

316.     Recorded  Mortgage  Superior  to  Subsequent 
Homestead. 

A  duly  recorded  mortgage  of  any  property  is 
superior  to  a  homestead  subsequently  impressed 
upon  the  same  property.^ 

2  A  conveyance  of  a  homestead  of  a  married  claim- 
ant must  be  jointly  and  concurrently  executed  and 
delivered  by  both  husband  and  wife;  otherwise  it 
is  void  without  qualification;  and  the  same  is  truo 
of  a  mortgage:  Hart  v.  Church,  126  Cal.  471,  477,  77 
Am.   St.  Kep.   195,  58  Pac.   910. 

3  Compare  Merced  Bank  v.  Kosenthal,  99  Cal.  39. 
49,  31  Pac.  849,  33  Pac.  732. 

Thus  a  mortgage  of  the  homestead  by  deed  abso- 
lute, with  a  contemporaneous  oral  agreement  of  de- 
feasance, cannot  secure  future  advances:  Merced  Bank 
V.  Rosenthal,  99  Cal.  39,  49,  31  Pac.  849,  33  Pac.  732. 

4  Van  Sandt  v.  Alvis,  109  Cal.  165,  168,  50  Am. 
St.  Rep.  25,  41  Pac.  1014;  Glas  v.  Glas,  114  Cal. 
566,  55  Am.  St.  Rep.  90,  46  Pac.  667;  Loewenthal  v. 
Coonan,  135  Cal.  381,  87  Am.  St.  Rep.  115,  67  Pac. 
324. 

See  Civil  Code,  section  1241,  as  quoted  under  next 
section. 

The  fact  that  the  mortgagee  was  wife  and  the  mort- 
gagor (who  afterward  declared  a  homestead)  her  hus- 
band makes  no  difference:  Glas  v.  Glas,  114  Cal.  566, 
568,  55  Am.  St.  Rep.  90,  46  Pac.  667. 


^ 


§    317  HOMESTEAD.  515 

317.  Unrecorded  Immovable  Property  Mortgage 
When  Superior  to  Homestead. 

An  unrecorded  immovable  property  mortgage 
executed  by  both  husband  and  wif e^  or  by  an  un- 
married homestead  claimant^  is  superior  to  a 
hom.estead  subsequently  declared  by  any  of  such 
persons  upon  the  property  affected  by  the  mort- 
gage.^ 

318.  Mortgage   When  Postponed  to  Homestead. 

An  unrecorded  mortgage  against  the  home- 
stead of  a  married  claimant,  when  not  executed 

Thus  a  duly  recorded  mortgage  on  a  crop  to  be 
planted  is  superior  to  a  declaration  of  homestead 
on  the  land  affected  thereby,  the  declaration  of  home- 
stead being  filed  after  the  recordation  of  the  mort- 
gage but  before  the  crop  was  planted,  as  the  mort- 
gage attaches  as  of  the  time  of  its  recordation:  Hall 
V.  Glass,  123  Cal.  500,  507,  69  Am.  St.  Eep.  77,  56 
Pac.  336. 

5  Civil  Code,  section  1241,  in  part,  provides: 
^  ^  The  homestead  is  subject  to  execution  or  f orce^i 
sale  in  satisfaction  of  judgments  obtained:   .... 

(3)  on  debts  secured  by  mortgage  on  the  premises, 
executed  and  acknowledged  by  the  husband  and 
wife,  or  by  an  unmarried  claimant; 

(4)  on  debts  secured  by  mortgages  on  the  premises, 
executed  and  recorded  before  the  declaration  of 
homestead  was  filed  for  record.'' 

Subdivision  4  applies  merely  to  mortgages  which 
are  not  executed  by  both  husband  and  wife:  Duncan 
V.  Curry,  124  Cal.  106,  56  Pac.  898.  Under  subdivision 
3,  however,  a  homestead  is  subject  to  an  unrecorded 
mortgage  executed  by  both  husband  and  wife  before 
the  declaration  of  homestead  was  filed:  Duncan  v. 
Curry,  124  Cal.  106,  56  Pac.  898;  Kleinsorge  v.  Klein- 


516  OPERATION    OF    MORTGAGE.  §    318 

jointly  and  concurrently  by  both  husband  and 
wife,  is  void  to  the  extent  of  the  homestead  ex- 
emption, although  subsisting  against  the  property 
at  the  time  of  the  declaration  of  homestead  ;^  and 
when  executed  after  the  declaration  of  home- 
stead is  also  likewise  void,  although  recorded;'' 
but  such  mortgages  are  valid  as  to  any  excess  in 

sorge,  133  Cal.  412,  65  Pac.  876.  (Downing  v.  Le  Du, 
87  Cal.  471,  473,  23  Pac.  202,  is  shown  to  be  inap- 
plicable in  Kleinsorge  v.  Kleinsorge.) 

6  Ontario  State  Bank  v.  Gerry,  91  Cal.  94,  27  Pac. 
531;  First  Nat.  Bank  v.  Bruce,  94  Cal.  77,  79,  29  Pac. 
488. 

See  Civil  Code,  section  1241,  subdivision  4,  as 
quoted  under  section  317,  note  5. 

The  homestead  is  superior  to  the  mortgage  even 
when  the  homestead  claimant  has  actual  notice  of  the 
mortgage:  Lee  v.  Murphy,  119  Cal.  364,  371-374,  51 
Pac.  549,  955. 

Historical.— For  a  general  discussion  of  mortgage 
of  the  homestead  under  the  acts  of  1851,  1860,  and 
1862,  see  Peterson  v.  Hornblower,  33  Cal.  266;  Mc- 
Laughlin V.  Hart,  46  Cal.  638;  Herrold  v.  Been,  58 
Cal.  443. 

7  See  the  cases  cited  in  note  8  below. 

^^It  is  the  settled  law  in  this  state  that  neither 
spouse  can  alienate  or  -encumber  the  homestead  with- 
out the  joint  act  of  the  other,  and  that  the  effort 
so  to  do  is  a  nullity,  and  will  not  be  validated  by  a 
subsequent  dissolution  of  the  marriage  or  termination 
of  the  homestead '^  Lange  v.  Geiser  (Cal.,  March  23, 
1903),  V2  Pac.  343. 

Where  certain  property  of  a  married  claimant  is 
impressed  with  a  homestead,  the  wife  cannot  mortga^ge 
her  interest  therein  to  her  husband,  because  the  wife 
cannot  alone  mortgage  such  interest  to  her  husband 
or  to  anyone  else,  and  because  the  husband  could 
not  mortgage  to  himself  and  thus  his  signing  the  mort- 
gage would  not   have   made   it   any  the  less   illegal: 


§    318      '  HOMESTEAD.  517 

value  of  the  mortgaged  property  beyond  tho 
homestead  exemption.^ 

319.     Penalty  for  Making  Void  Mortgage. 

Every  married  person  who  falsely  and  fraudu- 
lently represents  himself  or  herself  as  competent 
to  mortgage  any  immovable  property,  to  the 
validity  of  which  mortgage  the  assent  or  concur- 
rence of  the  other  spouse  is  necessary,  and  under 
such  representations  willfully  mortgages  such 
property,  is  guilty  of  felony.^ 

Freiermuth  v.  Steigleman,  130  Cal.  392,  80  Am.  St. 
Eep.   138,  69  Pac.   615. 

«  Valid  for  Excess  in  Value  of  Property  Beyond 
Homestead  Exemption.— Thus  a  mortgage  against  the 
homestead  of  a  married  claimant  executed  by  the  hus- 
band alone  is  void  to  the  extent  of  the  homestead  ex- 
emption, but  valid  as  Ijo  any  excess;  Sargent  v.  Wil- 
son, 5  Cal.  504;  Eevalk  v.  Kraemer,  8  Cal.  66,  74,  68 
Am.  Dec.  308;  Kraemer  v.  Eevalk,  8  Cal.  74;  Van 
Eeynegan  v.  Eevalk,  8  Cal.  75;  Moss  v.  Warner,  10 
Cal.  296;  Lies  v.  De  Diablar,  12  Cal.  327;  Mabury  v. 
Euiz,  58  Cal.  11,  14.  Compare  Quackenbush  v.  Eeed, 
102  Cal.  493,  500,  37  Pac.  755. 

In  Moss  V.  Warner,  10  Cal.  296,  the  court  says  that 
where  the  mortgage  is  valid  for  this  excess  of  value,  a 
proceeding  to  set  apart  from  the  entire  premises  a 
portion  not  exceeding  in  value  the  amount  of  the 
statutory  exemption,  through  the  appointment  of  com- 
missioners by  the  court,  who  are  directed  to  select  in 
as  compact  form  as  possible  a  portion,  including  the 
place  where  the  dwelling-house  is  situated,  of  the 
value  of  five  thousand  dollars,  is  highly  proper,  and 
when  practicable  is  far  preferable  to  the  sale  of  the 
entire  premises  with  a  reservation  of  the  amount  of 
the  exemption  from  the  proceeds.  Compare  the  provi- 
sions of  Civil  Code,  sections  1245-1259. 

9  See  Penal  Code,  section  534,  as  enacted  1872. 


518  OPERATION    OF    MORTGAGE.  §    320 

320.  Not  Rendered  Valid  by  Subsequent  Termi- 
nation of  Homestead. 
A  mortgage  void  as  to  the  homestead  value  of 
the  mortgaged  property  cannot  be  rendered  valid 
by  the  subsequent  termination  of  the  homestead, 
although  the  right  to  mortgage  is  thereby  re- 
vested in  the  mortgagor.  ^^ 

lo  Not  Rendered  Valid  by  Subsequent  Termination 
of  Homestead:  Eevalk  v.  Kraemer,  8  Cal.  66,  74,  68 
Am.  Dec.  304;  Gleason  v.  Spray,  81  Cal.  217,  15  Am. 
St.  Eep.  47,  22  Pac.  551;  Powell  v.  Patison,  100  Cal. 
236,  34  Pac.  677;  Lange  v.  Geiser  (Cal.,  March  23, 
1903),  72  Pac.  343. 

Rationale.— Civil  Code,  sections  1242-1244,  provide: 
''The  homestead  of  a  married  person  cannot  be  con- 
veyed or  encumbered,  unless  the  instrument  by  which 
it  is  conveyed  or  encumbered  is  executed  and  ac- 
knowledged by  both  husband  and  wife.  A  home- 
stead can  be  abandoned  only  by  a  declaration  of 
abandonment,  or  a  grant  thereof,  executed  and  ac- 
knowledged (1)  by  the  husband  and  wife,  if  the 
claimant  is  married;  (2)  by  the  claimant,  if  unmar- 
ried. A  declaration  of  abandonment  is  effectual  only 
from  the  time  it  is  filed  in  the  office  in  which  the 
homestead   is   recorded. '' 

''These  three  septions  are  in  pari  materia,  and 
must  be  read  together  and  effect  given  to  each.  Sec- 
tions 1242  and  1243  prescribed  how  homesteads  may 
be  alienated  or  encumbered,  and  the  last-mentioned 
section,  in  addition  thereto,  how  they  may  be  aban- 
doned, and  section  1244  the  time  from  which  the 
abandonment  becomes  effectual.  This  last  section, 
it  is  to  be  observed,  fixes  the  time,  when  the  home- 
stead character  r)f  the  property  is  extinguished  by 
abandonment,  and  does  not  give  the  abandonment  any 

retroactive  operation In  section  1244,  the  words 

'from  the  time'  must  have  been  used  for  some  pur- 
pose, and  with  the  intention  of  preventing  an  in- 
strument made  by  the  husband  alone  during  the  ex- 


§    321  LEVY   ON    MOVABLE    PROPERTY.  519 

Subdivision  6,     Levy  Upon    Mwtgaged  Mavalle 
Property, 

321.  Mortgaged  Movable  Property  Leviable  Un- 
der Certain  Conditions'^ 
The  proper  officer  may,  after  first^^  paying  or 
tendering  to  the  mortgagee,  or  depositing  with 
the  county  clerk  or  treasurer,  payable  to  the  or- 
der of  the  mortgagee,  the  amount  of  the  mortgage 
obligation  with  interest,  take  mortgaged  movable 

istence  of  the  homestead,  and  designed  to  affect  it, 
from  taking  effect  upon  the  abandonment  of  the 
homestead.  By  so  construing  those  words,  the  three 
sections,  taken  together,  erect  a  complete  barrier 
iaround  the  homestead  for  the  protection  of  it,  in 
favor  of  the  wife  against  the  individual  assaults  of 
the  husband  upon  if:  Gleason  v.  Spray,  81  Cal.  217, 
15  Am.  St.  Rep.  47,  22  Pac.  551. 

Historical.— In  Gleason  v.  Spray,  the  cases  of  Gee  v. 
Moore,  14  Cal.  472,  Barman  v.  Norton,  16  Cal.  213, 
and  Himmelmann  v.  Schmidt,  23  Cal.  117,  121,  holding 
that  the  mortgage  was  rendered  valid  by  the  subse- 
quent termination   of  the  homestead,  were  overruled. 

11  See  Civil  Code,  sections  2968  and  2969. 

12  The  Officer  Must  First  Pay,  etc.,  this  Amount.— 
So  where  the  sheriff  took  possession  under  a  writ  of 
attachment  of  mortgaged  movable  property  (as  a 
severed  crop  which  remained  upon  the  land  where  it 
was  grown,  or  some  household  furniture),  without 
first  paying,  tendering,  or  depositing,  as  above,  the 
taking  was  wrongful  and  the  sheriff  becomes  liable  to 
the  mortgagee  in  damages:  Rider  v.  Edgar,  54  Cal. 
127;  Woo^d  v.  Franks,  56  Cal.  217;  Person  v.  Nunan, 
63  Cal.  550,  551;  Meherin  v.  Oaks,  67  Cal.  57,  59,  7 
Pac.  47.  See,  also,  Chittenden  v.  Pratt,  89  Cal.  178, 
.183,   26  Pac.   626. 


520  OPERATION    OF    MORTGAGE.  §    321 

property  under  attaclinieiit^^  or  execution  issued 
at  the  instance  of  a  creditor  of  the  mortgagor. 

322.     Seizure   of   Property   Without  Performing 
Conditions  a  Conversion. 

The  officer  is  not  bound  to  make  the  seizure  of 
the  property  until  the  creditor  furnished  him 
with  the  funds  necessary  for  making  the  requi- 
site payment,  tender,  or  deposit  ;^^  and  if  the 
officer  seizes  the  property  without  first  making 
such  payment,  he  renders  himself  liable  for  the 
conversion  of  the  property.^^ 

13  For  the  purposes  of  attachment,  a  growing 
crop  is  deemed  to  be  movable  property  not  capable 
of  manual  delivery.  Thus  the  attachment  is  to  be 
made  in  conformity  with  the  Code  of  Civil  Procedure, 
section  542,  subdivision  5,  the  copy  of  the  writ  of 
attachment  and  notice  that  the  crop  is  attached  be- 
ing left  with  the  person  in  possession  of  the  crop, 
although  such  person  is  the  attachment  debtor  him- 
self: Raventas  v.  Green,  57  Cal.  254;  Rudolph  v. 
Saunders,  111  Cal.  233,  236,  43  Pac.  619. 

14  Officer  not  Bound  to  Make  Seizure  until  Fur- 
nished with  Funds.— ^  ^  The  officer  is  not  bound  to  make 
the  seizure  unless  the  attaching  creditor  furnish  him 
with  the  requisite  funds  to  make  the  payment;  a  fail- 
ure to  furnish  the  funds  would  be  a  good  defense  by 
the  officer  in  a  suit  against  him  by  the  attaching 
creditor ^^:  Wood  v.  Franks,  56  Cal.  217,  219. 

15  Seizure  without  Prior  Payment  is  a  Conver- 
sion.—^^  From  these  sections  [Civil  Code,  sections  2968 
and  2969]  it  clearly  appears  that  an  officer  has  no 
right  to  take  mortgaged  personal  property  under  pro- 
cess against  the  mortgagor,  unless  he  first  complies 
with  the  requirements  of  section  2969;  and  if  he  does 
so,  he  makes  himself  liable  as  for  a  conversion '' :  Ir- 
win V.  McDowell,  91  Cal.  119,  122,  27  Pac.  601. 


§    323  LEVY   ON    MOVABLE    PROPERTY.  521 

323.     Distribution  of  Proceeds  of  Sale  of  Levied 
Property. 

When  the  property  thus  taken  is  sold  under 
process,  the  officer  must  apply  the  proceeds  of  the 
sale 

(1)  to  the  repayment  of  the  sum  paid  to  the  mort- 
gagee Fith  interest  from  the  date  of  such  pay- 
ment, and 

(2)  any  balance  in  like  manner  as  the  proceeds 
of  sales  under  execution  are  applied  in  other 
cases. ^^ 

16  See  Civil  Code,  section  2970. 


522  MORTGAGE. 


•  AETICLE4. 

EIGHTS   AND   DUTIES   OF  PAETIES. 

Subdivision  1.    Possession,   Control,   Use. 

S24.     In. absence  of  agreement,  mortgagor  entitled  to 

possession. 
32'5.     Mortgagor    entitled    to    reasonable    subtractive 

use  of  land. 

326.  Mortgagor  may  not  impair  mortgagee's  security. 

327.  Immovable    property   mortgagor    under   penalty 

must  not  impair  freehold. 

328.  Movable  property  mortgagor  under  penalty  must 

give    notice    of    transaction    concerning    mort- 
gaged property. 

329.  Movable  property  mortgagor  under  penalty  must 

not  remove  property  from  county  where  situ- 
ate. 

330.  Movable  property  mortgagee  may  take  posses- 

sion upon  removal. 

331.  Remedies  of  movable  property  mortgagee  when 

entitled  to  possession. 

332.  Remedies  of  immovable  property  mortgagee  en- 

titled to  possession. 

333.  Liability   of  mortgagee  in  wrongful  possession. 

334.  Removal    of   fixtures   at   instance   of   mortgager^ 

wrongful. 

SuMivision  2.    As   to  Forfeitures. 

335.  Right    to    extinguish    mortgage    cannot    be    re- 

nounced by   contemporaneous   agreement. 

336.  By  independent   agreement  mortgagpr  may   sell 

to  mortgagee. 


k 


RIGHTS    AND    DUTIES.  523 

Snhdivision  3.    Absolute  Deed  as  Mortgage. 

337.  Action  to  declare  absolute   deed  mortgage  and 

liquidate  it  niaintainable. 

338.  Although   secured   obligation  barred,   mortgagor 

must  satisfy  it. 

339.  Judgment  must  grant  relief  to  mortgagor   con- 

ditionally. 

Suhdivision  4-    ^-^   to   Insurance. 

340.  Acts    of    mortgagor    avoid    insurance    although 

assigned   to   mortgagee. 

341.  When   new    contract    with    mortgagee    is    made, 

acts   of  mortgagor   immaterial. 

342.  Insurance  of  mortgagee  expires  when  mortgage 

extinguished. 

Suhdivision  5.    As  to  Taxes  and  Assessments. 

343.  Secured  obligation  not  deemed  interest  in  mort- 

gaged property  for  purposes  of  assessment. 

344.  Obligation    secured    by    property    outside    state 

not    deemed   interest   therein   for    purposes   of 
taxation. 
345:     Obligation  secured    by    property    within    state 
deeded  interest  therein  for  purposes   of  taxa- 
tion. 

346.  Quasi  public  corporation  when  owning  mortgaged 

property  liable  for  tax. 

347.  In   every   other   case   mortgagor   and  mortgagee 

liable  for  their  respective  shares  of  tax. 

348.  Taxes   may   be   paid     by    either    party — Effect 

thereof. 

349.  Mortgagee  liable  for  all  taxes  assessed  before 

payment   of  mortgage. 

350.  Agreement   compelling  mortgagor  to    pav  taxes 

or  assessments  on  secured  obligation  declared 
void  and  penalized, 

351.  Agreement   for    optional   payment    of   taxes   by 
mortgagor  valid.  i 


524  MORTGAGE.  §    324 

Snhdivision  6.     Mortgagee  in  Possession  of  Immoi  oMe 
Property. 

352.  Mortgagee  in  possession  defined. 

353.  Mortgagee  entitled  to  retain  possession  until  se- 

cured obligation  satisfied. 

354.  Mortgagee  in  possession  must  exercise  ordinary 

care. 

355.  Mortgagee  accountable  for  net  proceeds  of  mort- 

gaged premises. 

356.  Obscurities  in  accounts  of  mortgagee  to  be  re- 

solved against  him. 

357.  Mortgagee  not  entitled  to  compensation  for  his 

services. 

358.  Mortgagee  may  sublet  mortgaged  premises. 

359.  Mortgagee   not   generally   entitled   to    allowance 

for  new  improvements. 

360.  No  limitation  on  time  of  commencing  action  to 

cause  discharge   of  mortgage  brought  against 
mortgagee  in  possession  as  such. 

361.  Same— When    certain    parties   interested   in   the 

mortgaged  premises  are  not  entitled  to  bring 
such  action. 

SuMivision  1.     Possession,  Control^  Use, 

324.     In  Absence  of  Agreement,  Mortgagor  En- 
titled to  Possession. 

In  the  absence  of  a  special  express  agreement 
to  the  contrary,  the  mortgagor  is  entitled  to  the 
possession^  and  control  of  the  mortgaged  prop- 
erty and  the  complete  beneficial  nse.^ 

1  Possession:  See  sections  253  and  254,  above. 

Until  default  and  a  consequent  foreclosure  and  sale 
and,  where  redemption  is  allowable,  the  expiration  of 
the  period  of  redemption,  a  mortgagee  has  no  right  to 
take  possession  of  the  mortgaged  premises:    Kidd  v. 


§    325  RIGHTS    AND    DUTIES.  525, 

325.     Mortgagor    Entitled    to    Reasonable  Sub- 
tractive  Use  of  Land. 

A  mortgagor  in  possession  of  the  mortgaged 
land  may  cut  timber  on,  sever  fixtures  from,  and 
do  other  parallel  acts  in  respect  to  the  land,  so 
long  as  such  acts  are  not  carried  to  an  extent  cal- 

Teeple,  22  Cal.  255;  Low  v.  Allen,  26  Cal.  141;  Fogarty 
V.  Sawyer,  17  Cal.     589,  593. 

This  is  equally  true,  although  the  mortgage  is  by 
deed  absolute:  Jackson  v.  Lodge,  36  Cal.  28,  52;  Kaynbr 
V.  Drew,  72  Cal.  307,  309,  13  Pac.  866;  Smith  v.  Smith, 
80  Cal.  323,  326,  21  Pac.  4,  22  Pac.  186,  549;  Hall  v. 
Arnott,  8')  Cal.  348,  352,  353,  22  Pac.  200;  Locke  v. 
Moulton,  96  Cal.  21,  32,  30  Pac.  957;  132  Cal.  145,  64 
Pac.  87;  Vance  v.  Anderson,  113  Cal.  532,  538,  45  Pac. 
816. 

In  Eaynor  v.  Drew,  and  succeeding  case,  Hughes  v. 
Davis,  -^0  Cal.  117,  and  Pico  v.  Gallardo,  52  Cal.  206, 
holding  the  contrary,  were  overruled. 

And  the  mortgagee  having  taken  possession  is  lia- 
ble to  be  ejected  the  same  as  anv  other  intruder: 
Kidd  V.   Teeple,  22  Cal.  255. 

Likewise  a  mortgagee  of  movable  property  is  not 
entitled  to  possession:  Bank  of  XJkiah  v.  Moore,  106 
Cal.  673,   680,  39  Pac.  1071. 

3  Beneficial  Use:  See  sections  285,  299,  and  300, 
above. 

A  mortgagor  in  possession  is  entitled  to  receive  and 
apply  to  his  own  use  the  income  and  profits  of  the 
mortgaged  property  until  a  judicial  sale  under  fore- 
closure is  had:  Simpson  v.  Ferguson,  112  Cal.  180, 
185,  53  Am.  St.  Eep.  201;  44  Pac.  484;  Bank  of  Wood- 
land  V.  Heron,  120  Cal.  614,  617,  52  Pac.  1006. 

The  mortgagor  is  not  accountable  either  for  the 
rents  or  for  the  occupation  and  use  of  the  mortgaged 
premises:  Whitney  v.  Allen,  21  Cal.  233;  see  Pendola 
V.  Alexanderson,  67  Cal.  337,  339,  7  Pac.  756. 


526  MORTGAGE.  §    325 

culated  to  render  the  land  insufficient  security  for 
the  amount  due  upon  the  mortgage  obligation.^ 

326.     Mortgagor  may  not  Impair  Mortgagee's  Se- 
curity. 

On  the  other  hand,  no  person  whose  interest 
in  any  property  is  subject  to  a  mortgage  thereon 
may  do  any  act  which  will  substantially  impair 
the  mortgagee's  security,^  but  may  be  restrained 
therefrom  by  appropriate  judicial  proceeding.*^ 

3  Buckout  V.  Swift,  27  Cal.  433,  437,  87  Am.  Dec.  90. 
So    a   mortgagor   may  remove   a   house,   unless   the 

security  is  thereby  rendered  inadequate:   Buckout  v. 
Swift,  27  Cal.  433,  437,  87  Am.  Dec.  90. 

Unless  restrained  by  the  terms  of  a  mortgage,  a 
mortgagor  in  possession  may  work  mines  or  quarries 
upon  the  mortgaged  property,  and  whatever  he  severs 
from  the  realty  becomes  unencumbered  personalty, 
and  his  own  propertv:  Simpson  v.  Ferguson,  112  Cal. 
180,  185,  53  Am.  St.*^  Rep.  201,  44  Pac.  484. 

4  See  Civil  Code,  section  2929. 

But  an  act  such  as  the  removal  of  growing  nursery 
stock  or  pendant  fruit  does  not  materially  affect  the 
value  of  the  inheritance  nor  cause  irreparable  in- 
jury, and  cannot  be  enjoined:  Robinson  v.  Russell,  24 
Cal.  467,  473. 

5  May  be  Restrained  by  Appropriate  Judicial  Pro- 
ceeding. 

An  action  to  preserve  the  mortgaged  property  from 
destruction,  so  that  it  may  answer  the  purposes  of 
the  mortgage,  is  maintainable,  although  the  time  of 
the  payment  of  the  mortgage  obligation  has  not  ar- 
rived: Bank  of  Ukiah  v.  Moore,  106  Cal.  673,  681,  39 
Pac.  1071.     Compare  Whitney  v.  Allen,  21  Cal.  233. 

An  injunction  may  be  issued  to  stay  the  commission 
of  threatened  acts  upon  the  mortgaged  premises  cal- 
culated to   materially  impair  the  value  of  the  prop- 


i 


§    327  RIGHTS    AND    DUTIES.  527 

327.  Immovable  Property  Mortgagee  Tinder  Pen- 

alty must  not  Impair  Freehold. 

Every  mortgagor  of  immovable  property  who, 
with  intent  to  injure  or  defraud  the  mortgagee, 
his  representatives,  successors,  or  assigns,  re- 
moves from  such  property  or  otherwise  disposes 
of,  or  permits  to  be  removed  or  otherwise  dis- 
posed of,  any  house,  barn,  windmill,  or  water- 
tank,  upon  or  affixed  to  such  premises  as  an  im- 
provement thereon,  without  the  written  consent 
of  the  mortgage  holder,  is  guilty  of  larceny,  and 
shall  be  punished  accordingly.^ 

328.  Movable  Property  Mortgagor  Tinder  Pen- 

alty must  Give  Notice  of  Transaction  Con- 
cerning Mortgaged  Property. 

Every  mortgagor  of  any  movable  property  men- 
tioned in  section  251  above,  excepting  locomo- 
tives, engines,  rolling  stock  of  a  railroad,  steam- 

erty  so  as  to  render  it  an  inadequate  security:  Eobin- 
son  v.  Enssell,  24  Cal.  467,  473. 

An  action  may  be  maintained  by  the  mortgagee  for 
wrongful  and  fraudulent  injury  committed  upon  the 
encumbered  property,  whereby  the  mortgagee 's  se- 
curity is  impaired:  Robinson  v.  Russell,  24  Cal.  467, 
473. 

An  action  for  damages  may  be  maintained  against 
a  person  removing  fixtures  from  the  land  when  it 
rendered  the  property  inadequate  to  satisfy  the  mort- 
gage: Lavenson  v.  Standard  Soap  Co.,  80  Cal.  245,  13 
Am.  St.  Rep.  147,  note,  22  Pac.  184. 

6  See  Penal  Code,  section  502%,  new  section  in.  ef- 
fect March  26,  1895.  - 


528  MORTGAGE.  §    328 

boat  machinery  in  actual  use,  and  vessels,  who  in- 
tends, directly  or  indirectly,  to  sell,  transfer,  or 
further  encumber  any  such  property  during  the 
continuance  of  the  original  mortgage  thereon, 
must,  before  carrying  into  execution  such  inten- 
tion, 

(1)  inform  the  person  to  whom  the  sale,  trans- 
, '  fer,  or  subordinate  encumbrance  is  to  be  made 
.    of  the  existence  of  the  subsisting  mortgage, 

and 

(2)  notify  the  original  mortgagee  of  such  inten- 
tion by  a  written  notice  setting  forth  the  name 
and  place  of  residence  of  the  person  to  whom 
the  sale,  transfer,  or  subordinate  encumbrance 
is  to  be  made; 

otherwise  the  mortgagor  is  guilty  of  larceny,  and 
is  punishable  accordingly.'' 

7  This  duty  is  laid  upon  a  movable  property  mort- 
gagor by  Penal  Code,  section  538,  which  provides: 
^^  Every  person  who,  after  mortgaging  any  of  the 
property  mentioned  in  section  2955  of  the  Civil  Code, 
excepting  locomotives,  engines,  rolling  stock  of  a  rail- 
road, steamboat  machinery  in  actual  use,  and  vessels, 
during  the  existence  of  such  mortgage,  sells,  transfers, 
or  in  any  manner  further  encumbers  the  said  mort- 
gaged property,  or  any  part  thereof,  or  causes  the 
same  to  be  sold,  transferred,  or  further  encumbered, 
is  guilty  of  larceny,  and  shall  be  punished  accordingly; 
unless  at  or  before  the  time  of  making  such  sale,  trans- 
fer, or  further  encumbrance,  such  mortgagor  shall 
inform  the  person  to  whom  such  sale,  transfer,  or  en- 
cumbrance may  be  made,  of  the  existence  of  the  prior 
mortgage,  and  shall  inform  the  prior  mortgagee  of  the 
intended  sale,  transfer,  or  encumbrance,  in  writing,  by 
giving  the  name  and  place  of  residence  of  the  party 


§    329  RIGHTS    AND    DUTIES.  629 

329.  Movable  Property  Mortgagor  Under  Pen- 

alty must  not  Remove  Property  from  Coun- 
ty Where  Situate. 
Every  mortgagor  of  any  movable  property  men- 
tioned in  section  251  above,  excepting  locomo- 
tives, engines,  rolling  stock  of  a  railroad,  steam- 
boat machinery  in  actual  use,  and  vessels,  who, 
during  the  existence  of  the  mortgage,  with  intent 
to  defraud  the  mortgagee,  his  representatives,  or 
assigns,  transfers,  sells,  takes,  drives,  or  carries 
away,  or  otherwise  disposes  of,  or  permits  the 
transferring,  selling,  driving,  or  carrying  away, 
or  otherwise  disposing  of,  such  mortgaged  prop- 
erty, or  any  part  thereof,  from  the  county  where 
it  was  situated  at  the  time  of  mortgaging,  with- 
out the  written  consent  of  the  mortgagee,  is 
guilty  of  larceny,  and  shall  be  punished  accord- 
ingly.^ 

330.  Movable    Property  Mortgagee  may  Take 
Possession  upon  Removal. 

Upon  the  removal  with  the  consent  of  the 
mortgagor  of  mortgaged  movable  property  (ex- 
cept the  rolling  stock  of  a  common  carrier)  from 
to  whom  the  sale,  transfer,  or  encumbrance  Is  to  bo 
made.'^     New  section,  in  effect  March  9,  1893. 

By  section  378  below,  this  book,  it  is  provided  that 
a  transfer  of  mortgaged  movable  property  extin- 
guishes the  mortgage. 

8  See  Penal  Code,  section  537  (second) ;  new  section 
in  effect  March  9,  1893. 

As  to  the  rights  of  the  mortgagee  upon  a  removal 
of  the  property,  see  section  330,  below. 
Liens— 34 


530  MORTGAGE.  '  §    330 

the  county  in  which  it  was  situated  at  the  time  of 
the  recordation  of  the  mortgage^  the  mortgagee 
may  take  possession  and  dispose  of  the  property 
as  a  pledge  for  the  payment  of  the  principal  ob- 
ligation^ although  not  due.^ 

331.     Remedies  of  Movable  Property  Mortgagee 
When  Entitled  to  Possession. 

Whenever  by  operation  of  law  or  the  agree- 
ment of  the  parties  a  movable  property  mort- 
gagee becomes  entitled  to  the  possession  of  the 
mortgaged  property^  a  refusal  to  yield  possession 
of  the  property  to  him  on  demand  constitutes  a 
conversion  thereof/^  and  the  mortgagee  may 
maintain-  an  action  for  the  damages  sustained  by 
him  by  reason  of  the  conversion.^^/  Or,  without 

=    »  See  Civil' Code,  section  2966. 

10  Refusal  to  Yield  Possession  on  Demand  Consti- 
tutes Conversion:  Mathew  v.  Mathew,  138  Cal.  334,  71 
Pac.    344. 

11  May  Maintain  Action  for  Conversion.— Where  a 
movable  property  mortgage  provided  that  upon  de- 
fault in  the  payment  of  the  secured  obligation  at 
=maturity  the  mortgagee  might  take  possession  of  the 
property,  using  all  necessary  force  so  to  do,  and 
proceed^  to  sell  the  same  to  satisfy  the  secured  obliga- 
tion, a  mortgagor  who  refuses  to  deliver  the  property 
to  the  mortgagee  after  demand  made  is  liable  to  such 
mortgagee  in  damages 'to  the  amount-  of  his  special 
interest. 

'^It  is  true  that  under  section  2888  of  our  Civil 
Code  the  legal  title  of  mortgaged  property  is  in  the 
mortgagor;  and  yet,  at  the  same  time,  it  must  be  ad- 
mitted that  the  mortgagee  has  an  interest  in  the  mort- 
gaged property;  and  here,  this  interest  being  by  th3 


§    331  RIGHTS    AND    DUTIES.  631 

making  such  demand  of  possession,  the  mortgagee 
may  maintain  an  action  of  claim  and  delivery  for 
the  recovery  of  the  property/^  although  an 
'action  is  pending  for  the  foreclosure  of  the  mort- 

very  terms  of  the  mortgage  contract  coupled  with  h 
right  of  possession,  the  refusal  to  yield  that  possessioa 
on  demand  amounted  to  a  deprivation  of  a  valuable 
right  which  the  mortgagee  had  in  the  property,  and 
was  a  conversion  of  his  interest  in  such  property. 
The  possession  of  the  property,  and  its  delivery  on  a 
sale  to  satisfy  the  debt,  would  naturally  tend  to  in- 
crease the  price  that  it  might  bring,  and  the  in- 
ability to  deliver  would  naturally  decrease  that  price, 
and  thus  the  want  of  possession  in  the  mortgagee 
would  depreciate  the  value  of  the  mortgage  security 
and  greatly  impair  his  interest  in  the  property.  The 
legal  title  is  not  always  necessary  to  an  action  for 
conversion,  but  any  special  valuable  interest  in  the 
property,  accompanied  with  the  right  of  possession, 
is  a  sufficient  title  upon  which  to  base  the  right  of 
such  an  action.  We  quote  the  language  of  the  su- 
premo court  of  Wisconsin  in  a  case  similar  to  this: 
'His  right  to  recover  against  any  person  unlawfully 
converting  the  same  in  hostility  to  his  rights  as  mort- 
gagee was  just  as  perfect  as  if  he  had  been  the  ab^ 
solute  owner  thereof;  the  only  difference  being  that 
as  against  persons  claiming  under  the  mortgagor  or 
his  assigns  his  right  to  damages  would  be  limited  to 
the  amount  due  upon  his  mortgage,  and  not  the  value 
of  the  property,  if  such  value  exceeded  the  amount 
so  due'  (Smith  v.  Konst,  50  Wis.  360,  7  N.  W.  293)": 
Mathew  v.  Mathew,  138  Cal.  334,   71  Pac.   344. 

12  May  Maintain  Action  of  Claim  and  Delivery.— 
Where  a  movable  property  mortgage  gives  the  mort- 
gagee the  right  of  possession  upon  a  certain  con- 
tingency, upon  the  happening  thereof  such  mortgagee 
may  maintain  an  action  in  claim  and  delivery  for 
such  property:  Flinn  v.  Ferry,  127  Cal.  648,  652,  60 
Pac.  434;  Harper  v.  Gordon,  128  Cal.  489,  61  Pac.  84. 


532  MORTGAGE.  §    332 

gage  and  without  impairing  the  right  to  fore- 
close.^^ 

332.     Remedies    of    Imniovable    Property  Mort- 
gagee Entitled  to  Possession. 

Whenever  by  the  agreement  of  the  parties  an 
immovable  property  mortgagee  becomes  entitled 
to  the  possession  of  the  mortgaged  property,  such 
mortgagee  may  maintain  an  action  for  the  re- 
covery of  the  property,  although  an  action  is 
pending  for  the  foreclosure  thereof  and  without 
impairing  the  right  to  foreclose, ^^  and  may  cause  a 
receiver  for  the  property  to  be  appointed  in  such 
action/^  and  where  the  mortgaged  property  is  a 

13  Action  may  be  Maintained  Notwithstanding 
Pending  Foreclosure  Action.— Although  au  action  lies 
already  been  brought  to  foreclose  a  mortgage,  an  ac- 
tion may  be  maintained  to  recover  possession  of  the 
mortgaged  property  in  case  the  mortgagee  is  entitled 
thereto,  notwithstanding  the  provision  of  the  Code  of 
Civil  Procedure,  section  726,  that  *Hhere  can  be  but 
one  action  for  the  recovery  of  any  debt,  or  the  en- 
forcement of  any  right  secured  by  mortgage  upon 
real  estate  or  personal  property,''  as  such  possessory 
action  is  not  to  recover  the  debt,  nor  **for  the  en- 
forcement of  any  right  secured  by  mortgage''  in  the 
sense  intended  by  the  clause  of  the  statute,  the  agree- 
ment for  possession  being  but  an  incident  to  the 
mortgage,  which,  moreover,  would  have  no  value  could 
it  not  be  enforced  by  an  independent  action:  Harper 
V.  Gordon,  128  Cal.  489,  491,  492,  61  Pac.  84. 

14  Action  may  be  Maintained  Notwithstanding 
Pending  Foreclosure  Action:  See  section  331,  note  13, 
above. 

15  Receiver  may  be  Appointed:  Sacramento  etc. 
R.  R.  Co.  V.  Superior  Court,  55  Cal.  453;   McLane  v. 


§    332  RIGHTS    AND    DUTIES.  533 

railway,  may  anthorize  the  receiver  to  make  pro- 
vision for  operating  the  same  so  as  to  secure  a  a 
income  and  profits. ^^ 

333.    Liability   of   Mortgagee  in  Wrongful  Pos- 
session. 

A  mortgagee  whose  possession  is  wrongful  U 
chargeable  with  rents  and  profits  precisely  as  any 
other  disseisor,  and  is  not  entitled  to  any  ac- 
counting to  determine  how  much  he  may  have 
actually  realized  from  his  wrongful  occupation, 
nor  to  a  credit  for  the  value  of  the  improvements 
made.^'' 

Placerville  etc.  E.  E.  Co.,  Q6  Cal.  606,  615,  616,  6  Pac. 
748. 

''Section  564  (subdivision  6)  of  the  Code  of  Civil 
Procedure  provides  that  a  receiver  may  be  appointed 
by  the  court  in  which  the  action  is  pending,  *in  all 
cases  where  receivers  have  heretofore  been  appointed 
by  the  usages  of  courts  of  equity.'  This  is  not  a 
proceeding  to  foreclose  a  mortgage,  and  to  subject  the 
mortgaged  property  to  sale  under  the  decree  of  the 
court,  but  it  is  in  the  nature  of  a  proceeding  to  en- 
force specific  performance  of  the  terms  and  conditions 
of  a  mortgage;  and  we  find  numerous  cases  in  the 
books  in  which  courts  of  equity  have  exercised  the 
jurisdiction  complained  of  in  this  case":  Sacramento 
etc.  E.  E.  Co.  V.  Superior  Court,  55  Cal.  453. 

16  McLane  v.  Placerville  etc.  E.  E.  Co.,  66  Cal.  606, 
618,  6  Pac.  748. 

-  17  Mahoney  v.  Bostwick,  96  Cal.  53,  58-60,  31  Am. 
St.  Eep.  175,  30  Pac.  1020;  Malone  v.  Eoy,  107  Cal. 
518,  523,  524,  40  Pac.  1040. 

Where  an  immovable  property  mortgage  confers  no 
right  of  possession,  entry  by  the  mortgagee  can  con- 
fer none:  Nagle  v.  Macy,  9  Cal.  426,  428. 


534  MORTGAGE.  §    334 

334.  Removal  of  Fixtures  at  Instance  of  Mort- 

gagee Wrongful. 

A  person  who^  at  the  instance  of  an  immovable 
property  mortgagee  not  in  possession,  severs  and 
removes  from  the  mortgaged  premises  a  fixture 
affixed  thereto  is  liable  to  the  mortgagor  in 
tort.18 

Subdivision  2,    As  to  Forfeiture^ 

335.  Right  to  Extinguish  Mortgage   cannot  be 

Renounced    by    Contemporaneous    Agree- 
ment. 

The  right  to  extinguish  a  mortgage  by  payment 
is  inseparably  connected  therewith,  and  cannot  be 
abandoned  or  waived  by  any  stipulations  entered 
into  between  the  parties  at  the  time  of  the  exe- 
cution of  the  mortgage,  whether  inserted  in  the 
infe^rument  of  mortgage  or  not.^^ 

18  Hill  V.  Gwin,  51  Cal.  47. 

19  Right  to  Extinguish  Mortgage  cannot  "be  Re- 
nounced   by    Contemporaneous    Agreement. 

Civil  Code,  section  2889,  provides:  ''All  contracts 
for  the  forfeiture  of  property  subject  to  a  lien,  in  sat- 
isfaction of  the  obligation  secured  thereby,  and  all 
contracts  in  restraint  of  the  right  of  redemption  from 
a  lien,  are  void." 

Pierce  v.  Eobinson,  13  Cal.  116,  125;  Gpodenow  v. 
Ewer,  16  Cal.  461,  466,  467,  76  Am.  Dec  540;  Mont- 
gomery V.  Spect,  55  Cal.  352,  358,  359. 

Rationale.— l!\iQ  necessities  of  debtors  often  drive 
them  to  make  ruinous  concessions:  Bradbury  v.  Daven- 
port, 114  Cal.  593,  599,  55  Am.  St.  Rep.  92,  46  Pac. 
1062. 


§    336  RIGHTS    AND    DUTIES.  535 

S36.     By  Independent  Agreement  Mortgagor  may 
Sell  to  Mortgagee.2^ 

A  mortgagee  may  acquire  absolute  ownership 
of   mortgaged    property   by   bona   fide  purchase 

20  By  Independent  Agreement  Mortgagor  may  Sell 
to  Mortgagee:  Phelan  v.  De  Martin,  85  Cal.  365,  24 
Pac.  725;  Corcoran  v.  Hinkle  (Cal.),  34  Pac.  1031, 
1033 A;  Watson  v.  Edwards,  105  Cal.  70,  75,  76,  38 
Pac.  527;  Bradbury  v.  Davenport,  114  Cal.  593,  598- 
601,  55  Am.  St.  Eep.  92,  46  Pac.  1062;  120  Cal.  152, 
52  Pac.  301;  De  Martin  v.  Phelan,  115  Cal.  538,  56  Am. 
St.  Eep.  115,  47  Pac.  356. 

Compare  Chapman  v.  Bank  of  California,  97  Cal. 
155,  31  Pac.  845;  Woods  v.  Jensen,  130  Cal.  200,  202, 
203,  62  Pac.  473. 

/  While  courts  view  with  jealousy  and  suspicion  any 
dealings  between  a  mortgagor  and  his  mortgagee  to 
extinguish  the  mortgagor's  title,  a  purchase  of  the 
mortgagor's  interest,  if  fair  and  honest  on  the  part 
of  the  mortgagee,  will  not  be  disturbed.  The  law 
only  prohibits  a  mortgagee  from  availing  himself  of 
a  stipulation  in  a  mortgage  deed,  or  of  some  covenant 
or  agreement,  forming  part  of  the  same  transaction 
with  the  loan  and  the  taking  of  the  security,  by  which 
he  shall  attempt,  upon  the  happening  of  some  future 
event  or  contingency,  to  render  his  interest  not  sub- 
ject to  satisfaction,  and  thus  acquire  absolute  owner- 
ship. In  such  case  the  maxim  '*Onoe  a  mortgage  al- 
ways a  mortgage ' '  applies.  But  the  law  cannot  in- , 
terfere  with  the  right  to  foreclose,  nor  with  any 
frosh  contract  which  the  mortgagor  may  choose  to 
make  with  the  mortgagee  for  the  sale  or  the  relin- 
quishment of  the  right  to  satisfy  the  mortgage,  and 
vesting  the  latter  with  an  absolute  property:  Green 
V.  Butler,  26  Cal.  595,  601,  602. 

In  Garwood  v.  Wheaton,  128  Cal.  399,  60  Pac.  961, 
an  arrangement  was  made  between  a  mortgagor  and  a 
mortgagee  which  the  court  sustained,  having  inter- 
preted it  as  a  conveyance  of  the  premises,  but  ae^ 
companied  by  an  option  by  the  exercise  of  which  the 
mortgagor   vendor  could   repurchase. 


536  MORTGAGE.  §    336 

from  the  mortgagor  for  adequate  consideration^* 
at  any  time  subsequent  to  the  execution  of  the 
mortgage  by  an  independent  and  fair  agreement 
between  them;  but  an  unequal  transaction  will 
be  set  aside^^^  without  the  necessity  of  a  tender 
of  the  secured  obligation  by  the  mortgagor  to  the 
mortgagee.^^ 

21  The  kind  or  character  of  the  consideration  from 
the  mortgagee  to  the  mortgagor  can  make  no  dif- 
ference. It  may  be  something  outside  the  mortgage 
debt,  or  it  may  be  the  release  of  the  mortgage  debt: 
Watson  V.  Edwards,  105  Cal.  70,  76,  38  Pac.  527. 

But  any  marked  under-valuation  of  the  property  in 
the  price  paid  will  vitiate  the  proceeding:  Bradbury 
V.  Davenport,  114  Cal.  593,  599-601,  55  Am.  St.  Eep. 
92,  46  Pac.  1062. 

22  Thus  in  Clark  v.  Fast,  128  Cal.  422,  426,  427, 
61  Pac.  72,  where  a  policy  of  life  insurance  was 
first  pledged  by  an  assignment  for  security,  which 
was  void  because  not  permitted  by  the  terms  of  the 
policy,  and  was  afterward,  to  correct  this  mistake, 
absolutely  assigned,  the  absolute  assignment  was  set 
aside   because   not   for   adequate   consideration. 

23  In  consideration  of  the  discharge  of  an  obli- 
gation secured  by  mortgage,  the  mortgagor  con- 
veyed the  mortgaged  premises  to  the  mortgagor,  the 
consideration  being  grossly  inadequate.     Held,  an  ac- 

•  tion  may  be  maintained  to  cancel  the  conveyance 
when  the  effect  will  not  be  to  deprive  the  mortgagee 
of  his  remedy  on  the  debt.  To  impose  upon  the  plain- 
tiff the  condition  that  he  shall  first  tender  payment 
would  give  the  defendant  an  advantage  of  great  value 
from  a  transaction  from  which  he  should  not  be  al- 
lowed to  derive  any  benefit.  Moreover,  the  sale  of 
the  interest  of  the  mortgagor  in  the  property  might  be 
his  only  asset,  and  in  such  case  to  compel  him  to 
make  a  tender  before  his  ownership  was  declared 
"Would  deprive  him  of  all  remedy:  Bradbury  v.  Daven- 


§    337  EIGHTS    AND    DUTIES.  637 

S'libdwision  S.    Absolute  Deed  as  Mortgage. 

337.     Action  to  Declare  Absolute  Deed  Mortgage 
and  Liquidate  It  Maintainable.^* 

A  mortgagor. in  possession^^^  the  mortgage  of 
whose  property  is  evidenced  by  a  deed  absolute 
in  form,  as  against  everyone  except  a  bona  fide 
purchaser  or  encumbrancer  for  value,  may,  with- 
out limitation  of  time,^^  commence,  and  without 
first  tendering  or  offering  to  pay  the  amount  of 

port,  114  Cal.  593,  603,  604,  55  Am.  St.  Eep.  92,  46  Pac. 
1062. 

24  Daul)enspeck  v.  Piatt,  22  Cal.  30;  Montgom- 
ery V.  Speet,  55  Cal.  352,  359;  Baker  v.  Fireman '3 
Fund  Ins.  Co.,  79  Cal.  34,  21  Pac.  357;  Boyce  v.  Fisk, 
110  Cal.   107,  42  Pac.  473. 

25  Mortgagor ,  in  Possession.— Subject  to  sections 
360  and  361,  this  section  is  also  applicable  where  the 
mortgagee  is  in  possession. 

2G  Without  Limitation  of  Time:  Baker  v.  Fireman's 
Fund  Ins.  Co.,  79  Cal.  34,  42,  21  Pac.  357;  Hall  v. 
Arnott,  80  Cal.  348,  355,  22  Pac.  200. 

Civil  Code,  section  2903:  ^^  Every  person  having  an 
interest  in  property  subject  to  a  lien  has  a  right  to 
redeem  it  from  the  lien,  at  any  time  after  the  claim  is 
due,  and  before  his  right  of  redemption  is  foreclosed. ' ' 

Historical, — The  contrary  rule  as  declared  in  Taylor 
v.  McLain,  60  Cal.  651,  64  Cal.  513,  was  set  aside  by 
the  code. 

Before  the  adoption  of  the  codes  a  mortgage  by  deed 
absolute  in  form  conveyed  the  legal  title  to  the  propr 
erty  to  the  mortgagee,  and  whenever  the  obligation 
secured  by  the  mortgage  became  barred  by  lapse 
of  time,  the  right  of  the  mortgagor  to  maintain  an  ac- 
tion to  redeem  the  property  from  the  mortgagor  be- 
came likewise  barred:  Allen  v.  Allen  (Cal.),  27  Pac. 
30,  32A,  32B. 


538  MORTGAGE.  §    337 

the  secured  obligation^'''  maintain,  an  action  to 
declare  such  deed  a  mortgage,  to  determine  the 
amount  secured  thereby,  and  to  cause  a  recon- 
veyance of  the  interest  apparently  conveyed  by 
the  mortgagor  upon  the  satisfaction  of  the  secured 
obligation  (in  other  words,  an  action  to  quiet 
title ),^^  without  regard  to  the  validity  of  the 
mortgagor's  title,^^  any  adverse  rights  in  good 
faith  acquired  by  the  mortgagee  being  reserved 
to  him/^^  There  is,  however,  no  precedent  for 
an  action  instituted  for  the  sole  purpose  of  de- 

27  Without  Tendering  Secured  Obligation.—^ '  Nor  is 
it  true  that  a  debtor  who  has  given  a  deed  absolute 
in  form  as  security  for  the  payment  of  his  debt  must, 
under  all  circumstances,  tender  paiyment  before  he  can 
litigate  the  character  of  the  instrument;  as,  for  ex- 
ample, where  the  debt  is  not  due,  -and  the  grantee 
asserts  an  absolute  title,  or  is  attempting  to  con- 
vey and  sell  to  a  stranger' ':  Bradbury  v.  Davenport, 
314  Cal.  593,  603,  604,  55  Am.  St.  Eep.  92,  46  Pac. 
1062. 

Thus,  neither  averment  nor  proof  of  the  tender  of 
the  mortgage  obligation  is  a  necessary  prerequisite  to 
the  maintenance  of  the  action:  Daubenspeck  v.  Piatt, 
22   Cal.   30. 

28  This  action  to  declare  a  deed  absolute  in  form 
a  mortgage  upon  its  satisfaction  is  in  effect  merely 
an  action  to  remove  a  cloud  from  the  title:  Baker 
V.  Fireman's  Fund  Ins.  Co.,  79  Cal.  34,  42,  21  Pac.  357. 

29  Without  Regard  to  Validity  of  Title:  Lorenzana 
V.  Camarillo,  45  Cal.  125. 

30  The  action  may  be  maintained  notwithstand- 
ing the  fact  that  the  mortgagee  subsequently  and  in 
good  faith  acquired  an  adverse  title,  but  the  recon- 
veyance from  the  mortgagee  in  such  case  should  be 
limited  to  the  interest  conveyed  by  the  deed  referred 
to:  Hall  V.  Arnott,  80  Cal.  348,  357,  22  Pac.  200. 


§    337  RIGHTS    AND    DUTIES.  539 

daring  an  absolute  deed  a  mortgage,  and  it  can- 
not be  maintained.^^ 

338.  Although  Secured  Obligation  Barred,  Mort- 
gagor must  Satisfy  It. 

In  such  action  the  mortgagor  cannot  obtaiu 
any  affirmative  relief  without  satisfying  the  prin- 
cipal obligation,  although  barred  by  lapse  of 
time.^^ 

339.  Judgment  must  Grant  Relief  to  Mortgagor 

Conditionally.^^ 

The  judgment  in  the  action  must  provide  that 
in  case  of  the  failure  of  the  mortgagor  to  satisfy 
the  obligation  secured  by  the  instrument  in  form 
an  absolute  deed  within  a  time  specified  by  the 
judgment, 

31  Cowing  V.  Eogers,  34  Cal.  648,  654;  Cline  v. 
Rogers,  112  Cal.  581,  585,  44  Pac.  1023. 

32  See  sections  216  and  339. 

The  fact  that  his  debt  is  barred  by  the  statute  of 
limitations  does  not  absolve  a  mortgagor  who  would 
redeem  the  mortgaged  property  from  the  mortgagee 
from  paying  his  debt.  The  moral  obligation  remains 
and  re^ts  upon  the  mortgagor  who  would  redeem  to 
pay,  as  a  condition  thereof,  the  sum  of  money  which 
the  mortgagee  could  have  recovered  but  for  the  bar  of 
the  statute:  Boyce  v.  Fisk,  110  Cal.  107,  113,  42  Pac. 
473. 

33  The  law  as  stated  in  the  text  is  not  supported 
unanimously  by  the  decisions,  but  seems  to  have  the 
weight  of  reason  and  of  some  well-considered  deci- 
sions on  its  side. 


540  MORTGAGE.  §    339 

(1)   if  the  secured  obligation  has  not  been  barred 

by   lapse   of   time,   the   property  be  sold  and 

the  proceeds  be  applied  to  the  satisfaction  of 

the  secured  obligation,^^  or 

34  If  Secured  Debt  not  Barred,  Then  Property  to 
be  Sold: 

Murdock  v.  Clarke,  in  bank,  90  Cal.  427,  443,  444, 
27  Pac.  275  (this  was  not  a  case  of  mortgagee  m 
possession  as  might  appear  from  a  casual  glance,  see 
pp.  431-435). 

And  in  Byrne  v.  Hudson,  127  Cal.  254,  59  Pac.  597, 
a  judgment  that  the  mortgagor  ^'be  barred  from 
all  equity  of  redemption,  or  other  right  to  said  prop- 
erty" was  held  erroneous. 

In  certain  cases,  however,  it  is  held  that  the  proper 
judgment  was  that  the  action  he  dismissed:  Cowing 
V.  Rogers,  34  Cal.  648;  Cline  v.  Eogers,  112  Cal.  581, 
585,  586,  44  Pac.  1023,  in  department,  the  judgment  of 
the  trial  court  in  conformity  with  Murdock  v.  Clarke 
being  set  aside. 

Where  an  action  to  quiet  title  was  brought  by  a 
mortgagor  in  possession  against  his  mortgagee  under  a 
deed  absolute  in  form,  the  secured  debt  not  being 
barred  by  lapse  of  time,  the  court  said:  ^* Respondent 
[the  mortgagor]  stands  simply  in  the  position  of  a 
mortgagor  seeking  to  quiet  his  title  against  a  mort- 
gagee without  paying,  or  tendering  or  offering  to  pay, 
the  debt  for  which  the  mortgage  was  given.     But  such 

a  result  cannot  be  achieved The  only  way  for 

a  party  in  respondent's  position  to  quiet  a  mortgage 
is  to  pay  it.  The  decree  in  the  case  at  bar  first  un- 
dertakes to  quiet  respondent's  title,  and  then  dis- 
turbs it  again  by  declaring  appellant's  right  to  fore- 
close. If  appellant's  debt  should  become  barred  by 
the  statute  of  limitations,  then,  by  this  decree,,  re- 
spondent would  have  his  title  quieted  without  paying 
the  mortgage  debt — the  very  thing  which  equity  says 
cannot  be  done.  Respondent  can  have  no  remedy  in 
the  premises  without  paying  or  tendering  the  amount 
due  appellant  on  his  mortgages":  Brandt  v.  Thompson, 
in  department,  91  Cal.  458,  462,  27  Pac.  763. 


§    339  RIGHTS    AND    DUTIES.  541 

(2)   if  the  secured  obligation  has  become  barred 
by  lapse  of  time,  the  action  be  dismis^ed.^^ 

Subdimsion  Jf.    As  to  Insurance. 

340.     Acts  of  Mortgagor    Avoid    Insurance    Al- 
though Assigned  to  Moitgagee.^^ 

The  assignment  from  a  mortgagor  to  a  mort- 
gagee of  the  sum  which  may  become  due  on  the 

35  If  Secured  Debt  Barred,  then  Action  to  be  Dis- 
missed: Booth  V.  Hoskins,  75  Cal.  271,  276,  17  Pac. 
225  (an  action  to  quiet  title),  the  judgment  of  the 
trial  court  in  conformity  with  Murdock  v.  Clarke  be- 
ing set  aside;  De  Cazara  v.  Orena,  80  Cal.  132,  22  Pac. 
74  (also  to  quiet  title) ;  Boyce  v.  Fiske,  110  Cal.  107, 
116,  42  Pac.  473,  which  held  that  as  a  mortgagee  could 
not  obtain  any  affirmative  relief  upon  his  outlawed 
debt,  an  order  adjudging  that  in  case  the  mortgagor 
fails  to  satisfy  the  judgment  his  title  shall  terminate 
and  the  mortgagee's  title  become  valid  was  erroneous. 

In  one  case  at  least,  however,  it  was  held  that  the 
proper  judgment  was  that  the  property  be  sold:  Healy 
V.  O'Brien,  in  department,  m  Cal.  517,  520,  6  Pac.  386. 

36  Acts  of  Mortgagor  Avoid  Insurance  Although  As- 
signed to  Mortgagee.— Civil  Code,  section  2541: 
^^  Where  a  mortgagor  of  property  effects  insurance 
in  his  own  name,  providing  that  the  lass  shall  be 
payable  to  the  mortgagee,  or  assigns  a  policy  of 
insurance  to  the  mortgagee,  the  insurance  is  deemed 
to  be  upon  the  interest  of  the  mortgagor,  who  does 
not  cease  to  be  a  party  to  the  original  contract,  and 
any  act  of  his  which  would  otherwise  avoid  the  in- 
surance will  have  the  same  effect,  although  the  prop- 
erty is  in  the  hands  of  the  mortgagee." 

Such  an  assignment  by  way  of  security  is  per- 
missible. Where  a  policy  of  insurance  was  assigned 
as  collateral  security  for  the  payment  of  a  general 
balance,  and  the  insured  property  was  destroyed,  and 
tne  insurance  became  payable,  and  the  insured  party 


542  MORTGAGE.  §    340 

insurance  on  the  mortgaged  property,^''  or  a 
stipulation  in  an  insurance  policy  that  the  insur- 
ance is  payable  in  case  of  loss  to  the  mortgagee,^* 
amounts  merely  to  a  provisional  assignment  of 
the  contingent  proceeds  of  the  contract  of  in- 
surance; and  the  contract  will  thereafter,  unless 

became  insolvent,  it  was  claimed  that  the  assignee 
could  not  maintain  an  action  to  recover  the  insurance, 
as  the  insurance  could  be  assigned  only  in  connection 
with  an  insurable  interest  in  the  insured  property,  and 
then  only  with  the  consent  of  the  insurer.  The  court 
held  that  ^'the  fact  that  the  title  of  the  policies  and 
to  the  insurance  money  when  it,  as  a  fund  of  in- 
demnity for  the  loss,  came  in  esse,  remained  in  the 
parties  insured;  and  the  further  fact  that  the  plain- 
tiff's [assignee's]  right  in  respect  to  it  was  that  of 
a  lien  upon  it  merely,  subject  to  be  discharged  at  the 
will  of  the  debtor,  ....  obviates  the  objection  that 
the  ....  transaction  ....  was  void'':  Bibend  v. 
Liverpool  etc.  Ins.  Co.,  30  Cal.  78,  89,  90. 

37  The  so-called  ^^  assignment  of  a  policy  of  in- 
surance" is,  rather,  an  assignment,  when  made  bo- 
fore  the  loss  occurs,  of  the  sunl  that  may  become  due, 
and  when  the  assignment  is  made  after  the  loss,  of 
the  sum  that  has  already  become  due:  Bergson  v. 
Builders'  Ins.  Co.,  38  Cal.  543,  544. 

An  indor.sement  in  a  policy  of  insurance,  making 
the  loss  payable  to  a  mortgagee  of  the  insured  prop- 
erty as  his  interest  might  appear,  operates  as  an  as- 
signment of  the  policy  to  the  mortgagee  by  way  of 
collateral  security:  Ballard  v.  Nye  (Cal.),  69  Pac.  481, 
482A. 

38  A  stipulation  for  payment  to  the  mortgagee  in 
case  of  loss  is  a  provisional  assignment  of  the  con- 
tingent proceeds  of  the  contract,  and  has  not  the 
effect  to  substitute  the  mortgagee  for  the  mortgagor  as 
the  party  insured:  Holbrook  v.  Baloise  Fire  Ins.  Co., 
117  Cal.  561,  566,  49  Pac.  555;  Eeynolds  v.  London  etc. 
Ins.  Co.,  128  Cal.  16,  19,  79  Am.  St.  Eep.  16,  60  Pac. 
467. 


§    340  KIGIITS    AND    DUTIES.  543 

otherwise  expressly  provided^^^  be  avoided^^  by 
any  act  of  the  mortgagor  which  would  otherwise 
have  avoided  it,  although  the  mortgagee  is  in 
possession. 

3^  Where  a  mortgagor  insured  the  mortgaged 
premises  in  the  name  of  the  mortgagee,  the  policy 
providing  that  ^^as  to  the  interests  of  the  mortgagee 
or  trustee  only  therein/'  the  policy  ** shall  not  be 
invalidated  by  any  act  or  negligence  of  the  mortgagor 
or  owner  of  the  property  insured,  nor  by  the  occupa- 
tion of  the  premises  for  purposes  more  hazardous  than 
are  permitted  by  the  terms  of  this  policy,  nor  by  any 
change  in  title  or  possession  of  the  property  insured; 
provided,  however,  that  whenever  the  said  mortgagee 
or  trustee  shall  become  aware  of  any  act  or  negligence 
on  the  part  of  the  mortgagor  or  owner  which  would, 
except  as  to  such  mortgagee  or  trustee,  invalidate  this 
policy,  or  of  any  occupation  of  the  premises  for  pur- 
poses more  hazardous  than  are  permitted  by  the  terms 
of  this  policy,  or  of  any  change  in  title  or  posses- 
sion of  the  property  insured,  he  will  at  once  notify 
this  company  thereof;  and  provided,  also,  that  he 
will,  on  demand,  pay  to  this  company  the  additional  pre- 
mium charged  by  this  company  on  account  of  any  in- 
creased risk  for  the  entire  term  of  the  policy;  and  fail- 
ure to  so  notify  this  company,  or  to  so  pay  said  addi- 
tional premium,  shall  avoid  this  contract, ' '  and  where 
the  mortgagee  complied  with  the  terms  of  the  contract, 
the  policy  will  be  enforced  notwithstanding  the  acts 
of  the  mortgagor  which  otherwise  would  have  avoided 
the  insurance:  Nat.  Bank  v.  Union  Ins.  Co.,  88  Cal. 
497,  22  Am.  St.  Eep.  324,  26  Pac.  509. 

40  Contract  will  be  Avoided— TAmito Hon  of  Prin- 
ciple.—But  a  condition  in  a  policy  of  insurance  on 
mortgaged  property  issued  to  the  mortgagor,  and 
made  payable  in  case  of  loss  to  the  mortgagee,  that 
the  policy  should  be  void  if,  with  the  knowledge  of 
the  insured,  foreclosure  proceedings  should  be  com- 
menced on  any  of  the  property  covered  thereby,  is  in- 
operative as  against  the  mortgagee:  Sharp  v.  Scot- 
tish etc.  Tns.  Co.,  in  department,  136  Cal.  542,  543  et 
seq.,  69  Pac.  253,  255A. 


544  MORTGAGE.  §    341 

341.  When    New    Contract  with  Mortgagee  is 

Made,  Acts  of  Mortgagor  Immaterial. 

If  the  insurer  consents  to  the  transfer  of  an 
insurance  from  a  mortgagor  to  a  mortgagee,  and, 
at  the  time  of  his  assent,  imposes  further  obliga- 
tions upon  the  assignee,  making  a  new  contract 
with  him,  the  acts  of  the  mortgagor  cannot  aft'ect 
his  rights.^^ 

342.  Insurance     of    Mortgagee   Expires   When 

Mortgage  Extinguished.'*^ 

Whenever  insurance  upon  mortgaged  property 
(whether    effected   by   the   mortgagor   or  mort- 

The  reason  for  this  conclusion  is  that  "the  insurer 
must  have  known,  when  attaching  the  mortgage  clause, 
that  it  might  become  necessary  for  the  mortgagee,  in 
order  to  protect  his  interest  under  the  mortgage,  to 
commence  foreclosure  proceedings^':  Sharp  v.  Scot- 
tish etc.  Ins.  Co.,  in  department,  136  Cal.  542,  543  et 
seq.,  69  Pac.  253. 

Beatty,  C.  J.,  dissented  from  an  order  denying  a 
hearing  in  bank,  saying,  in  part:  "As  to  the  second 
point  decided,  viz.,  that  when  a  mortgagor  takes  in- 
surance which  he  makes  payable  to  his  mortgagee, 
the  latter  is  not  prejudiced  by  the  failure  of  the  in- 
sured to  fulfill  the  conditions  of  his  contract,  this 
seems  to  nullify  the  express  provisions  of  section 
2541  of  the  Civil  Code  (see  code  section  quoted, 
note  36,  above):  Sharp  v.  Scottish  etc.  Ins.  Co.,  136 
Cal.  542,  547,  69  Pac.  615. 

41  Civil  Code,  section  2542.  Commissioners'  note, 
1872:  "The  provision  of  the  text  follows  the  general 
rule  governing  the  alteration  of  the  policy.'' 

43  Illustrations. — Where  a  mortgagor  effected  in- 
surance made  payable  in  case  of  loss  to  the  mort- 
gagee, and  a  loss  occurred  after  the  foreclosure  sale 


§    342  RIGHTS    AND    DUTIES.  545 

gagee)^^  is  payable  in  case  of  loss  to  the  mort- 
gagee, the  liability  of  the  insurer  to  the  mort- 
gagee is  terminated  by  the  extinction  of  the  right 
of  the  mortgagee  as  snch  to  the  mortgaged  prop- 
erty. 

of  the  property,  although  the  mortgagee  purchased 
at  such  sale,  the  mortgagee  cannot  collect  the  in- 
surance. His  right  as  mortgagee  was  terminated: 
Eeynolds  v.  London  etc.  ins.  Co.,  128  Cal.  16,  79  Am. 
St.  Eep.  16,  60  Pac.  467.  The  conclusion  of  National 
Bank  v.  Union  Ins.  Co.,  88  Cal.  497,  22  Am.  St.  Eep. 
324,  26  Pac.  509,  so  far  as  in  any  way  inconsistent 
with  this  conclusion,  is  expressly  overruled. 

Where  the  obligation  of  the  mortgagee  to  whom 
the  loss  was  made  payable  is  extinguished  by  pay- 
ment, and  the  insured  property  was  destroyed,  the 
mortgagor  is  himself  entitled  to  maintain  an  action  for 
the  insurance  money:  Stockton  etc.  Works  v.  Ameri- 
can Fire  Ins.  Co.,  121  Cal.  182,  184,  53  Pac.  573. 

43  Insurance  by  Mortgagee.— The  California  cases 
do  not  deal  directly  with  the  case  of  an  insurance  by 
the  mortgagee  of  his  interest,  as  such,  in  the  prem- 
ises. Thus  in  Eeynolds  v.  London  etc.  Ins.  Co.,  128 
Cal.  16,  22,  79  Am.  St.  Eep.  16,  60  Pac.  467,  the  court 
says:  ^^We  are  not  concerned  with  the  class  of  cases 
where  the  mortgagor  himself  procures  a  policy  on 
buildings  situated  on  the  mortgaged  premises,  where 
he  is  the  party  insured,  and  where  it  has  been  held 
that  he  may  take  the  policy  on  his  interest 
in  the  property  itself.^'  The  court,  however,  quotes 
approvingly  the  statement  that  ^'whether  the 
mortgagee  procures  a  policy  of  insurance,  paying 
the  premium,  without  authority  from  the  mort- 
gagor, or  whether  it  is  procured  by  the  mort- 
gagor in  the  name  of  the  mortgagee,  and  the  debt  is 
paid,  the  insurers  are  not  liable  to  the  mortgagee,  be- 
cause in  the  one  case  the  payment  of  the  debt  and 
the  extinguishment  of  the  mortgage  determines  all 
efficacy  in  the  policy,  and  in  the  other  the  mortgagor 
Liens — 35 


546  MORTGAGE. 

Subdivision  5.    As  to  Taxes  and  Assessments. 

Introductory  Note. 

The  taxation  of  mortgages,  mortgaged  property,  and 
the  obligations  secured  by  mortgages,  is  controlled  in 
California  by  sections  4  and  5  of  article  13  of  the 
state  constitution. 

The  system  of  taxation  is  set  forth  in  the  earlier 
portion   of   section   4,    which   provides: 

^*A  mortgage,  deed  of  trust,  contract  or  other  obli- 
gation by  which  a  debt  is  secured,  shall,  for  the  pur- 
paying  the  debt  is  subrogated  and  he  alone  should 
sue. ' ' 

Is  Mortgagee's  Interest  as  Such  Insurable. — In  the 
light  of  Civil  Code,  sections  2547  and  2549,  this  is  per 
haps  a  close  question,  the  code  commissioners'  note, 
1872,  saying  in  respect  to  insurable  interest:  '*It  must 
be  a  direct  interest  in  reference  to  the  perils  secured 
against,  and  not  of  a  remote,  circuitous,  consequential 
eitect,  such  as  a  creditor's  interest  in  the  safety  of  his 
debt  or  property.''  In  Iowa,  however,  the  courts  have 
held  that  a  mechanic's  lienor  has  an  insurable  inter- 
est, and  in  Ohio  that  both  mortgagor  and  mortgagee 
have  insurable  interests. 

In  White  v.  Oilman,  158  Cal.  375,  71  Pac.  436,  it  was 
held  that  both  a  vendor  of  immovable  property  under 
an  executory  contract  of  sale  pursuant  to  which  the 
vendee  is  in  possession,  and  the  vendee  in  possession 
himself,  has  an  insurable  interest  in  the  building 
erected  by  the  vendee  on  the  land  at  his  own  expense, 
the  vendor's  insurable  interest  being  to  the  extent  of 
the  unpaid  purchase  money.  But  before  the  vendee's 
default  in  payment  of  the  purchase  money  the  vendor 
had  no  interest  in  the  building.  Moreover,  he  did  not 
pay  for  it,  and  lost  nothing  by  its  destruction;  thus 
it  seems  extraordinary  to  say  that  he  should  actually 
gain  the  amount  of  the  insurance  money  by  the  fire. 
The  case  would  have  been  entirely  different  if  the 
vendor  had  owned  the  building. 


TAXATION.  547 

poses  of  assessment  and  taxation,  be  deemed  and 
treated  as  an  interest  in  the  property  affected  thereby. 
Except  as  to  railroad  and  other  quasi  public  corpora- 
tions, in  case  of  debts  so  secured,  the  value  of  the 
property  affected  by  such  mortgage,  deed  of  trust, 
contract  or  obligation,  less  the  value  of  such  security 
shall  be  assessed  and  taxed  to  the  owner  of  the  prop- 
erty, and  the  value  of  such  security  shall  be  assessed 
and  taxed  to  the  owner  thereof,  in  the  county,  city, 
or  district  in  which  the  property  affected  thereby  is 
situate.  The  taxes  so  levied  shall  be  a  lien  upon  the 
property  and  security,  and  may  be  paid  by  either  party 
to  such  security;  if  paid  by  the  owner  of  the  security, 
the  tax  so  levied  upon  the  'property  affected  thereby 
shall  become  a  part  of  the  debt  so  secured;  if  the 
owner  of  the  property  shall  pay  the  tax  so  levied  on 
such  security,  it  shall  constitute  a  payment  therefrom, 
and  to  the  extent  of  such  payment  a  full  discharge 
thereof.  ^  ^ 

The  first  proposition  established  by  this  constitu- 
tional provision  is  that  for  the  purposes  of  taxation 
every  obligation  of  every  sort  secured  by  an  encum- 
brance against  property  situate  in  the  state  of  Cali- 
fornia inheres  in,  or  is  deemed  an  interest  in,  the 
property  affected  thereby. 

Thus  in  Germania  Trust  Co.  v.  San  Francisco,  128 
Cal.  589,  594,  61  Pac.  178,  the  court  in  bank,  speaking 
through  Mr.  Commissioner  Britt,  McFarland,  Temple, 
and  Harrison,  JJ.,  adopting  his  discussion  of  the  case 
as  tjie  opinion  of  the  court,  and  Garoutte,  J.,  concur- 
ring *^in  the  views  and  conclusions  of  the  court  pro- 
mulgated through  Mr.  Commissioner  Britt,''  said  in 
reference  to  the  constitutional  provision  quoted  above 
(Van  Dyke,  J.,  dissenting) : 

^'This  declaration  is  comprehensive;  no  class  of  se- 


548  MOBTGAGE. 

cured  obligations  is  excepted  from  it;  such  obligations 
being  made   an  interest  in  the  affected  property  for 
the  purposes  stated,  necessarily  the  property  affected 
includes,  for  the  same  purposes,  the  obligations  which 
affect    it,    as   well   as   the   remaining   interest    of   the 
debtor.     The  form  which  credits  should  take  for  the 
purposes  of  taxation  being  thus  fixed  as  an  interest 
in    the    affected   property,    it   remained   to    determine 
from  whom  payment  of  the  tax  on  the  aggregate  of 
values  comprised  in  the  property  should  be  exacted; 
as  to   credits  secured  on  the  property  of  individuals 
and    strictly   private   corporations,   the   burden    is   di- 
vided and  adjusted  by  assessing  the  interest  separately 
-—the  owner  of  the  secured  credit  being  taxed  on  its 
value,  and  the  owner  of  the  encumbered  propertj^  be- 
ing taxed  on  the  value  thereof  remaining  after   de- 
ducting the  amount  assessed  to  the  secured  creditor. 
But  in  the  case  of  credits  secured  on  the  property  of 
^railroad  and  other  quasi  public  corporations'  no  de- 
duction from  the  value  of  the  property  is  allowed  on 
account  of  the  indebtedness;  the  whole  of  the  prop- 
erty—precisely   commensurate   with    the    interests    of 
both  debtor  and  creditor— is  assessed  to  such  corpora- 
tion; and  thus,  as  an  interest  in  the  affected  property 
(which  it  is  declared  to  be  for  this  purpose  by  the 
first  clause  of  section  4)   the  secured  obligation  is  as- 
sessed, and  the  tax  is  paid  by  the  debtor  corporation. 
It  necessarily  follows  that  to  assess  and  tax  the  obli- 
gation again  to  the  holder  thereof,  as  if  it  were  an  un- 
secured  credit,  would  be   to   tax  the.  same   property 
twice,  which  in  this  instance,  at  least,  is  made  impos- 
sible by  the  terms  of  the  constitution;  for,  since  the 
secured  obligation  is  for  the  purposes  of  assessment 
and  taxation  to  be  deemed  and  treated  as  an  interest 
in  the  property  affected,  it  cannot  be  taxed  except  as 
such  interest. '' 


TAXATION.  649 

This  statement  of  the  law  was  approved  in  Estate  of 
Fair,  128  Cal.  607,  610,  61  Pac.  184,  and  in  Estate  of 
Pichoir,  128  Cal.  615,  61  Pac.  1130. 

Before  the  decision  in  Germania  Trust  Co.  v.  San 
Francisco,  however,  it  was  held  that  an  obligation 
secured  by  an  encumbrance  against  the  property  of  a 
railroad  or  other  quasi  public  corporation  was  not 
deemed  an  interest  in  the  property  affected  by  the 
encumbrance.  Thus  in  Central  Pacific  E.  R.  Co.  v. 
State  Board  of  Equalization,  60  Cal.  35,  59,  the  court, 
in  department,  speaking  through  Mr.  Justice  McKins- 
try,  said:  ^^ Reading  the  whole  section,  it  seems  very 
plain  that  as  to  mortgages,  deeds  of  trust,  contracts, 
or  other  obligations  secured  upon  the  property  of  rail- 
road and  other  quasi  public  corporations,  they  should 
not  be  deemed  and  treated  as  an  interest  in  the  prop- 
erty affected  by  them  *for  the  purposes  of  taxation.' 
Under  the  constitution  of  this  state  the  property  of 
such  corporations  is  subject  to  assessment  and  taxa- 
tion, without  deduction  of  the  amount  of  any  mortgage 
or  like  lien  thereon.''  In  Mackay  v.  San  Francisco, 
113  Cal.  392,  397,  45  Pac.  696,  the  court,  in  depart- 
ment, speaking  through  Mr.  Commissioner  Hayne, 
said:  ^^ Railroads  and  other  quasi  public  corporations 
are  excepted  from  the  above  provision  [that  is,  from 
the  first  sentence  of  the  constitutional  provision  above 
quoted]."  And  the  legislature,  by  the  amendment  of 
March  7,  1881,  to  Political  Code,  section  3627,  adopted 
the  same  construction  of  the  constitution.  But  this 
construction  has  been  repudiated. 

In  Savings  etc.  Soc.  v.  Multnomah  County,  169  U.  S. 
421,  18  Sup.  Ct.  Rep.  392,  42  Law  ed.  803,  the  conten- 
tion was  made  that  a  statute  of  Oregon  in  this  respect 
similar  to  the  California  constitution  was  in  conflict 
with  the  United  States  constitution,  as  a  secured  obli- 
gation owned  by  a  nonresident  followed  his  residence, 


550  MORTGAGE. 

and  was  taxable  only  at  his  residence.  But  the  court, 
by  Mr.  Justice  Gray,  Fuller,  C.  J.,  Brewer,  Brown, 
Shiras,  and  Peckham,  JJ.,  concurring,  Harlan  and 
White,  JJ.,  dissenting  said: 

*'The  statute  of  Oregon,  the  constitutionality  of 
which  is  now  drawn  in  question,  expressly  forbids  any 
taxation  of  the  promissory  note,  or  other  instrument  of 
writing,  which  is  the  evidence  of  the  debt  secured  by 
the  mortgage;  and,  with  equal  distinctness,  provider 
for  the  taxation,  as  real  estate,  of  the  mortgage  inter- 
esx  in  the  land.  Although  the  right  which  the  mort- 
gage transfers  in  the  land  covered  thereby  is  not  the 
legal  title,  but  only  an  equitable  interest  and  by  way 
of  security  for  the  debt,  it  appears  to  be  clear  to  us 
upon  principle,  and  in  accordance  with  the  weight  of 
authority,  that  this  interest,  like  any  other  interest, 
legal  or  equitable,  may  be  taxed  to  its  owner  (whether 
resident  or  nonresident)  in  the  state  where  the  land 
is  situated,  without  contravening  any  provision  of  the 
constitution  of  the  United  States''  (pp.  431,  432). 

*'The  state  may  tax  real  estate  mortgaged,  as  it 
may  all  other  property  within  its  jurisdiction,  at  its 
full  value.  It  may  do  this,  either  by  taxing  the  whole 
to  the  mortgagor,  or  by  taxing  to  the  mortgagee  the  in- 
terest therein  represented  by  the  mortgage,  and  to 
the  mortgagor  the  remaining  interest  in  the  land.  And 
it  may,  for  the  purposes  of  taxation,  either  treat  the 
mortgage  debt  as  personal  property,  to  be  taxed,  like 
other  choses  in  action,  to  the  creditor  at  his  domicile, 
or  treat  the  mortgagee's  interest  in  the  land  as  real 
estate,  to  be  taxed  to  him,  like  other  real  estate,  at  its 
situs"  (pp.  427,  428).  " 

The  court  (p.  428)  distinguished  the  decision  in 
Cleveland,  Painesville  &;  Ashtabula  Eailroad  v.  Penn- 
sylvania   (Case    of    the    State    Tax    on    Foreign-Held 


TAXATION.  551 

Bonds),  82  U.  S.  (15  Wall.)  300,  323,  21  Law  ed.  179, 
on  the  ground  that  the  tax  in  that  case  was  a  percent- 
age '^upon  the  interest  due  the  bondholders  upon  the 
bonds,  and  was  not  a  tax  upon  the  railroad,  or  upon 
the  mortgage  thereof,  or  upon  the  bondholders  solely 
by  reason  of  their  interest  in  that  mortgage,''  and 
added  by  way  of  criticism  that  'Hhe  remarks  in  the 
opinion  ....  that  a  mortgage,  being  a  mere  security 
for  the  debt,  confers  upon  the  holder  of  the  mortgage 
no  interest  in  the  land,  and  when  held  by  a  nonresi- 
dent is  as  much  beyond  the  jurisdiction  of  the  state 
as  the  person  of  the  owner,  went  beyond  what  was 
required  for  the  decision  of  that  case,  and  cannot  be 
reconciled  with  other  decisions  of  this  court." 

(In  New  Orleans  v.  Stemple,  175  U.  S.  309,  20  Sup. 
Ct.  Eep.  110,  44  Law  ed.  174,  the  court,  Harlan  and 
White,  JJ.,  dissenting  as  in  the  Multnomah  county 
case  above,  held  that  mortgages  and  bonds  could  be 
taxed  in  the  place  where  the  evidence  of  their  exist- 
ence was  kept,  on  account  of  their  concrete  tangible 
form.) 

Similarly  in  Tappan  v.  Merchants'  Nat.  Bank,  86 
V.  S.  (19  Wall.)  490,  22  Law  ed.  189,  the  court  held 
that  '^shares  of  stock  ....  are  a  species  of  personal 
property  which  is,  in  one  sense,  intangible  and  incor- 
poreal, but  the  law  which  creates  them  may  separate 
them  from  the  person  of  their  owner  for  the  purposes 
of  taxation,  and  give  them  a  situs  of  their  own"  (pp. 
499,  500).  j^'or  ^Hhe  shareholder  is  protected  in  his 
person  by  the  government  at  the  place  where  he  re- 
sides; but  his  property  in  this  stock  is  protected  at  the 
place  where  the  bank  transacts  his  business"  (pp. 
503,  504). 

Thus  every  secured  obligation  is  for  the  purposes  of 
taxation  deemed  an  interest  in  the  property  whereby 


^^2  MORTGAGE. 

it  is  secured,  and  although  owned  by  a  nonresident  of 
California  is  nevertheless  taxable  to  the  nonresident 
at  the  situs  of  the  encumbered  property,  and  no  con- 
flict is  thereby  created  with  any  provision  of  the 
United  States  constitution. 

In  California  Loan  etc.  Co.  v.  Weis,  118  Cal.  489,  493, 
50  Pac.  697,  the  court  refused  to  hold  that  the  consti- 
tution and  revenue  laws  recognized  and  treated  a  mort- 
gage as  '^real  estate,''  and  that  in  any  piece  of  land 
subject  to  a  mortgage  there  are  two  separate  and  dis- 
tinct real  properties— the  one  being  the  property  of 
the  owner  of  the  fee,  the  value  of  which  is  the  differ- 
ence between  the  mortgage  debt  and  the  value  of  the 
land  if  unencumbered,  the  second  being  the  real  prop- 
erty of  the  mortgagee,  but  decided  that  such  a  con- 
struction of  the  language  of  the  constitution  was  un- 
warranted, and  was  '^not  borne  out  by  the  remaining 
part   of  section  4,  nor   by  the  legislative   enactments 
under  it.     The  section  itself  speaks  of  the  holder  of 
the  legal  title  as  the  owner  of  the  property.     As  fur- 
ther appears  by  it,  a  mortgage  is  to  be  treated  as  an 
interest  in  the  real  property  which  it  affects,  only  to 
the  end  that  the  mortgage  tax  itself  may  become  a 
lien  upon  the  land.     If  the  constitution  had  intended 
to   segregate   a  piece   of  realty  into   such   anomalous 
properties,  ....  and  thus  to  make  a  mortgage  real 
property  and  distinct  from  the  land  in  which  it  is  an 
interest,  it  would  not  have  permitted  that  the  mort- 
gage tax  should  itself  become  a  lien  upon  another's 
property,  to  wit,  upon  the  property  of  the  owner  of 
the    fee.     No    more    was    intended    by   the    provision 
quoted  than  to  provide,  first,  for  a  decreased  assess- 
ment upon  the  realty  by  reason  of  the  mortgage;  next, 
for  an  assessment  upon  the  mortgage;  and  finally,  that 
the  state  may  have  security  for  the  payment  of  the 


TAXATION.  553 

mortgage  tax,  to  make  the  mortgage  an  interest  in 
the  realty  to  the  end  that  the  latter  may  be  made 
chargeable  for  the  tax  upon  the  former.  No  injustice 
thus  results,  for  if  the  owner  of  the  property  is  obliged 
to  pay  the  mortgage  tax,  it  becomes  a  payment  upon 
the  amount  of  his  mortgage  indebtedness,''  But  in 
stating  what  this  constitutional  provision  was  in- 
tended to  accomplish,  the  court  omits  to  take  into  ac- 
count the  important  result  achieved  by  it  whereby,  as 
was  said  in  the  Multnomah  county  case  above,  it  **  ex- 
pressly ....  provides  for  the  taxation,  as  real  estate, 
of  the  mortgage  interest  in  the  land,''  and  ^' treat [s] 
the  mortgagee's  interest  in  the  land  as  real  estate,  to 
be  taxed  to  him,  like  other  real  estate,  at  its  situs." 
Thus,  in  view  of  this  case  and  of  the  Germania  Trust 
Company  case,  wherein  it  was  held  that  under  no  cir- 
cumstances could  the  secured  obligation  be  taxed  ex- 
cept at  the  situs  of  the  mortgaged  property,  and  then 
only  as  an  interest  in  the  land,  it  is  evident  that  for 
the  purpose  of  taxation  the  mortgage  obligation  is 
deemed  an  interest  in  the  land— real  estate  in  a  quali- 
fied sense,  where  the  mortgaged  property  is  real  estate. 
This  conclusion  does  not,  however,  necessarily  affect 
the  ultimate  result  reached  in  California  Loan  and 
Trust  Company  v.  Weis,  that  a  tax  upon  the  mort- 
gagor's interest  constitutes  a  paramount  lien  against 
the  whole  property,  including  the  mortgagee's  interest, 
as  the  law  which  creates  this  interest  for  purposes 
of  taxation  may  define  its  incidents. 

The  California  courts,  however,  limit  this  doctrine 
that  an  obligation  secured  by  mortgage  is,  for  the  pur- 
poses of  taxation,  deemed  an  interest  in  the  mortgaged 
property  to  obligations  secured  by  mortgages  against 
property  situate  within  the  state,  and  hold  that  obli- 
gations secured  by  property  without  the  state  do  not 
inhere  in  the  encumbered  property,  but  are  taxable  to 


554  MORTGAGE. 

the  owners  of  them  when  residing  in  this  state,  with- 
out regard  to  the  fact  that  the  obligation  may  already 
have  been  taxed  to  the  owner  in  the  foreign  state. 

Thus,  the  court,  in  department,  in  Mackay  v.  San 
Francisco,  113  Cal.  392,  45  Pac.  696,  held  that  certain 
bonds  secured  by  a  mortgage  against  an  Arizona  rail- 
way, but  owned  by  a  resident  of  San  Francisco,  were 
taxable  in  San  Francisco,  saying:  '^The  bonds  in 
question  were  held  here.  They  could  not  be  taxed  in 
Arizona,  where  the  property  mortgaged  to  secure  them 
is  situated''  (pp.  397,  398).  '^The  debtor  [that  is, 
the  mortgagor  J  is  a  nonresident,  and  the  property  upon 
which  these  bonds  are  secured  is  in  another  jurisdic- 
tion, and  therefore  beyond  the  taxing  power  of  the 
state''  (p.  400). 

In  Estate  of  Fair,  128  Cal.  607,  611-615,  61  Pac.  184, 
the  further  conclusion  was  reached  that  although  tan- 
gible movable  property  is  taxable  at  its  situs,  a  bond, 
whether  negotiable  or  non-negotiable  (unless,  perhaps, 
when  in  the  possession  and  control  of  a  foreign  agent 
of  the  owner  for  management  in  the  course  of  the 
principal's  permanent  business),  had  no  situs  apart 
from  the  domicile  of  the  owner,  for  the  paper  itij 
merely  an  evidence  of  the  obligation  expressed  by  it, 
and  the  obligation,  not  the  evidence,  is  the  thing 
of  value,  and  would  subsist  although  the  paper  was 
destroyed,  and  in  its  nature  could  have  no  actual  lo- 
cality. Thus  a  bond  owned  by  a  person  domiciled  in 
California,  kept  in  New  York,  and  secured  by  a  mort- 
gage on  the  property  of  certain  West  Virginia  railway 
corporations,  is  taxable  in  California. 

Mackay  v.  San  Francisco,  however,  was  mostly  based 
upon  the  case  of  the  State  Tax  on  Foreign-Held  Bonds, 
which  was  modified  in  Savings  etc.  Soc.  v.  Multnomah 
County,  above,  while  Estate  of  Fair  was  based  upon 


TAXATION.  555 

Mackay  v.  San  Francisco.  Moreover  the  fact  did  not 
appear  in  either  of  these  cases  that  the  bonds  by  the 
law  of  the  place  wherein  the  property  by  which  they 
were  secured  was  situate  were  deemed  interests  in 
such  property  or  that  the  bonds  had  already  been 
taxed  at  such  place.  But  had  this  fact  appeared,  it 
probably  would  not  have  influenced  the  judgment  of 
the  court.  For  in  City  and  County  of  San  Francisco 
V.  Fry,  63  Cal.  470,  where  all  the  property  of  a  Cali- 
fornia corporation  was  situate  in  Nevada,  and  had 
there  been  taxed  at  its  full  value,  certain  stock  of  the 
corporation  which  was  owned  by  a  resident  of  Califor- 
nia was  held  to  be  taxable  to  him  in  this  state.  (The 
California  law  in  respect  to  the  taxation  of  corpora- 
tions is  that  when  the  property  of  the  corporation  has 
been  taxed  at  its  full  value  by  the  California  authori- 
ties, the  shares  of  stock  cannot  be  again  taxed  to  their 
resident  owners.  For  ^^when  the  property  of  the  cor- 
poration is  assessed  to  it,  and  the  tax  thereon  paid, 
who  but  the  stockholders  pay  it?  It  is  true  that  it  is 
paid  from  the  treasury  of  the  corporation  before  the 
money  therein  is  divided,  but  it  is  substantially  the 
same  thing  as  if  paid  from  the  pockets  of  the  individ- 
ual stockholders.  To  assess  all  of  the  corporate  prop- 
erty of  the  corporation,  and  also  to  assess  to  each  of 
the  stockholders  the  number  of  shares  held  by  him, 
would,  it  is  manifest,  be  assessing  the  property  twice, 
once  in  the  aggregate  to  the  corporation,  and  again 
separately  to  the  individual  stockholders,  in  propor- 
tion to  the  number  of  shares  held  by  each.  As  well 
might  it  be  contended  that  the  property  of  a  partner- 
ship should  be  assessed  to  the  firm,  and,  in  addition, 
that  the  interest  of  each  partner  in  the  firm  property 
should  be  assessed  to  him  individually '' :  Burke  v. 
Badlam,  57  Cal.  594,  601.  This  decision  was  followed 
in  City  and  County  of  San  Francisco  v.  Mackay,  21 


556  MORTGAGE. 

Fed.  (C.  C.)  539.)  In  the  Fry  case,  however,  the 
court  said:  "It  is  further  urged  that  to  tax  the  shares 
in  this  state,  when  the  property  of  the  corporation  is 
taxed  in  the  state  of  Nevada,  would  be  double  taxa- 
tion. But  the  inhibition  of  double  taxation  only  ap- 
plies to  such  taxation  made  by  the  same  state  or  gov- 
ernment  It  will  be  seen  that,  in  this  state,  the 

shares  of  the  corporation  alone  are  taxed.  Its  prop- 
erty is  not  here  assessed.  Conceding  that  taxation  of 
the  shares  and  property  of  a  corporation  by  the  state 
of  California  would  be  double  taxation,  there  is  here 
no  taxation  of  that  kind^'  (pp.  471,  472). 

Thus,  for  the  purposes  of  taxation,  an  obligation  se- 
cured by  an  encumbrance  against  property  situate 
without  the  state  of  California  is  not  deemed  an  inter- 
est in  the  property  affected  thereby,  and  the  situs  of 
such  property  is  the  domicile  of  the  owner. 

By  the  constitutional  provision  above  set  forth  an 
obligation  secured  by  an  encumbrance  against  prop- 
erty within  the  state  is  deemed  to  be  an  interest  in 
the  encumbered  property,  and  except  when  owned  by 
a  railroad  or  other  quasi  public  corporation,  is  taxed 
to  the  owner  of  the  obligation  at  its  situs.  But  al- 
though the  mortgagee  is,  for  the  purposes  of  taxation, 
in  every  case  deemed  to  own  the  interest  in  the  mort- 
gaged property  represented  by  his  mortgage,  as  wa^5 
expressly  held  in  Germania  Trust  Co.  v.  San  Francisco, 
as  quoted  above  (and  in  the  subsequent  cases  above 
cited;,  yet  the  value  of  the  mortgage  interest  as  well 
as  of  the  remainder  of  the  property  i3,  in  case  of  the 
railroad  and  other  quasi  public  corporations,  taxed  to 
the  mortgagor,  and  it  is  compelled  to  pay  the  tax,  and 
no  right  is  conferred  upon  it  to  reimburse  itself  for  the 
payment  by  withholding  the  amount  paid  from  that  to 
become  payable  to  the  mortgagee  or  bondholder.     The 


TAXATION. 


557 


result  of  this  arrangement  is  that  the  tax  on  the  mort- 
gage interest  is  paid  from  the  general  funds  of  the 
quasi  public  corporation,  and  thus  falls  upon  its  stock- 
holders, while  the  bondholders  are  exempt  from  taxa- 
tion. 

A  fair  construction  of  the  constitutional  provision 
need  not,  however,  bring  us  to  this  conclusion.  For 
while  the  first  sentence  of  the  constitutional  provision 
declares  that  in  every  case  an  obligation  secured  by 
an  encumbrance  against  property  situate  in  the  state 
is  deemed  an  interest  in  the  property  for  the  purposes 
of  taxation,  the  second  sentence,  and  doubtless  the 
third  also,  merely  prescribe  the  method  in  which  this 
tax  shall  be  levied  against  persons  other  than  quasi 
public  corporations,  and  contain  no  provision  at  all 
as  to  the  method  to  be  pursued  in  assessing  and  col- 
lecting a  tax  against  the  encumbered  property  of  such 
a  corporation,  but  merely  infer  that  the  method  shall 
in  some  respect  differ  from  that  pursued  in  other  cases. 
Subject,  then,  to  the  constitutional  rule  that  the  se- 
cured obligation  is  deemed  an  interest  in  the  encum- 
bered property,  and  in  virtue  of  the  principle  deter- 
mined in  Savings  etc.  Soc.  v.  Multnomah  County, 
above,  that  the  situs  of  a  secured  obligation  can,  for 
the  purposes  of  taxation,  be  made  that  of  the  encum- 
bered property,  the  legislature  is  apparently  author- 
ized to  provide  that  while  the  tax  on  the  whole  value 
of  the  encumbered  property  of  a  quasi  public  cor- 
poration is  payable  by  the  corporation,  yet  that  the 
corporation  must  deduct  from  the  amounts  otherwise 
payable  by  the  corporation  to  its  bondholders  the 
amount  of  the  taxes  owing  on  the  interest  which 
they  are  deemed  to  own  in  the  encumbered  property. 
Thereby  the  discrimination  which  the  law  has  been 
said  to  make  against  quasi  public  corporations  would 
be   avoided.     But    now   that   business    conditions    and 


558  MOETGAGE.' 

rates  of  interest  have  become  adjusted  to  the  present 
system,  so  that  quasi  public  corporations  borrow  money 
at  less  rates  of  interest  than  other  mortgagors,  the 
expediency  of  such  a  change  is  not  apparent. 

Conceding,  however,  that  the  construction  hereto- 
fore placed  on  the  provision  concerning  the  taxation 
of  quasi  public  corporations  by  the  California  supreme 
court  is  correct,  does  this  provision  conflict  with  the 
provision  of  the  fourteenth  amendment  to  the  United 
States  ''.onstitution,  which  declares  that  **no  state 
shall  make  or  enforce  any  law  which  shall  abridge  the 
privileges  or  immunities  of  citizens  of  the  United 
States,  nor  shall  any  state  deprive  any  person  of  life, 
liberty,  or  property,  without  due  process  of  law,  nor 
deny  to  any  person  within  its  jurisdiction  the  equal 
protection  of  the  laws''?  This  question  was  first 
raised  in  Central  Pacific  E.  B.  Co.  v.  State  Board 
of  Equalization,  60  Cal.  35,  58-60,  where  it  was  held 
that  a  corporation  was  not  a  person  within  the  mean- 
ing of  the  provision  of  the  United  States  constitu- 
tion, and  that  consequently  any  discrimination,  if  such 
there  was,  was  immaterial.  But  in  Santa  Clara 
County  V.  Southern  Pac.  K.  R.  Co.,  118  U.  S.  394,  396, 
6  Sup.  Ct.  Rep.  1132,  30  Law  ed.  118,  Chief  Justice 
Waite  said:  '^The  court  does  not  wish  to  hear  argu- 
ment on  the  question  whether  the  provision  in  the 
fourteenth  amendment  to  the  constitution,  which  for- 
bids a  state  to  deny  to  any  person  within  its  jurisdic- 
tion the  equal  protection  of  the  laws,  applies  to  these 
corporations.  We  are  all  of  opinion  that  it  does.'' 
And  in  subsequent  cases  this  opinion  has  been  fol- 
lowed. Taking  this  view  of  the  scope  of  the  four- 
teenth amendment,  the  United  States  circuit  court, 
in  County  of  San  Mateo  v.  Southern  Pac.  R.  R.  Co.,  13 
Fed.  722,  729-748,  771-775,  and  County  of  Santa  Clara 
V.  Southern  Pac.  R.  R.  Co.,  18  Fed.  385,  396-402,  429- 


TAXATION.        V.      r  559 

437,  held  that  quasi  public  corporations  do  not  by 
themselves  constitute  a  special  class  to  which  a  spe- 
cial plan  of  taxation  is  applicable;  that  to  value  their 
property  on  a  different  basis  from  the  property  of 
other  persons  is  an  inequality;  and  that  such  an  in- 
equality is  prohibited  by  the  fourteenth  amendment. 
This  decision  cannot,  however,  be  considered  authori- 
tative, as  both  cases  were  appealed  to  the  supreme 
court.  The  San  Mateo  case  was  afterward  settled 
out  of  court,  while  the  Santa  Clara  case  was  decided 
upon  another  point  of  law  in  118  U.  S.  394,  411,  416, 
6  Sup.  Ct.  Eep.  1132,  30  Law  ed.  118,  the  supreme 
court  expressly  refusing  to  pass  upon  the  constitu- 
tional question.  In  California  v.  Central  Pac;  R.  K. 
Co.,  127  U.  S.  1,  45,  8  Sup.  Ct.  Rep.  1073,  32  Law 
ed.  150,  the  court  also  refused  to  pass  on  this  ques- 
tion. More  recently  the  Missouri  supreme  court,  in 
Russsell  V.  Croy,  164  Mo.  69,  63  S.  W.  849,  by  a  de- 
cision in  which  four  justices  concurred  and  from  which 
three  dissented,  held  a  similar  provision  in  the  Mis 
souri  constitution  in  conflict  with  the  fourteenth 
amendment,  but  in  view  of  the  statement  in  Kirtland 
V.  Hotchkiss,  100  U.  S.  491,  25  Law  ed.  558,  that 
''so  long  as  the  state,  by  its  laws  prescribing  the 
modes  and  subjects  of  taxation,  does  not  entrench 
upon  the  legitimate  authority  of  the  Union,  or  does 
not  violate  any  right  recognized  or  secured  by  the 
constitution  of  the  United  States,  this  court,  as  be- 
tween the  state  and  its  citizen,  can  afford  him  no 
relief  against  state  taxation,  however  unjust,  oppres- 
sive, or  onerous''  (p.  498),  and  that  ** whether  the 
s»tate  of  Connecticut  shall  measure  the  contribution 
which  persons  resident  within  its  jurisdiction  shall 
make  by  way  of  taxes,  in  return  for  the  protection  it 
affords  them,  by  the  value  of  the  credits,  chosea  in 
action,  bonds,   or  stocks  which  they  may  own   (other 


560  MOKTGAGE.'  §    343 

than  such  as  are  exempted  or  protected  from  taxation 
under  the  constitution  and  laws  of  the  United  States), 
is  a  matter  which  concerns  only  the  people  of  that 
state,  with  which  the  federal  government  cannot  in- 
terfere V  (p.  499),  it  seems  improbable  that  the  fed- 
eral sui3reme  court  would  hold  this  provision  of  the 
constitution  of  California  to  conflict  with  the  four- 
teenth amendment. 

343.     Secured  Obligation  not  Deemed  Interest  in 
Mortgaged  Property  for  Purposes  of  As- 
sessment.^ 
For  the  purpose  of  levying  and  collecting  a 
special    assessment,^    an    obligation    secured   by 
mortgage,  trust  deed  in  the  nature  of  a  mortgage, 
contract,  or  other  obligation,  is  not  deemed  an 
interest  in  the  property  whereby  it  is  secured; 
but  the  assessment  must  be  levied  upon  the  prop- 
erty and  the  owner  thereof  as  though  the  prop- 
erty was  not  affected  by  an  encumbrance  for  se- 
curity, and  without  regard  to  the  provisions  of 
this  subdivision. 

1  Secured  Obligation  not  Deemed  Interest  in  Mort- 
gaged Property  for  Purposes  of  Assessment.— Thus  an 
assessment  by  an  irrigation  district  ''although  refer- 
able to  the  powers  of  taxation,  is  distinct  from  a  tax, 
and  is  not  subject  to  the  constitutional  provisions  re- 
specting taxation,  but  may  be  levied  upon  all  real 
property  within  the  district  without  deducting  from 
the  value  of  such  property  the  amount  of  any  mort- 
gages existing  thereon'':  Tregea  v.  Owens,  94  Cal. 
317,  318,  319,  29  Pac.  643. 

3  Assessment  Defined  and  Distinguished:  See  sec- 
tion 643,  and  note  below. 


§    344  TAXATION.  561 

344.  Obligation    Secured   by    Property    Outside 

State   not   Deemed   Interest   Therein   for 
Purposes  of  Taxation. 

For  the  purposes  of  taxation^  an  obligation 
secured  by  an  encumbrance  against  property  out- 
side the  state  of  California  is  not  deemed  an  in- 
terest in  the  property  whereby  it  is  secured,  but 
when  owned  by  a  resident  of  California  is  taxable 
to  him  at  the  place  of  his  residence.^ 

345.  Obligation  Secured  by  Property  Within 
State  Deemed  Interest  Therein  for  Pur- 
poses of  Taxation.^ 

For  the  purposes  of  taxation,  every  obligation 
secured  by  mortgage,  trust  deed  in  the  nature  of 

3  See  Mackay  v.  San  Francisco,  113  Cal.  392,  397, 
398,  45  Pac.  696,  and  Estate  of  Fair,  128  Cal.  607, 
611-615,  61  Pac.  184,  as  quoted  in  the  introductory 
note,  pages  553,  554. 

4  Obligation  Secured  by  Property  Within  State 
Deemed  Interest  Therein  for  Purposes  of  Taxation: 
See  Germania  Trust  Co.  v.  San  Francisco,  128  Cal.  589, 
594,  61  Pac.  178,  Estate  of  Fair,  128  Cal.  607,  610, 
61  Pac.  184,  and  Estate  of  Pichoir,  128  Cal.  615,  61 
Pac.  1130,  as  quoted  pages  547-549,  above. 

Historical. — In  several  early  cases  decided  under  the 
constitution  of  1849,  it  had  been  held  that  money 
at  interest,  secured  by  mortgage  or  not,  was  taxable 
to  the  mortgagee  or  other  creditor  in  the  county  of 
his  domicile  (People  v.  McCreery,  34  Cal.  432,  447; 
People  V.  Whartenby,  38  Cal.  461;  People  v.  Eddy, 
43  Cal.  331;  compare,  also,  Falkner,  Bell  &  Co.  v. 
Hunt,  16  Cal.  167),  and  it  had  also  been  held  that  if 
land  subject  to  a  mortgage  was  taxed,  and  the  debt 
Liens — 36 


562  MORTGAGE.  §    345 

secured  by  the  mortgage  was  also  taxed,  the  tax  on 
the  debt  being  paid  by  the  mortgagee,  the  mortga- 
gor cannot  complain  of  double  taxation  (Lick  v.  Aus- 
tin, 43  Cal.  590). 

The  reasoning  on  which  this  conclusion  rests  is  con- 
vincingly set  forth  in  People  v.  Worthington,  21  111. 
171,  where  the  court  said:  **It  may  be  true,  in  one 
sense,  to  say  that  it  is  double  taxation  to  tax  the  horse 
which  is  sold  and  also  the  note  which  is  given  for 
the  purchase  money;  and  so  it  is  to  tax  the  note  which 
is  given  for  one  hundred  dollars  borrowed  money,  and 
also  the  money  which  is  borrowed;  and  so  we  might 
go  on  through  the  whole  system  of  human  transac- 
tions which  involves  a  credit  for  things  tangible,  which 
are  within  the  state  and  subject  to  taxation;  and 
even  so  it  is,  if  they  are  beyond  the  state,  for  the 
presumption  is  that  they  are  taxed  wherever  they  may 
be.  Whatever  rights,  credits,  or  choses  in  action 
which  may  be  taxed,  are  so  much  over  and  above  the? 
money  and  other  physical  objects  within  the  state, 
and  are  in  the  same  sense,  double  taxation;  for  these 
very  credits  must  ultimately  be  paid  with  those  physi- 
cal objects  if  they  are  ever  paid.  To  say  that  there 
shall  not  be  double  taxation  in  this  sense  of  the  term 
is  at  once  to  say  that  no  credits  of  any  sort  shall  be 
taxed;  and  all  those  whose  fortunes  consist  in  loanevl 
money  or  other  credits  must  be  allowed  the  bene^t 
and  protection  of  the  laws,  and  be  exempt  from  the 
burdens  incident  to  the  making  and  enforcing  them^' 
(pp.  173,  174).  '^Whenever  a  credit  is  given,  a  new 
property  is  created  in  the  hands  of  the  creditor,  which 
before  did  not  exist,  and  when  the  debt  is  pai«l,  that 
property  is   annihilated"   (p.   176). 

But  in  Savings  etc.  Soc.  v.  Austin,  46  Cal.  415,  491- 
500,  the  court,  speaking  through  Mr.  Justice  Crockett 
(pp.  485-488,  and  491),  and  Mr.  Justice  Niles  (p.  520); 
Ehodes,  J.  (pp.  500-503),  and  Wallace,  C.  J.  (pp.  518- 
520),  dissenting,  and  Belcher,  J.,  not  expressing  an 
opinion^  overruled  the  earlier  decisions,  and  held  that 
an  obligation  secured  by  mortgage  was  not  taxable. 
In  People  v.  Hibernia  Sav.  etc.  Soc,  51  Cal.  243,  21 
Am.  Eep.  704,  per  McKinstry,  J.,  Wallace,  C.  J.  (who 
had  reversed  his  opinion),  and  Crockett,  J.;  Ehodes,  J., 


§    345  TAXATION.  663 

a  mortgage^  contract^  or  other  obligation,*^ 
against  property  situate  in  the  state  of  California 
is  deemed  an  interest  in  the  property  whereby  it 
is  secured^  and  is  taxable  at  the  place  where  the 

dissenting-,  the  court  pushed  this  case  to  its  legitimate 
conclusion,  and  held  that  under  the  constitution  of  1843 
no  solvent  debt  nor  credit  of  any  kind  was  taxable. 
This  decision  was  affirmed  in  Bank  of  Mendocino  v. 
Chalfant,  51  Cal.  369,  51  Cal.  471. 

Thus,  when  the  constitution  of  1879  was  adopted, 
tne  question  arose  whether  the  interest  of  the  mort- 
gagee could  be  newly  defined  and  thereby  subjected  to 
taxation^  such  interest  having  been  exempt  from 
taxation  under  the  above  decisions  at  the  time  of  the 
execution  of  the  mortgage. 

In  Hay  v.  Hill,  65  Cal.  383,  4  Pac.  378,  and  Sanford 
V.  Savings  etc.  Soc,  80  ±'ed.  (C.  C.)  54,  60,  the  court 
held  that  from  the  time  of  the  adoption  of  the  con- 
stitution of  1879  the  mortgagee  under  a  mortgage 
executed  before  the  adoption  of  the  new  constitution 
became  primarily  liable  for  taxes  on  his  interest  in 
the  mortgaged  property. 

In  McCoppin  v.  McCartney,  60  Cal.  367,  371,  where 
a  mortgage,  also  executed  before  the  adoption  of  the 
constitution,  contained  a  provision  whereby  the  mort- 
gagor agreed  to  pay  all  taxes  upon  the  mortgaged 
property,  the  court  held  that  the  obligation  of  con- 
tracts was  not  impaired  by  the  altered  constitutional 
provision  in  respect  to  taxation,  and  that  the  mort- 
gagee was  primarily  liable  for  the  tax,  as  no  one  could 
have  a  vested  right  to  exemption  from  taxation.  The 
mortgagee  might,  however,  enforce  reimbursement 
from  the  mortgagor. 

6  Obligation  Secured  by  Mortgage,  Trust  Deed,  Con- 
tract or  Other  Obligation  Deemed  Interest.— The  lan- 
guage of  the  constitution  is  ^'a  mortgage,  deed  of 
trust,  contract  or  obligation  by  which  a  debt  is  se- 
cured^'; evidently  what  is  meant  was  not  that  the 
'' mortgage, '^  etc.,  as  such,  but  the  obligation  secured 
therebv  is  deemed  an  interest. 


564  MORTGAGE.  §    345 

encumbered  property  is  situate  and  nowhere 
else.^  The  vakie  of  the  mortgage  interest  is 
deemed  to  be  the  value  of  the  secured  obliga- 

Just  what  is  embraced  in  the  expression  ^'mortgage, 
deed  of  trust,  contract,  or  other  obligation '^  has  not 
been  determined. 

In  Sanford  v.  Savings  etc.  Soc,  80  Fed.  (C.  C.)  54, 
58,  59,  this  description  was  held  to  embrace  a  deed 
absolute  in  form  which  was  intended  as  a  mortgage. 
The  court  said:  '^It  is  objected  to  the  application  of 
these  provisions  (concerning  taxation  of  mortgaged 
property),  that  they  do  not  apply  to  a  deed  intended 
as  a  mortgage;  that  they  only  apply  to  a  mortgage 
in  form  such,  to  a  deed  of  trust  in  form  such;  and  it 
is  urged  further  in  support  of  this  construction  that 
the  machinery  of  the  law  is  inadequate  to  assess  any 
other  but  formal  mortgages  or  deeds  of  trust.  I  do 
not  think  that  either  proposition  is  tenable.  Not  the 
first,  because  it  is  manifest  that  sections  4  and  5 
should  be  taken  together,  and  were  intended  to  in- 
clude all  forms  by  which  money  could  be  secured; 
and  it  would  have  been  of  little  avail  to  have  avoided 
0.  contract  by  which  a  debtor  obliges  himself  Ho  pay 
any  tax  or  assessment  on  money  loaned,  or  any  mort- 
gage, deed  of  trust,  or  other  lien,'  if  the  result  could 
have  been  produced  by  the  easy  and  not  uncommon 
form  of  a  deed.  Not  the  second,  because  the  machin- 
ery of  the  law  provides  for  not  only  what  the  records 
may  show,  but  for  the  disclosures  of  the  parties  under 
oath— as  adequate  a  method  as  can  be  applied  to 
men,  and  as  far  as  the  state  is  concerned,  completely 
adequate,  the  value  of  the  visible  land  being  the  basis 
of  taxation,  whether  as  one  interest  or  as  two  in- 
terests. ' ' 

6  Mortgage  Interest  Taxable  Nowhere  Else.— The 
mortgage,  being  for  the  purposes  of  taxation  deemed 
an  interest  in  the  mortgaged  property,  is  taxable  at 
the  situs  of  the  property,  and,  although  the  secured 
obligation  is  owned  by  a  person  residing  elsewhere 
in  the  state,  and  is  a  bond  of  a  quasi  public  corpora- 
tion upon  which  the  mortgagor  was  compelled  to  pay 


§    345  TAXATION.  565 

tion;''  the  value  of  the  interest  remaining  in  the 
owner  of  the  property  is  determined  by  deducting 
the  value  of  the  mortgage  interest  from  the  value 
of  the  property  if  unencumbered.^  Taxes  levied 
upon  either  interest  constitute  liens  against  the 
encumbered  property  paramount  to  the  encum- 
brance.^ The  fact  that  the  interest  of  the  owner 
is  in  certain  cases  nontaxable  does  not  of  itself^  in 

the  tax,  it  cannot  be  again  taxed  to  the  mortgagee  at 
the  p'lace  of  his  residence:  Germania  Trust  Co.  v. 
San  Francisco,  128  Cal.  589,  597,  61  Pac.  178,  as 
quoted  in  the  introductory  note  above. 

7  Value  of  Secured  Obligation.— In  People  v.  Dunn, 
in  bank,  59  Cal.  328,  and  Schroeder  v.  Grady,  in  bank, 
GG  Cal.  212,  5  Pac.  81,  Eoss,  J.,  dissenting,  the  court 
held  that  although  a  mortgage  was  assessed  at  its 
face  value,  the  assessment  thereon  was  liable  to  be 
raised  by  a  horizontal  increase  of  the  entire  assess- 
ment-roll of  a  county  by  the  state  board  of  equal- 
ization. 

8  The  fact  that  a  mortgage  happens  to  belong  to 
the  state,  and  is,  therefore,  exempt  from  taxation, 
does  not  render  nugatory  the  provision  that  only  the 
value  of  the  land,  less  the  value  of  the  mortgage, 
shall  be  assessed  to  the  mortgagor:  People  v.  Board 
of  Supervisors,  77  Cal.  136,  19  Pac.  257;  Henne  v. 
Los  Angeles,  129  Cal.  297,  298,  61  Pac.  1081. 

o  Taxes  Constitute  Paramount  Lien  Against  Mort- 
gaged Property. 

Thus,  a  tax  sale  of  the  interest  of  a  mortgagee  for 
nonpayment  of  taxes  upon  the  mortgage  sells  an  in- 
terest in  the  property,  not  merely  the  mortgage: 
Dorland  v.  Mooney,  72  Cal.  34,  13  Pac.  71. 

A  tax  lien  against  the  interest  of  the  mortgagor  is 
superior  to  every  other  lien,  including  that  of  the 
mortgagee:  California  Loan  and  Trust  Co.  v.  Weis, 
118  Cal.  489,  492,  493,  50  Pac.  697. 


566  MORTGAGE.  §    345 

those  cases^  render  the  mortgage  interest  also  ex- 
empt from  taxation.^^ 

346.  ftuasi   Public   Corporation  When   Owning 
Mortgaged  Property  Liable  for  Tax. 

In  case  of  a  tax  upon  encumbered  property  of 
a  railway  or  other  quasi  public  corporation,  the 
corporation  must  pay  the  tax  upon  both  the  mort- 
gage interest  and  the  interest  remaining  in  the 
owner  of  the  property.^^ 

347.  In  Every  Other  Case  Mortgagor  and  Mort- 

gagee Liable  for  Their  Respective  Shares 
of  Tax.i2 

In  case  of  a  tax  upon  encumbered  property 
situate  in  California,  other  than  the  property  of 
a  quasi  public  corporation,  the  value  of  the  mort- 

10  Thus  where  certain  nontaxable  stocks  and  bonds 
are  pledged  as  security  for  an  obligation,  conced- 
ing that  the  secured  obligation  is  an  interest  in 
the  stocks  and  bonds  within  the  meaning  of  the 
constitution,  it  does  not  follow  that  the  secured  ob- 
ligation is  also  exempt  from  taxation:  Savings  etc. 
Soc.  V.  City  and  County  of  San  Francisco,  131  Cal. 
356,  361,  362,  63  Pac.  665;  Security  Sav.  Bank  v. 
City  and  County  of  San  Francisco,  132  Cal.  599,  600, 
64-  Pac.  898. 

See,  also,  City  and  County  of  San  Francisco  v.  La 
Societe  Francaise,  131  Cal.  612,  63  Pac.  1016. 

11  See  introductory  note  above  (page  548).  It  has 
always  been  assumed  that  the  corporation  must  -pny 
the  tax,  and  in  Central  Pacific  E.  E.  Co.  v.  State 
Board  of  Equalization,  60  Cal.  35,  58-60,  this  prac- 
tice was  held  constitutional. 

12  See  constitutional  provision  as  quoted  in  the  in- 
troductory note,  page  547. 


§   347  TAXATION.  567 

gage  interest  must  be  assessed  and  taxed  in  the 
county,  city,  or  district  in  which  the  encumbered 
property  is  situate  to  the  holder  of  the  mortgage 
at  the  time  of  assessment ;^^  the  value  of  the  re- 
maining interest  in  the  property  must  be  assessed 
and  taxed  to  the  owner  thereof.  The  assessment 
of  the  interest  of  the  mortgagor  must  be  com- 
plete in  itself,  so  as  to  show  upon  its  face,  with- 
out reference  to  the  assessment  of  the  interest 
of  the  mortgagee,  that  the  value  of  the  mortgage 
interest  is  deducted;  otherwise  the  assessment  is 
void.^^ 

348.     Taxes  may  be  Paid  by  Either  Party— Effect 
Thereof. 

Taxes  upon  either  the  mortgage  interest  or 
the  interest  remaining  in  the  owner  may  be  paid 
by  the  owner  of  either  interest.  A  tax  upon  the 
property  when  paid  by  the  owner  of  the  obliga- 
tion which  is  deemed  an  interest  therein  becomes 
a  part  of  the  second  obligation;  a  tax 
upon  the  secured  obligation  when  paid  by 
the  owner  of  the  property  constitutes  to  the 
amount  of  the  payment  a  discharge  of  the  obli- 
gation.^^    But  if  a  mortgagor  permits  the  whole 

13  San  Gabriel  Valley  Land  etc.  Co.  v.  Witmer 
Bros.  Co.,  96  Cal.  623,  636,  29  Pac.  500,  31  Pac.  588. 

14  Knott  V.  Peden,  84  Cal.  299,  23  Pac.  1081,  24 
Pac.  160;  Pol.  Code,  sec.  3650,  subd.  15. 

15  Mayre  v.  Hart,  76  Cal.  291,  18  Pac.  325;  Ham- 
ilton V.  Jones,  62  Cal.  473,  476;  Lloyd  v.  Davis,  123 
Cal.  348,  355,  55  Pac.  1003. 


668  MORTGAGE.  §    348 

tax  to  be  assessed  upon  his  interest  in  the  prop- 
erty without  deducting  the  value  of  the  secured 
obligation,  as  though  the  property  was  not 
affected  by  an  encumbrance,  and  pays  such  tax, 
he  is  not  entitled  to  deduct  any  portion  of  the 
sum  so  paid  from  the  secured  obligation. ^^* 
Where,  however,  a  mortgagee  in  possession  un- 
der a  deed  absolute  in  form,  thereby  holding  the 
apparent  legal  title  to  the  property,  permits  the 
whole  tax  to  be  assessed  upon  the  property,  as 
though  it  was  unencumbered,  without  apportion- 
ing the  proper  proportion  of  the  tax  to  the  mort- 
gage interest  which  he  holds,  upon  an  accounting 
with  the  mortgagor  he  can  only  include  in  the 
expenses  of  his  trust  the  proportion  of  the  tax 
which  should  have  accrued  upon  the  interest  in 
the  property  remaining  in  the  mortgagor,  but 
must  himself  pay  the  tax  upon  the  mortgage  in- 
terest.^'' 

See  latter  part  of  the  constitutional  provision 
quoted  in  introductory  note,  page  547. 

16  Hibernia  Sav.  etc.  Soc.  v.  Behnke,  121  Cal.  339, 
343,  53  Pac.  812,  where  the  court  said:  '*It  ap- 
peared bv  the  evidence  on  the  part  of  the  appellant 
[mortgagor]  that  the  mortgagee  was  not  assessed  for 
that  year,  and  that  the  assessment  for  which  the 
taxes  were  paid  was  upon  the  land  without  any  de- 
duction for  mortgage  or  other  obligation.  It  is  only 
the  tax  levied  upon  the  security'  that  the  owner 
may  pay  and  have  the  amount  deducted  from  the 
amount  of  the  security  (Const.,  art.  13,  sec.  4);  and 
as  there  was  no  assessment  of  the  security,  the  de- 
fendant [mortgagor]  was  not  authorized  to  have  this 
payment   deducted. ' ' 

17  Sanford  v.  Savings  etc.  Soc,  80  Fed.  (C.  C.)  51, 


§    349  TAXATION.  569 

349.     Mortgagee  Liable  for  All  Taxes  Assessed 
Before  Payment  of  Mortgage. 

A  person  who  satisfies  the  secured  obligation 
after  the  assessment  of  any  tax  thereon,  but  be- 
fore its  levy,  may  either 
(1)  retain  the  amount  of  the  tax  thereafter  to 

be  levied,  computed  according  to  the  tax  levy 

for  the  preceding  year/^  or 

58,  59;  same  case,  Savings  etc.  Soc.  v.  Davidson,  97 
Fed.  696,  718,  719,  38  C.  C.  A.  365,  9th  Cir. 

The  circuit  court  of  appeals  distinguished  this 
case  from  Hibernia  Sav.  etc.  Soc.  v.  Behnke,  note  16 
above,  as  in  the  Hibernia  case,  the  owner  [mortgagor] 
paid  the  entire  tax  and  sought  to  obtain  a  reduction 
in  the  amount  of  the  foreclosure  judgment  for  the 
proportion  of  the  tax  which  the  mortgagee  should 
have  paid,  while  here  the  mortgagee,  who  held  the 
title  but  was  not  the  real  owner  of  the  property, 
and  who  stood  in  a  trust  relation  to  the  mortgagor, 
paid  the  tax.  *^The  fact  that  it  [the  mortgagee] 
had  the  property  assessed  to  itself  instead  of  having 
it  assessed  as  provided  for  in  the  constitution  gave 
it  no  additional  rights.  It  cannot  be  allowed  to  take 
advantage  of  its  own  wrong.  The  principles  an- 
nounced in  the  Hibernia  case  are  not,  when  the  differ- 
ence in  the  facts  is  considered,  in  opposition  to  the 
conclusion  we  have  reached.'' 

18  Const.,  art.  13,  sec.  4,  last  clause:  *'If  any 
such  security  or  indebtedness  shall  be  paid  by  any 
such  debtor  or  debtors,  after  assessment  and  before 
the  tax  levy,  the  amount  of  such  levy  may  likewise 
be  retained  by  such  debtor  or  debtors,  and  shall  be 
computed  according  to  the  tax  levy  for  the  preced- 
ing year.'' 

This  provision  is  permissive  and  not  mandatory  in 
its  terms:  San  Gabriel  Val.  Land  etc.  Co.  v.  Witmer 
Bros.  Co.,  96  Cal.  623,  635,  29  Pac.  500,  31  Pac.  588. 


570  MORTGAGE.  §    349 

(2)    pay    the    secured    obligation    in    full,    and 
when  the  tax  is  thereafter  levied,  maintain  an 
action    to    recover    the    true    amount  thereof 
from  the  mortgagee.-*-^ 
But  a  purchaser  of  mortgaged  property  at  fore- 
closure sale  in  satisfaction  of  the  first  mortgage 
thereon  (such  purchaser  being  the  former  first 
mortgagee)  cannot  recover  from  a  second  mort- 
gagee of  the  same  property,  whose  interest  was 
sold  to  the  state  for  delinquent  taxes,  the  amount 
expended  by  himself  in  the  redemption  of  the 
property  from  the  sale  to  the  state  in  satisfaction 
of  the  tax  lien  upon  the  interest  of  the  second 
mortgagee.^^ 

350.  Agreement  Compelling  Mortgagor  to  Pay 
Taxes  or  Assessments  on  Secured  Obliga- 
tion Declared  Void  and  Penalized.-^ 

A  contract  purporting  to  obligate  a  debtor  to 
pay  any  tax  or  assessment  on  any  obligation  se- 

19  San  Gabriel  Val.  Land  etc.  Co.  v.  Witmer  Bros. 
Co.,  96  Cal.  623,  635,  29  Pac.  500,  31  Pac.  588,  per 
McFarland,  De  Haven,  Garoutte  and  Sharpstein,  JJ.; 
Beatty,  C.  J.,  Paterson  and  Harrison,  JJ.,  dissent- 
ing: Campbell  v.  Quackenbush  (Cal.),  31  Pac.  746, 
in  bank,  Harrison,  J.,  dissenting;  Angus  v.  Plum,  121 
Cal.  608,  54  Pac.  97,  in  bank.  Temple,  J.,  dissenting. 

20  Canadian  etc.  Trust  Co.,  Lim.,  v." Boas,  136  Cal. 
419,  69  Pac.  18. 

21  Agreement  Compelling  Mortgagor  to  Pay  Taxes 
or  Assessments  on  Secured  Obligation  Declared  Void 
and  Penalized:  Burbridge  v.  Lemmert,  99  Cal.  493,  32 
Pac.  310;  Harralson  v.  Barrett,  99  Cal.  607,  34  Pac. 
342;  Garms  v.  Jensen,  103  Cal.  374,  37  Pac.  337. 


§   350  TAXATION.  571 

Constitution,  article  13,  section  5:  ^' Every  con- 
tract hereafter  made,  by  which  a  debtor  is  obligated 
to  pay  any  tax  or  assessment  on  money  loaned,  or 
on  any  mortgage,  deed  of  trust,  or  other  lien,  shall, 
as  to  any  interest  specified  therein,  and  as  to  such 
tax  or  assessment,  be  null  and  void/'  In  Daw  v. 
Niles,  104  Cal.  106,  110,  111,  the  court  said:  ^'The 
language  of  this  section  is  not  happily  chosen;  and, 
literally  taken,  involves  an  absurdity;  for  it  speaks 
•of  a  contract  which  obligates  the  debtor,  and  is  at 
the  same  time  void.  What  is  evidently  meant,  how- 
ever, is  a  contract  which  but  for  the  invalidating 
effect  of  this  provision,  would  obligate  the  debtor  to 
pay  the  tax,  and  this  contract  must  be  a  part  of  the 
contract  to  pay  the  interest;  for  it  is  the  interest 
specified  therein,  i.  e.,  in  the  contract  to  pay  the  tax, 
which  is  alone  invalidated/' 

This  section  only  applies  to  contracts  made  after 
the  adoption  of  the  present  constitution:  Beckman  v. 
Skaggs,  59  Cal.  541,  544. 

Rationale. — The  end  attempted  to  be  accomplished 
is  that  a  portion  of  the  taxes  might  be  collected  from 
the  mortgagee,  and  that  the  burden  of  the  mortgagor 
might  not  at  the  same  time  be  increased:  Hewitt  v. 
Dean,  91  Cal.  5,  11,  27  Pac.  423;  Harralson  v.  Bar- 
rett, 99  Cal.  607,  608,  34  Pac.  342. 

Illustrations.— A  proviso  in  a  mortgage  that,  upon 
a  foreclosure,  the  mortgagee  may  include  in  the  se- 
cured obligation  all  payments  made  by  the  mort- 
gagee ^*for  taxes  on  said  premises,  and  the  taxes  of 
this  mortgage  on  the  money  hereby  secured"  is 
void:  Harralson  v.  Barrett,  99  Cal.  607,  34  Pac.  342. 

An  agreement  that  the  mortgagee  may  pay  taxes, 
assessments,  or  other  liens,  which  may  be  imposed 
upon  the  mortgaged  ^^land  or  premises,''  such  pay- 
ments to  be  secured  by  the  mortgage,  does  not  come 
within  the  constitutional  inhibition:  Marye  v.  Hart, 
76  Cal.  291,  18  Pac.  325;  Longmaid  v.  Coulter,  123 
Cal.  208,  218,  55  Pac.  791. 

A  provision  in  a  mortgage  that  the  mortgagee  may 
pay  all  taxes,  liens,  or  assessments  upon  the  mort- 
gaged  property,   and   that   the   same   shall   be   repaid 


572  MORTGAGE.  §    350 

cured  by  mortgage,  trust  deed^  or  other  encum- 
brance is  void,  and  when  made  a  part  of  a 
written^^  agreement,  although   evidenced  by  a 

with  interest  thereon  at  the  rate  of  one  per  cent  per 
month,  falls  far  short  of  being  a  contract  by  which 
the  mortgagor  is  obligated  to  pay  any  taxes  upon 
the  money  loaned,  or  upon  the  mortgages  given  there- 
for. Thus  it  does  not  exonerate  the  mortgagor  from 
paying  interest  to  the  mortgagee:  Bank  of  Ukiah  v. 
Beed,  131  Cal.  597,  604,  63  Pac.  921. 

A  mortgage  containing  a  provision  for  the  pay- 
ment by  the  mortgagor  of  all  taxes  upon  the  ^^land^' 
mortgaged,  when  it  did  not  appear  that  any  other 
taxes  were  assessed  upon  the  land  than  those  which 
were  assessed  upon  it  when  the  value  of  the  security 
was  deducted,  does  not  come  within  the  constitutional 
inhibition:  Barnhart  v.  Edwards  (Cal.),  47  Pac.  251, 
252B,   2o3A. 

22  To  Avoid  Interest  the  Contract  must  be  Writ- 
ten.— The  general  rule,  as  stated  in  Code  of  Civil 
Procedure,  section  1856,  is  that  parol  evidence  can- 
not be  admitted  to  alter  the  terms  of  a  writing. 
There  is,  however,  an  exception  to  this  rule  which 
admits  *' evidence  of  a  parol  agreement  which  is  part 
of  a  written  agreement  when  the  effect  of  the  parol 
agreement  is  to  invalidate  the  written  agreement. 
But  the  proposition  that  a  parol  promise  to  do  an 
unlawful  thing  will  invalidate  the  written  promise 
of  the  same  pa,rty  to  do  what  is  entirely  lawful  has 
little  authority  and  less  reason  to  support  it.  Tt  is, 
of  course,  very  different  when  the  written  promise 
of  one  party  is  made  in  consideration  of  an  oral 
agreement  of  the  other  party  to  do  an  unlawful  act. 
....  In  such  case  the  illegality  of  the  consideration 
may  undoubtedly  be  proved  as  a  defense  to  an  ac- 
tion on  the  written  contract,  because  it  neces- 
sarily invalidates  it.'*  Thus,  a  parol  agreement  to 
pay  the  taxes  made  by  the  mortgagor  does  not  inval- 
idate the  contract  to  pay  interest:  Daw  v.  Niles,  104 
Cal.  106,  118,  37  Pac.  876,  per  Beatty,  C.  J.,  Be  Haven, 
McFarland   and  Fitzgerald,   J  J.;  Garoutte    and    Har- 


§    350  TAXATION.  573 

separate  instrument,^^  releases  the  debtor  from 
all  liability  to  pay  any  interest  which  may  be 
provided  for  by  such  agreement,  without  regard 

rison,  JJ.,  dissenting;  California  State  Bank  v. 
Webber,  110  Cal.  538,  542,  42  Pac.  1066;  Harrelson 
V.  Tomich,  107  Cal.  627,  40  Pac.  1032;  Fisk  v.  Casey, 
110  Cal.  643,  645,  51  Pac.  1077. 

Eeferring  to  Daw  v.  Niles,  the  court,  in  Matthews 
V.  Ormerd,  134  Cal.  84,  66  Pac.  67,  210,  says:  ''The 
point  of  the  decision  seems  to  be,  that  the  obligation, 
which,  under  the  constitutional  provision,  will  de- 
prive the  lender  of  interest,  must  be  one  which 
would  have  been  valid  and  enforceable  but  for  this 
provision. ' ' 

So  evidence  of  a  verbal  agreement  between  the 
parties  when  agreeing  upon  the  amount  of  interest  to 
be  paid  to  make  the  rate  of  interest  two  per  cent 
higher  than  it  would  otherwise  have  been,  in  order 
to  cover  the  anticipated  taxes  on  the  mortgage,  is 
inadmissible.  In  the  absence  of  a  usury  law^  any 
rate  of  interest  for  which  the  parties  contract  is 
legal;  and  it  is  immaterial  what  ordinary  business 
considerations  lead  them  to  adopt  the  stipulated  rate; 
Hotaling  v.  Monteith,  128  Ca.1.  556,  61  Pac.  95. 

In  London  etc.  Bank  v.  Bandmann,  120  Cal.  220, 
224,  65  Am.  St.  Eep.  179,  52  Pac.  583,  an  agreement 
by  which  the  mortgagor  had  agreed  to  pay  the  taxes 
on  the  secured  obligation  was  held  not  to  deprive 
the  mortgagee  of  the  right  to  interest,  first,  because 
it  did  not  appear  that  this  agreement  ''was  a  part 
of  the  contract  of  mortgage.  If  it  was  a  separate 
agreement,  if  it  was  no  part  of  the  contract  of  mort- 
gage, then  it  has  no  force  here,  for  it  is  only  the  in- 
terest that  is  sptecified  in  the  contract  that  is  made 
uncollectible  for  a  violation  of  this  provision  of  the 
constitution. '' 

i23  Separate  Instruments  Construed  Together.— A 
mortgagor  who  makes  a  promise  by  a  separate  writ- 
ten instrument  to  pay  taxes  on  the  mortgage  is  re- 
leased from  his  obligation  to  pay  interest:  Burbridge 
V.  Lemmert,  99  Cal.  493,  32  Pac.  310. 


574  MORTGAGE.  §    351 

to  whether  or  not  the  debtor  actually  pays  any 
such  tax  or  assessment.^'*  But  if  a  mortgagor 
whose  contract  purports  to  obligate  him  to  pay 
such  taxes  or  assessments  actually  makes  a  pay- 
ment of  the  interest  due  on  the  secured  obliga- 
tion voluntarily;,  whether  under  mistake  of  law 
or  as  a  waiver  of  a  known  right,  he  cannot  re- 
cover back  such  sum;  nor  can  it  be  allowed  as  a 
credit  upon  the  secured  obligation.^^ 

351.     Agreement  for  Optional  Payment  of  Taxes 
by  Mortgagor  Valid. 

An  agreement  allowing  a  mortgagor  a  certain 
reduction  in  the  interest  upon  his  indebtedness 
in  case  he  pays  the  taxes  thereon  is  valid.^^ 

AVhere  a  mortgage  was  executed  providing  for 
twelve  per  cent  interest,  and  another  instrument  was 
contemporaneously  made  providing  that  the  interest 
should  be  only  eight  per  cent,  plus  the  amount  of 
taxes  on  the  mortgage,  and  the  difference  should  ba 
refunded  to  the  mortgagor,  or  if  the  mortgagor  paid 
the  taxes,  only  eight  per  cent  should  be  paid  in  the 
first  place,  the  two  instruments  are  to  be  construed 
together,  and  the  agreement  is  then  clearly  within 
the  constitutional  prohibition,  and  the  pTomise  to 
pay  interest  is  invalidated:  Matthews  v.  Ormerd,  134 
Cal.  84,  66  Pac.  67,  210. 

24  Whether  or  not  the  mortgagor  actually  pays 
the  taxes  is  immaterial,  as  the  penalty  is  affixed 
not  alone  to  the  attempt  to  compel  ■  the  mortgagor 
to  pay  them,  but  to  the  contract  itself.  Its  ob- 
ject is  to  prevent  the  making  of  such  a  contract  as 
well  as  its  enforcement:  Garms  v.  Jensen,  103  Cal. 
374,  377,  37  Cal.  337. 

25  Harralson  v.  Barrett,  99  Cal.  607,  611,  34  Pac. 
342;  London  etc.  Bank  v.  Bandmann,  120  Cal.  220, 
224,  65  Am.  St.  Eep.  179,  52  Pac.  583. 


§    352  MORTGAGEE    IN    POSSESSION.  575 

Subdivision  6.     Mortgagee  in   Possession  of  Im- 
movable Property. 

352.     Mortgagee  in  Possession  Defined. 

A  mortgag'ee^'^  of  immovable  property  who 
takes  possession  of  the  property  by  virtue  of  an 
agreement  between  himself  and  the  mortgagor  and 

26  A  coUateral  agreement  allowed  the  mortgagor 
two  and  one-half  per  cent  reduction  in  interest  each 
year  in  which  he  paid  the  taxes  upon  the  mort- 
gage. Held,  such  an  agreement  merely  offers  the 
mortgagor  an  option  which  he  may  exercise  to  his 
advantage,  and  as  it  does  not  compel  him  to  pay  the 
taxes  is  not  in  contravention  of  the  constitutional 
provision:  Hewitt  v.  Dean,  91  Cal.  5,  10-14)  27  Pac. 
423;  California  State  Bank  v.  Webber,  110  Cal.  538, 
542,  42  Pac.  1066. 

27  Mortgage  in  Possession  Defined:  Freeman  v. 
Campbell,  109  Cal.  360,  362,  42  Pac.  35. 

Illustrations. — Where  a  mortgagor  leased  the  mort- 
gaged property  to  a  tenant  for  years,  and  the  tenant 
assigned  the  lease  to  the  mortgagee,  and  the  mort- 
gagee entered  into  piossession,  the  mortgagee  becomes 
a  mortgagor  in  possession:  Barnhart  v.  Edwards 
(Cal.),  47  Pac.  251,  253B-254A. 

But*  a  mortgagee  who  enters  into  the  possession  of 
-mortgaged  premises  after  the  death  of  the  mortgagor, 
not  adversely,  but  for  the  protection  of  the  property, 
as  well  in  the  interest  of  the  mortgagor  as  himself, 
is  not  a  mortgagee  in  possession,  but  merely  a  quasi 
bailiff  of  the  mortgagor:  Freeman  v.  Campbell,  109 
Cal.  360,  363,  42  Pac.  35. 

Where  one  of  two  cotenants  mortgaged  his  estate 
to  his  cotenant,  and  the  cotenant  mortgagee  took  pos- 
session of  the  whole  of  the  premises  without  any  op- 
position from  the  cotenant  mortgagor  or  those  in 
I)Ossession,  this  fact  by  itself  does  not  constitute, 
and  goes  but  a  little  w^ay  toward  constituting,  the 
mortgagee    a    mortgagee    in    possession.     For,    as    the 


576  MORTGAGE.  §    352 

in  recognition  of  the  relation  between  them,  is 
called  a  mortgagee  in  possession.  This  rela- 
tion can  be  created  by  parol  agreement.^^ 

353.     Mortgagee  Entitled  to   Retain  Possession 
Until  Secured  Obligation  Satisfied. 

As  against  a  mortgagor,  his  heirs  and  assigns, 
a  mortgagee  in  possession,  holding  as  such,  is  en- 
titled to  retain  the  possession  of  the  mortgaged 
premises  until  the  satisfaction  of  the  secured  ob- 
ligation, without  limitation  of  time.^^ 

mortgagee,  being  a  cotenant,  had  the  right  to  enter 
upon  the  premises,  the  acquiescence  of  the  mortgagor 
cotenant  in  his  possession  is  not  inconsistent  with 
his  claim  as  cotenant,  especially  when  the  facts  stated 
do  not  show  that  the  mortgagor  cotenant  was  in  pos- 
session when  the  mortgagee  took  possession,  nor  that 
the  mortgagee  turned  the  mortgagor  out  of  posses- 
sion, nor  that  the  mortgagor  ever  had  notice  that  the 
mortgagee  had  entered:  Davenport  v.  Turpin,  41  Cal. 
100,  103. 

2S  Spect  V.  Spect,  88  Cal.  437,  440,  22  Am.  St.  Eep. 
314,  26  Pac.  203. 

29  Mortgagee  Entitled  to  Eetain  Possession  Until 
Secured  OlDligation  Satisfied:  Dutton  v.  WarscHauer, 
21  Cal.  609,  626,  82  Am.  Dec.  765;  Frink  v.  Le  Eoy, 
49  Cal.  344.  ' 

''In  taking  possession,  the  mortgagee  does  not 
thereby  acquire  any  estate  in  the  land,  or  obtain  for 
his  mortgage  any  higher  character  or  any  greater  or 
diif erent  protection  than  it  would  otherwise  have  pos- 
sessed. In  any  action  to  enforce  the  mortgage,  or 
to  collect  the  debt  for  which  it  was  given  as  security, 
the  mortgagee  has  no  additional  rights  by  reason  of 
the  fact  that  he  is  in  possession  of  the  mortgaged 
premises  with  the  consent  of  the  mortgagor. 

''Such  possession  does,  however,  give  him  rights 
in  addition  to  those  conferred  by  •  the  mortgage.     It 


§   354  MORTGAGEE  IN   POSSESSION.  577 

354.     Mortgagee  in  Possession  must  Exercise  Or- 
dinary Care. 

A  mortgagee  in  possession  must  exercise  ordi- 
nary care  in  respect  to  the  mortgaged  premises.^^ 

is  an  additional  security  for  the  debt,  which  he  is 
entitled  to  retain  in  accordance  with  the  terms  under 
which  it  was  received.  This  right  to  retain  posses- 
sion of  the  land  is  not  coincident  with  a  right  to 
foreclose  his  mortgage,  or  dependent  upon  such  right, 
but  depends  solely  upon  the  existence  of  the  debt. 
The  possession  of  the  land  is  a  special  security  for 
the  debt,  distinct  and  separate  from  the  mortgage, 
which  has  been  conferred  by  an  act  of  the  debtor, 
and  the  right  to  retain  the  same  is  independent  of, 
and  distinct  from,  any  right  springing  from  the  mort- 
gage  "When,  therefore,  in  addition  to  the  con- 
tract of  hypothecation,  the  debtor  gives  to  his  cred- 
itor the  possession  of  the  mortgaged  premises,  he 
thereby,  in  addition  to  the  mortgage  which  he  has  ex- 
ecuted, also  pledges  the  land  to  him  as  security  for  the 
debt,  and  confers  upon  him  such  rights  as  are  incident 

to  a  pledge On  the  same  principle  that  the  party 

who  holds  goods  in  pledge  for  a  debt  may  retain 
those  goods,  even  after  an  action  upon  such  debt  has 
been  barred,  the  party  who  has  got  the  rightful  pos- 
session of  land  mortgaged  may  retain  possession 
thereof  until  his  debt  is  paid,  although  he  can  bring 
no  action  to  foreclose  the  debt'^:  Spect  v.  Spect,  88 
Cal.  437,  440-442,  22  Am.  St.  Eep.  314,  26  Pac.  203. 

Compare  Nagle  v.  Macy,  9  Cal.  426,  428;  Kobinson 
V.  Kussell,  24  Cal.  467,  472,  473. 

A  mortgagee  is  entitled  to  remain  in  p'ossession  as 
against  a  receiver  appointed  at  the  instance  of  the 
wife  of  the  mortgagor,  the  wife  suing  the  husband 
for  a  divorce:  Cummings  v.  Cummings,  75  Cal.  434, 
439,  440,  17  Pac.  442. 

30  Must  Exercise  Ordinary  Care:  Benham  v.  Eowe, 
2  Cal.  387,  398,  407,  56  Am.  Dec.  342;  Murdock  v. 
Clarke,  59  Cal.  683,  694;  90  Cal.  427,  439,  440,  27  Pac. 
275. 

Lic^is— 37 


578  MORTGAGE.  §    355 

355.  Mortgagee  Accountable  for  Net  Proceeds 
of  Mortgaged  Premises. 
A  mortgagee  in  possession  is  chargeable  with 
the  rents  and  profits  of  the  mortgaged  premises 
after  deducting  taxes  paid  and  other  expenses 
necessarily  incurred^^^  and  must^in  the  absence  of 

A  mortgagee  in  possession  is  accountable  merely  for 
the  net  profits  or  rents,  unless  reduced  by  his  willful 
default  or  gross  negligence.  By  taking  possession  he 
impioses  upon  himself  the  duty  of  a  provident  owner, 
and  he  is  bound  to  recover  what  such  an  owner  would 
with  reasonable  diligence  have  recovered:  Hidden  v. 
Jordan,  28  Cal.  301,  309;  Murdock  v.  Clarke,  90  Cal. 
427,  439,  27  Pac.  275. 

A  mortgagee  who  acts  in  bad  faith  toward  the 
owner  of  the  property  is  liable  in  damages.  If  guilty 
of  gross  negligence,  he  is  chargeable  with  the  dif- 
ference between  the  rents  and  profits  received  and 
the  amount  of  those  which  should  have  been  received, 
to  be  determined  by  a  jury:  Benham  v.  Eowe,  2  Cal. 
387,  398,  399,  407,  56  Am.  Dec.  342. 

But  a  person  put  into  the  possession  of  the  mort- 
gaged property  by  the  mortgagor  and  mortgagee 
jointly,  who  was  to  account  to  the  mortgagee,  is  the 
agent  of  both  parties  for  the  management,  so  that  the 
mortgagee  upon  subsequently  becoming  a  mortgagee 
in  possession  is  not  accountable  for  his  acts,  nor  for 
any  waste  or  mismanagement  by  him:  Murdock  v. 
Clarke,  90  Cal.  427,  432-435,  27  Pac.  275. 

31  Raun  V.  Eeynolds,  15  Cal.  459,  471;  Hidden  v. 
Jordan,  28  Cal.  301,  309;  Murdock  v.  Clarke,  59  Cal. 
683,  694;  Husheon  v.  Husheon,  71  Cal.  407,  417,  12 
Pac.  410;  De  Cazara  v.  Orena,  80  Cal.  132,  134,  135, 
2Z  Pac.  74;  Murdock  v.  Clarke,  90  Cal.  427,  438,  27 
Pac.  275;  Moss  v.  Odell,  134  Cal.  464,  466,  m  Pac. 
581.  Compare  Malone  v.  Roy,  118  Cal.  512,  50  Pac. 
542. 

The  mortgagee  is  chargeable  with  the  net  proceeds 
in  the  settlement  of  the  secured  obligation,  and  any 


§  355         MORTGAGEE  IN  POSSESSION.  579 

a  special  agreement  to  the  contrary,  apply  such 
net  proceeds  to  the  interest  first  and  then  to  the 
principal  of  the  secured  obligation.^^ 

surplus  remaining  is  subject  to  the  disposition  of  the 
mortgagors.  For  such  surplus  he  is  the  trustee  of 
the  mortgagor,  the  trust  arising  from  the  very  nature 
of  the  security,  by  operation  of  law:  Pierce  v.  Eobin- 
son,  13  Cal.  116,  120. 

Where  no  negligence  or  improper  conduct  is  found, 
the  mortgagee  is  only  chargeable  with  what  he  has 
actually  received:  Murdock  v.  Clarke,  90  Cal.  427, 
438,  27  Pac.  275;  Barnhart  v.  Edwards  (Cal.),  47  Pae. 
251,  254A. 

The  wages  of  a  person  hired  by  a  mortgagee  in 
possession  under  an  agreement  with  the  mortgagor 
to  take  charge  of  the  mortgaged  premises  are  a  dis- 
bursement with  which  the  mortgagee  should  be 
credited  in  the  settlement  of  his  account:  Murdock  v. 
Clarke,  59  Cal.  683,  695,  696. 

32  In  the  absence  of  an  explicit  agreement  to  the 
contrary,  a  mortgagee  in  possession  may  recei\e 
the  rents  and  profits  of  the  mortgaged  premises,  and 
apply  them  to  the  payment  of  the  secured  debt. 
There  is,  indeed,  no  other  good  reason  why  the  mort- 
gagor should  be  let  into  possession  in  preference  to 
anv  other  party:  Button  v.  Warschauer,  21  Cal.  609, 
626,  82  Am.  Dec.  765;  Spect  v.  Spect,  88  Cal.  437, 
442,  22  Am.  St.  Eep.  314,  26  Pac.  203. 

In  the  absence  of  a  special  agreement,  the  mort- 
gagee must  apply  rents  and  profits  received  to  the 
interest  first,  and  then  to  the  principal  of  the  mort- 
gage debt,  but  this  duty  may  be  supplanted  by  a 
specific  agreement  between  the  mortgagor  and  the 
mortgagee,  as  an  agreement  that  the  excess  of  rents 
beyond  interest  on  the  mortgage  obligation  shall  be 
applied  to  other  indebtedness  due  from  the  mortgagor, 
or  to  become  due  up  to  an  assignment  of  the  mort- 
gaged property:  Demick  v.  Cuddihy,  72  Cal.  110,  12 
Pac.  287,   13  Pac.   166. 


580  MORTGAGE.  §    350 

356.  Obscurities  in  Accounts  of  Mortgagee  to  be 
Resolved  Against  Him. 

The  accounts  of  a  mortgagee  in  possession 
should  be  clear  and  accurate^  and  all  obscurities 
and  doubts  must  be  resolved  against  him.^^ 

357.  Mortgagee  not  Entitled  to  Compensation 

for  His  Services. 
A  mortgagee  in  possession  is  not  entitled  to 
make  any  charge  for  his  services  in  respect  to  the 
mortgaged  premises.^^ 

358.  Mortgagee  may  Sublet  Mortgaged  Prem- 
ises. 

A  mortgagee  in  possession  is  not  required  to 
himself  operate  the  mortgaged  premises^  but  msij 
rent  them  instead  for  their  full  value  to  any  suit- 
able tenant.^^ 

33  Murdock  v.  Clarke,  90  Cal.  427,  438,  27  Pac.  275. 

34  Mortgagee  not  Entitled  to  Compensation. 

Rationale.— Where  a  mortgagee  takes  possession  of 
the  mortgaged  premises,  his  care  and  trouble  are  be- 
stowed for  the  furthering  and  protection  of  his  own 
interests.  He  is  not  a  mere  naked  trustee,  nor  is 
his  capacity  that  of  an  agent.  He  is,  while  in  posses- 
sion, quasi  its  owner.  It  is  a  charge  which  he  has 
voluntarily  taken  upon  himself,  and  for  which  he  has 
no  right  to  seek  a  compensation  out  of  the  mortgagor: 
Benham  v.  Eowe,  2  Cal.  387,  408,  56  Am.  Dec.  342. 

35  Button  V.  Warschauer,  21  Cal.  609,  626,  82  Am. 
Dec.  765;  Hidden  v.  Jordan,  28  Cal.  301,  309. 


§    359  MORTGAGEE    IN    POSSESSION.  581 

359.  Mortgag^ee  not  Generally  Entitled  to  Al- 
lowance for  New  Improvements.^^ 

In  the  absence  of  special  circumstances  re- 
quiring the  construction  of  new  and  permanent 
improvements,  a  mortgagee  in  possession  cannot 
be  allowed  their  cost;^''  but  is  not  chargeable 
with  any  enhanced  value  of  the  rents  and  profits 
of  the  mortgaged  premises  resulting  therefrom, 
unless  an  allowance  is  also  made  to  him  for  the 
actual  cost  to  him  of  the  improvements.^^ 

360.  No  Limitation  on  Time  of  Commencing  Ac- 

tion to  Cause  Discharge  of  Mortgage 
Brought  Against  Mortgagee  in  Possession 
as  Such.^ 

Unless  a  mortgagee  in  possession  or  those 
claiming  under  him  have  continuously  maintained 

36  Hidden  v.  Jordan,  28  Cal.  301,  309;  32  Cal.  397, 
401. 

37  So  the  cost  of  a  fence  cannot  be  allowed,  unless 
necessary  for  the  protection  of  the  crops:  Hidden  v. 
Jordan,  28  Cal.  301,  309. 

A  mortgagee  in  ptossession  may  make  such  repairs 
as  are  reasonably  necessary  for  the  preservation  of  the 
property,  but  not  permanent  improvements,  or  things 
which  conduce  merely  to  his  comfort  or  convenience. 
The  cases  which  go  beyond  this  rest  on  grounds  of 
equitable  estoppel:  Eaynor  v.  Drew,  72  Cal.  307,  312, 
13  Pac.  866. 

38  The  mortgagee  in  possession  is  entitled  to  charge 
the  mortgagor  not  more  than  the  actual  cost  to  him 
of  such  improvements:  Hidden  v.  Jordan,  32  Cal.  397, 
401. 

39  Action  to  Discharge  Mortgage  in  General.— Code 
of   Civil  Procedure,   section   346,   as   enacted   in   1872, 


582 


MORTGAGE.  §    360 


an  adverse  possession  of  the  mortgaged  premises 
for  ^Ye  years  after  breach  of  some  condition  of 

provides:  ''An  action  to  redeem  a  mortgage  of  real 
propierty,  with  or  without  an  account  of  rents  and 
profits,  may  be  brought  by  the  mortgagor,  or  those 
claiming  under  him,  against  the  mortgagee  in  pos- 
session, or  those  claiming  under  him,  unless  he  or  they 
liave  continuously  maintained  an  adverse  possession 
of  the  mortgaged  premises  for  five  years  after  breach 
of  some  condition  of  the  mortgage/' 

The  old  phraseology  has  come  down  to  us,  and  found 
a  place  in  the  statute.  But  it  is  manifest  that  an  ac- 
tion to  ^ ^redeem,''  where  the  title  remains  in  the 
mortgagor  and  the  mortgage  is  extinguished  by  lapse 
of  time  (Civil  Code,  section  2911),  is  in  effect  merely 
an  action  to  remove  a  cloud.  And,  as  a  court  of 
equity  may  require  justice  to  be  done  as  a  condition 
of  removing  a  cloud,  why  should  there  be  any  limita- 
tion for  such  an  action?  Eavnor  v.  Drew,  72  Cal.  307, 
312,  13  Pac.  866. 

Ejectment. — The  mortgagor  cannot  maintain  an  ac- 
tion in  ejectment  against  the  mortgagee  in  possession, 
unless  the  mortgagee  is  holding  adversely.  Mere 
lapse  of  time,  however,  does  not  constitute  adverse 
possession:  Spect  v.  Spect,  88  Cal.  437,  445,  22  Am. 
St.  Eep.  314,  26  Pac.  203. 

Jurisdiction. — Where  the  defendant  is  a  resident  of 
the  state,  although  the  property  involved  is  without 
its  jurisdiction,  the  court  has  jurisdiction  of  such  an 
action,  so  far  as  the  remedy  in  personam  by  account- 
ing is  available,  and  may  exercise  that:  Peninsular 
etc.  Co.  V.  Pacific  Steam  Whaling  Co.,  123  Cal.  689, 
696,   697,  56  Pac.   604. 

Historical.— Before  the  adoption  of  the  code,  the 
rule  w^as  that,  the  rights  of  foreclosure  and  redemp- 
tion being  reciprocal  (as  was  said),  when  the  right  to 
foreclosure  was  barred  by  lapse  of  time,  the  right  to 
redeem  was  also  barred:  Grattan  v.  Wiggins,  23  Cal. 
16,  35;  Cunningham  v.  Hawkins,  24  Cal.  403,  409-411, 
85  Am.  Dec.  502;  Arrington  v.  Liscom,  34  Cal.  365, 
369,   94   Am.   Dec.   722;  Espinosa   v.   Gregory,  40   Cal. 


§    360  MORTGAGEE    IN    POSSESSION.  583 

the  mortgage^^^an  action  against  any  such  person 
to  cause  an  immovable  property  mortgage  to  be 
discharged  upon  the  satisfaction  thereof,'**  with 
or  without  an  account  of  rents  and  profits,  niay, 
without  limitation  of  time,^^  be  maintained  by 
the  mortgagor  and  those  claiming  under  him. 

58;  Taylor  v.  Mc[C]Lain,  60  Cal.  651;  64  Cal.  513,  2 
Pao.    399. 

40  The  right  of  action  is  defeated  by  five  years' 
adverse  possession  after  breach  of  some  condition 
of  the  mortgage:  Warder  v.  Enslen,  73  Cal.  291, 
14  Pac.  874;  Peshine  v.  Ord,  119  Cal.  311,  314,  63 
Am.  St.  Eep.  131,  51  Pac.  536.  Compare  Prink  v. 
Le  Koy,  49  Cal.  314;  Eaynor  v.  Drew,  72  Cal.  307,  311, 
13  Pac.  866. 

Such  adverse  possession  ''would  not  operate  upon 
the  lien  alone,  but  would  attack  and  overcome  the 
legal  title,  and  in  effect  would  be  the  same  as  if  a 
stranger  to  the  title  should  obtain  actual  possession 
by  a  trespass,  and  succeed  in  holding  adversely  for 
the  statutory  period'':  Hall  v.  Arnott,  80  Cal.  348, 
356,  22  Pac.  200. 

41  Mortgage  will  not  be  Discharged  Without  Sat- 
isfaction of  Secured  Obligation.— Although  the  mort- 
gage has  been  extinguished  by  lapse  of  time,  the  mort- 
gagor cannot  obtain  affirmative  relief  without  sartis- 
fying  the  obligation  which  was  secured,  on  the  maxim 
that  he  who  seeks  equity  must  do  equity,  the  moral 
obligation  to  pay  subsisting  notwithstanding  that  the 
remedv  at  law  is  barred:  Peshine  v.  Ord,  119  Cal.  311, 
314,  63  Am.  St.  Rep.  131,  51  Pac.  56. 

42  Action  may  be  Commenced  Without  Limitation 
of  Time. — At  any  time  after  the  principal  obligation 
becomes  due,  the  mortgagor  may  have  the  lien  extin- 
guished that  would  otherwise  cloud  his  title,  upon 
paving  the  debt,  without  limitation  as  to  time:  Hall 
V.  Arnott,  80  Cal.  348,  355,  22  Pac.  200. 


584  MORTGAGE.  §    361 

361.  Same — When  Certain  Parties  Interested  in 
the  Mortgaged  Premises  are  not  Entitled 
to  Bring  Such  Action. 

If  there  is  more  than  one  such  mortgagor, 
or  more  than  one  person  claiming  under  a  mort- 
gagor^ some  of  whom  are  not  entitled  to  main- 
tain such  an  action^  any  one  of  them  who  is  en- 
titled to  maintain  such  an  action  may  redeem 
therein  a  divided  or  undivided  part  of  the  mort- 
gaged premises,  according  as  his  interest  may  ap- 
pear, and  have  an  accounting  for  a  part  of  the 
rents  and  profits,  proportionate  to  his  interest  in 
the  mortgaged  premises,  on  payment  of  a  part  of 
the  mortgage  ohligation  bearing  the  same  pro- 
portion to  the  whole  of  such  obligation  as  the 
value  of  his  divided  or  undivided  interest  in  the 
premises  bears  to  the  whole  of  such  premises.^^ 

43  Compare   Code  of   Civil  Procedure,   section   347. 


S(>'>  ASSIGNMENT    THEREOF.  '  685 


ARTICLE  5. 

ASSIGNMENT  OF  MORTGAGE.       • 

362.  Mortgage  assigned  by  assignment    of    principal 

obligation. 

363.  Assignment    when    principal    obligation    not    in 

writing. 

364.  Assignment  of  mortgage  may  be  recorded. 

365.  Record  of  assignment  does  not  invalidate  pay- 

ment by  mortgagor  of  evidence   of  mortgage 
indebtedness. 
S66.     Record  operates  as  notice  in  every  other  case. 

362.     Mortgage  Assigned  by  Assignment  af  Prin- 
cipal Obligation. 

The  assignment  of  an  obligation  secured  by 
mortgage  carries  with  it  the  security/  or  where  a 
plurality  of  obligations  are  secured  by  one  mort- 
gage^ a  pro  rata  thereof,^  without  the  necessity 

1  See  Civil  Code,  section  2936. 

Where  the  assignment  is  made  after  maturity,  it 
is  subject  to  the  equities  against  the  assignor,  the 
same  as  in  any  other  case:  Brown  v.  Witts,  57  Cal. 
304. 

2  The  indorsement  of  one  of  several  notes  secured 
by  a  single  mortgage  carries  with  it  a  pro  rata  of 
the  security:  Phelan  v.  Olney,  6  Cal.  478,  483. 

See  section  278,  above. 


k 


58ft  MORTGAGE.  §    362 

of  an  assignment  of  the  instrument  of  mortgage.^ 
As  distinct  from  the  secured  obligation^  a  mort- 
gage is  not  a  subject  of  transfer.* 

3  Without  the  Necessity  of  the  Assignment  of  the 
Instrument  of  Mortgage.— A  mortgage  is  the  incident 
of  the  debt  it  secures,  and  the  indorsement  or  assign- 
ment of  a  promissory  note  thereby  secured  carries  with 
it  the  security  without  a  formal  transfer  of  the  in- 
strument of  mortgage:  Ord  v.  McKee,  5  Cal.  515; 
Phelan  v.  Olney,  6  Cal.  478,  483;  Willis  v.  Farley,  24 
Cal.  490,  497;  Mack  v.  Wetzlar,  39  Cal.  247,  256; 
Storch  V.  McCain,  85  Cal.  304,  307,  24  Pac.  639;  Bur- 
nett V.  Lyford,  93  Cal.  114,  117,  28  Pac.  855;  Adler  v. 
F^argent,  109  Cal.  42,  49,  50,  41  Pac.  799;  Savings  etc. 
Soc.  V.  McKoon,  120  Cal.  177,  179,  52  Pac.  305. 

The  assignment  by  way  of  pledge  of  an  obligation 
secured  by  a  movable  property  mortgage  has  the  same 
effect:  Bank  of  Woodland  v.  Duncan,  117  Cal.  412, 
415,  49  Pac.  414. 

4  Apart  from  Secured  Obligation,  Mortgage  Non- 
transferable.— The  debt  and  the  mortgage  are  insepa- 
rable. The  latter  must  follow  the  former.  As  distinct 
from  the  debt  the  mortgage  has  no  determinate  value 
and  is  not  a  subject  of  transfer.  An  assignment  of  the 
mortgage  without  the  secured  obligation  is  a  nullity: 
Nagle  V.  Macv,  9  Cal.  426,  428;  Polhemus  v.  Trainer, 
30  Cal.  685,  687,  688;  Hyde  v.  Mangan,  88  Cal.  319, 
327,  26  Pac.  180. 

*  ^  *  A  mortgage  is  a  mere  incident  to  the  debt,  and 
will  not  pass  except  by  an  assignment  of  the  note,  or 
debt^':  Bitter  v.   Stevenson,   7   Cal.   388. 

The  recorded  transfer  of  a  mortgage  along  with  a 
forged  note  purporting  to  be  secured  thereby  does  not 
affect  the  rights  of  the  assignee  of  the  genuine  note 
to  secure  which  the  mortgage  was  given,  even  when 
there  was  n,o  delivery  of  the  instrument  of  mortgage 
to  the  assignee:  Adler  v.  Sargent,  109  Cal.  42,  41  Pac. 
799. 


§    363  ASSIGNMENT     THEREOF.  587 

363.  Assignment    When    Principal    Obligation 

not  in  Writing. 
Where  the  obligation  secured  by  mortgage  is 
not  evidenced  by  writing,  the  assignment  of  tho 
instrument  of  mortgage  assigns  such  obligation.^ 

364.  Assignment  of  Mortgage  may  be  Recorded. 

The  assignment  of  a  mortgage  may  be  recorded 
in  like  manner  as  a  mortgage.^ 

365.  Record  of  Assignment  does  not  Invalidate 

Payment   by   Mortgagor   of  Evidence   of 
Mortgage  Indebtedness. 

The  record  of  the  assignment  of  a  mortgagii 
executed  as  security  for  an  obligation  evidenced 

5  Peters  v.  Jamestown  Bridge  Co.,  5  Cal.  334, 
63   Am.   Dec.   134. 

An  assignment  of  a  mortgage  is  not  a  grant  of  an 
estate  of  real  property,  and  thus  does  not  come  within 
the  provisions  of  section  1107  of  the  Civil  Code  as  to 
recordation:  Adler  v.  Sargent,  109  Cal.  42,  49,  41  Pac. 
799. 

The  assignee  of  an  instrument  of  mortgage  after 
maturity  is  affected  with  all  the  equities  against  his 
assignor:  Brown  v.  Witts,  57  Cal.- 304. 

But  a  purported  deed  of  mortgaged  property  exe- 
cuted by  the  mortgagee  cannot  '^operate  as  an  as- 
signment of  the  mortgage.  The  latter  is  a  mere  se- 
curity for  the  debt;  so  it  would  seem  that  the  two 
transactions  are  totally  different  in  character;  the  in- 
tent of  the  one  is  to  convey  title  to  the  land;  of  the 
other,  to  transfer  a  debt  with  its  security'':  Peters 
V.  Jamestown  Bridge  Co.,  5  Cal.  334,  63  Am.  Dec.  134; 
Mack  V.  Wetzlar,  39  Cal.  247,  256. 

6  Compare  Civil  Code,  section  2934,  quoted  at 
section  366,  note  8,  below. 


588  MORTGAGE.  §    365 

by  a  promissory  note^  bond,  or  other  instrument 
designated  in  the  mortgage  does  not  of  itself  con- 
'  stitute  such  notice  to  a  mortgagor,  his  heirs  or 
personal  representatives,  as  to  invalidate  a  pay- 
ment made  by  any  of  them  to  the  person  hold- 
ing such  evidence  of  mortgage  indebtedness.'' 

366.    Record  Operates  as  Notice  in  Every  Other 
Case. 

Except  as  provided  in  the  preceding  section, 
the  record  of  the  assignment  of  a  mortgage 
operates  as  notice  to  the  mortgagor  and  every- 
one else.® 

7  See  Civil  Code,  section  2935,  quoted  under  sec- 
tion 366,  note  8,  below. 

So,  where  a  mortgagor  conveyed  the  mortgaged 
property  to  the  mortgage  holder,  part  of  the  consid- 
eration being  the  cancellation  of  the  note  secured  by 
the  mortgage,  and  the  mortgage  holder  had  actual  pos- 
session of  the  secured  note  at  the  time  of  the  transac- 
tion, the  payment  is  not  invalidated  by  the  fact  that 
such  mortgage  holder  had  previously  assigned  the 
mortgage  obligation  to  a  third  party  for  value  with- 
out notice  (without  a  change  of  possession  of  the 
note),  and  that  such  assignment  had  been  recorded: 
Bodgers  v.  Parker,  136  Cal.  313,  316,  68  Pac.  975. 

8  Record  Operates  as  Notice  in  Every  Other  Case. 

Civil  Code,  section  2934:  ''An  assignment  of  a  mort- 
gage may  be  recorded  in  like  manner  as  a  mortgage, 
and  such  record  operates  as  notice  to  all  persons  sub- 
sequently deriving  title  to  the  mortgage  from  the  as- 
signor. ' ' 

Section  2935:  ''When  the  mortgage  is  executed  as 
security  for  money  due,  or  to  become  due,  on  a  promis- 
sory note,  bond,  or  other  instrument,  designated  in 
the  mortgage,   the   record   of   the   assignment   of   the 


§    366  ASSIGNMENT     THEREOF.  589 

mortgage  is  not,  of  itself,  notice  to  a  mortgagor,  his 
heirs,  or  personal  representatives,  so  as  to  invalidate 
any  payment  made  by  them,  or  either  of  them,  to  the 
person  holding  such  note,  bond,  or  other  instrument.^' 

In  Rodgers  v.  Peckham,  120  Cal.  238,  242,  52  Pac. 
483,  the  court  says:  ^^It  will  be  observed  that  section 
2934  does  not  declare  that  the  record  of  the  assign- 
ment of  a  mortgage  will  operate  as  notice  only  to  per- 
sons subsequently  deriving  title  to  the  mortgage  from 
the  assignor,  while  the  language  used  in  section  2935 
clearly  imports  that  such  a  record  would  operate  as 
notice  to  a  mortgagor,  so  as  to  invalidate  any  payment 
made  by  him  to  a  person  not  holding  the  note  or  mort- 
gage. And  in  such  case,  if  a  payment  is  so  made,  it 
must  be  treated  as  made  at  the  risk  of  the  party  mak- 
ing! it." 

Illustrations. — A  payment  made  by  a  transferee  of 
a  mortgagor  to  the  original  mortgagor  after  the 
recordation  of  the  assignment  of  the  principal  obliga- 
tion accompanied  by  the  transfer  of  the  notes  evi- 
dencing it  is  of  no  effect:  Woodward  v.  Brown,  119 
Cal.  283,  302,  303,  63  Am.  St.  Rep.  108,  51  Pac.  2,  542. 

The  fact  that  the  note  secured  by  the  mortgage  was 
non-negotiable,  and  that  the  payment  was  made  to  the 
original  mortgagee  does  not  alter  the  rule  either  as 
to  the  mortgagor  or  a  bona  fide  purchaser  without 
notice  of  the  mortgaged  property,  as  the  record  con- 
cludes them  both:  Rodgers  v.  Peckham,  120  Cal.  238, 
52  Pac.  483. 


I 


590  IMMOVABLE    PROPERTY    MORTGAGE.  §    367 


AETICLE  6. 

TEANSFER       OF       MORTGAGED       IMMOVABLE 
PROPERTY. 

367.  Mortgagor   may  transfer   mortgaged  immovaole 

property. 

368.  Purchaser  who  assumes  mortgage  obligation  be- 

comes principal  obligor. 

369.  Purchaser  of  part  of  property  who  assumes  part 

of    mortgage    obligation  primarily  chargeable 
pro  tanto. 

370.  Such  purchaser  liable  for  expenses  of  foreclosure. 

371.  Such  purchaser  not  liable  for  unsecured  obliga- 

tions. 

372.  Purchaser  not  presumed  to  assume  liability. 

373.  Mortgage  voidable  between  original  parties  valid 

as  to  purchaser. 

367.     Mortgagor  may  Transfer  Mortgaged  Im- 
movable Property.^ 

A  mortgagor  may,  at  any  time  before  his  in- 
terest in  mortgaged  immovable  property  is  ex- 
tinguished or  the  period  of  redemption  has  ex- 
pired, transfer  his  right  thereto.^  . 

1  on  the  effect  of  a  transfer  of  mortgaged  mov- 
able property,  see  section  378,  below. 

3  So  ne  cannot,  by  injunction,  be  restrained  from 
selling  the  property  during  the  pendency  of  fore- 
closure proceedings;  Br  eon  v.  Strelitz,  48  Cal.  645. 


§    368  TRANSFER    OF    PROPERTY.  591 

368.     Purchaser  Who  Assumes  Mortgage  Obliga- 
tion Becomes  Principal  Obligor. 
A  purchaser   of  mortgaged  immovable  prop-' 
erty  who  for  a  consideration^  agrees^  to  assume 

3  Consideration  Necessary.— A  verbal  promise  to 
assume  the  secured  obligation  made  by  the  purchaser 
subsequently  to  receiving  the  conveyance  of  the  prop- 
erty and  without  consideration  is  not  binding:  Com- 
mercial Bank  of  Madera  v.  Eedfield,  122  Cal.  405,  408, 
409,  55  Pac.  160. 

4  Agreement  to  Assume  Debt.— **  It  is  not  necessary 
that  there  should  be  a  formal  promise,  on  the  part  of 
the  grantee,  to  pay  the  mortgage  debt,  in  order  to  ren- 
der him  liable  therefor,  if  his  intention  to  assume  the 
debt  appears  from  a  consideration  of  the  entire  in- 
strument. The  obligation  may  be  made  orally  or  in 
a  separate  instrument;  it  may  be  implied  from  the 
transaction  of  the  parties,  or  it  may  be  shown  by  the 
circumstances  under  which  the  purchase  was  made, 
as  well  as  the  language  used  in  the  agreement":  Hop- 
kins V.  Warner,  109  Cal.  133,  137,  138,  41  Pac.  868. 

Agreements  Rendering  Purchaser  Liahle.— An  agree- 
ment by  the  purchaser  of  mortgaged  property  at  all 
times  to  hold  the  mortgagor  vendor  harmless  as  against 
any  mortgages  existing  upon  the  real  estate  this  day 
transferred  to  the  purchaser,,  is  an  agreement  to  as- 
sume the  entire  mortgage  debt:  Hopkins  v.  Warner, 
109  Cal.  133,  138,  41  Pac.  868. 

An  agreement  by  the  purchaser  of  mortgaged  prop- 
erty that  his  conveyance  is  *^  subject,  however,  to  a 
certain  mortgage  of  seven  hundred  and  fifty  dollars, 
dated  February  2,  1892,  upon  which  has  been  paid  fifty 
dollars;  the  party  of  the  second  part  hereby  assumes 
the  payment  of  the  above  mortgage,"  is  **an  agree- 
ment to  pay  the  note  secured  by  the  mortgage,  for  in 
no  other  way  could  the  mortgage  be  paid":  Daniels 
V.  Johnson,  129  Cal.  415,  417,  79  Am.  St.  Eep.  123,  61 
Pac.  1107. 

A  purchaser  of  mortgaged  property  who  agrees  to 
*' assume  the  payment  of  a  certain  mortgage"  agrees 


502  IMMOVA.BLE    PROPERTY    MORTGAGE.  §    368 

the  payment  of  the  mortgage  obligation^  is 
deemed,    as    between    the    mortgagor  and    pur- 

not  merely  to  cause  the  mortgage  to  be  discharged, 
but  to  satisfy  the  secured  obligation.  Any  other  con- 
struction would  be  absurds  Lewis  v.  Covillaud,  21  Cal. 
178,  189. 

Agreements  not  EstoUisJiing  Personal  Liability,— K 
mere  recital  in  a  deed  that  a  deed  is  made  subject  to 
the  ^^ payments,  conditions,  and  agreements^'  con- 
tained in  a  certain  mortgage  imposes  no  obligation  on 
the  grantee  to  pay  the  mortgage  debt.  Deeds  are 
construed  most  strongly  against  the  grantor,  and  in 
the  absence  of  any  agreement  importing  that  the  gran- 
tee shall  assume  upon  himself  the  payment  of  a  prior 
mortgage  upon  the  premises,  no  such  obligation  arises, 
and  the  purchaser  does  not  become  personally  liable 
for  the  mortgage  obligation:  Salmon  v.  Wilson,  41 
Cal.  595,  608. 

An  agreement  by  a  second  mortgagee  to  discharge 
a  first  mortgage  upon  the  mortgaged  property  does  not 
make  the  second  mortgagee  liable  to  the  first  mort- 
gagee for  a  deficiency  of  proceeds  arising  upon  the 
sale  of  the  mortgaged  premises:  Savings  Bank  of 
Southern  Cal.  v.  Thornton,  112  Cal.  255,  44  Pac.  446. 

Where  the  grantee  of  the  mortgagor  is  not  rendered 
personally  liable,  a  recital  in  a  deed  by  such  grantee 
to  a  subsequent  grantee  from  him,  that  such  grantee 
assumes  a  mortgage  thereon  does  not  render  him  per- 
sonally liable  therefor:  Ward  v.  De  Oca,  120  Cal.  102, 
105,  52  Pac.  130. 

5  Referring  to  a  provision  in  a  deed  of  certain 
mortgaged  premises  that  the  grantee  '^  assumes 
the  payment  of  the  above  mortgage,"  the  court  said 
that,  while  the  language  of  the  agreement  is  that  the 
grantee  shall  pay  the  mortgage,  the  real  meaning  of 
the  covenant  is  that  the  grantee  shall  pay  the  note 
which  the  mortgage  secures,  for  the  discharge  of  the 
note  is  the  only  way  to  pay  the  mortgage,  the  latter 
being  only  the  incident,  the  note  being  the  principal 
thing:  Daniels  v.  Johnson,  129  Cal.  415,  417,  79  Am. 
St.  Rep.  123,  61  Pac.  1107. 


§    368  TRANSFER    OF    PROPERTY.  593 

chaser,®  and  in  reference  to  the  mortgagee  at  the 
option  of  the  mortgagee/  the  principal  debtor, 
and  the  mortgagor  his  surety. 

6  Renders  Purchaser  Principal  Debtor  as  Between 
Him  and  Mortgagor:  A.bell  v.  Coons,  7  Cal.  105,  109, 
68  Am.  Dec.  229;  Thomas  v.  Bettens,  94  Cal.  82,  84, 
85,  29  Pac.  336;  Williams  v.  Naftzger,  103  Cal.  438, 
440,  37  Pac.  411;  Hopkins  v.  Warner,  109  Cal.  133,  136, 
41  Pac.  868;  Tulare  Co.  Bank  v.  Madden,  109  Cal. 
312,  314,  41  Pac.  1092;  Eoberts  v.  Fitzallen,  120  Cal. 
482,  484,  52  Pac.  818;  Tuohy  v.  Woods,  122  Cal.  665, 
667,  55  Pac.  683;  Herd  v.  Tuohy,  133  Cal.  55,  61,  62, 
65  Pac.  139;  Daniels  v.  Johnson,  129  Cal.  415,  418,  79 
Am.  St.  Eep.  123,  61  Pac.  1107. 

7  Mortgagee  may  Hold  Purchaser  as  Principal 
Debtor. 

Where  the  purchaser  of  mortgaged  premises  as- 
sumes the  payment  of  the  secured  obligation,  the  court 
is  not  required  to  enter  a  personal  judgment  against 
the  purchaser  when  not  requested  to  do  so  by  the 
mortgagee,  but  in  such  case  the  transferor's  remedy 
against  the  purchaser  must  be  obtained  in  an  inde- 
pendent action:  O'Neal  v.  Hart,  116  Cal.  69,  47  Pac. 
926, 

This  liability  of  the  purchaser  to  the  mortgagee  *  *  re- 
sults from  the  familiar  doctrine  in  equity  that  a  cred- 
itor is  entitled  to  the  benefit  of  all  securities  or  col- 
lateral obligations  that  his  principal  debtor  may  have 
given  to  the  surety  for  the  payment  of  the  debt." 
Thus,  in  an  action  for  the  foreclosure  of  the  mortgage, 
if  the  mortgaged  premises  are  insufficient  to  satisfy 
the  mortgage  debt,  judgment  may  be  rendered  against 
the  purchaser  as  well  as  against  the  mortgagor  for  the 
amount  of  the  deficiency:  Williams  v.  Naftzger,  103 
Cal.  438,  440,  37  Pac.  411;  Hopkins  v.  Warner,  109  Cal. 
133,  136,  41  Pac.  868;  Tulare  Co.  Bank  v.  Madden,  109 
Cal.  312,  314,  41  Pac.  1092;  Daniels  v.  Johnson,  129 
Cal.  415,  418,  79  Am.  St.  Eep.  123,  61  Pac.  1107. 

This  principle  is  formulated  in  Civil  Code,  section 
2854:  ''A  creditor  is  entitled  to  the  benefit  of  every- 
Liens— 38 


594  IMMOVABLE    PROPERTY    MORTGAGE.  §    369 

369.  Purchaser  of  Part  of  Property  Who  As- 

sumes Part  of  Mortgage  Obligation  Pri- 
marily  Chargeable   Pro  Tanto. 

A  purchaser  of  part  of  mortgaged  premises 
who  binds  himself  to  pay  the  whole  or  any  part 
of  the  mortgage  obligation,  his  assigns  with  no- 
tice of  such  agreement,  and  the  property  pur- 
chased, as  between  themselves  and  the  mort- 
gagor and  his  successors  in  interest  in  other  parts 
of  the  premises,  become  primarily  liable  for  the 
mortgage  obligation  so  far  as  assumed  by  them.^ 

370.  Such   Purchaser   Liable    for   Expenses    of 
Foreclosure. 

A  purchaser  of  mortgaged  property  who  as- 
sumes the  mortgage  obligation  becomes  liable  for 
the  expenses  of  foreclosure.® 

371.  Such  Purchaser  not  Liable  for  Unsecured 
Obligations. 

A  purchaser  of  mortgaged  property  who  binds 

himself  to  pay    the  obligation  secured    by  the 

thing  which  a  surety  has  received  from  a  debtor  by 
way  of  security  for  the  performance  of  the  obligation, 
and  may,  upon  the  maturity  of  the  obligation,  compel 
the  application  of  such  security  to  its  satisfaction. ' ' 

8  So  where  a  purchaser  of  part  -  of  mortgaged 
property  agreed  to  pay  eight  dollars  per  acre 
upon  the  secured  obligation,  upon  the  foreclosure  of 
the  mortgage,  his  share  of  the  property  is  primarily 
liable  for  such  portion  of  the  secured  obligation:  Ir- 
vine V.  Perry,  119  Cal.  352,  356,  51  Pac.  544,  949. 

9  Tulare  Co.  Bank  v.  Madden,  109  Cal.  312,  315, 
41    Pac.    1092. 


§    371  TRANSFER    OF    PROPERTY.  695 

mortgage  is  not  thereby  rendered  liable  for  the 
payment  of  any  obligation  provided  for  by  the 
mortgage  note  but  unsecured  by  the  mortgage.-^** 

372.  Purchaser  not  Presumed  to  Assume  Liabil- 
ity. 

In  the  absence  of  an  express  agreement/*  a 
purchaser  of  the  whole  or  any  part  of  mortgaged 
property  is  not  personally  bound  to  satisfy  the 
whole  or  any  part  of  the  secured  obligation;  and 
in  case  of  a  purchase  of  a  part  of  the  property, 
the  portion  then  remaining  in  the  mortgagor's 
ownership  is  primarily  chargeable*^  with  the  se- 
cured obligation. 

373.  Mortgage  Voidable  Between  Original  Par- 
ties Valid  as  to  Purchaser. 

A  mortgage,  voidable  between  the  original 
parties  thereto,  is  nevertheless  valid  as  against 

10  So  the  purchaser  is  not  liable  for  an  attor- 
ney's fee  provided  for  by  the  secured  note  but  not 
secured  by  the  mortgage:  Eoberts  v.  Fitzallen,  120  Cal. 
482,  484,  485,  52  Pac.  818. 

11  The  fact  that  the  purchaser  assumes  personal 
liability  must  be  affirmatively  shown:  Thomson  v.  Bet- 
tens,  94  Cal.  82,  84,  29  Pac.  336. 

Where  the  purchaser  of  mortgaged  property  from 
the  mortgagor  takes  the  property  ''subject  to  the  mort- 
gage,''  such  purchaser  does  not  assume  liability  for 
any  deficiency  that  may  occur  from  the  sale  of  the 
mortgaged  property  at  foreclosure:  Commercial  Bank 
V.  Eedfield,  122  Cal.  405,  408,  55  Pac.  160. 

12  See    section   21,    subdivision  4,    above. 

A  fortiori  is  this  so,  where  the  property  is  sold  un- 


696  MORTGAGE.  §   373 

a  purchaser  of  the  mortgaged  property  who  as- 
sumes the  payment  thereof  by  a  recital  in  the 
deed  to  him.^^ 

der  a  warranty  against  the  mortgagor's  acts:  Clieever 
V.  Fair,  5  Cal.  337. 

13  Alvord   V.    Spring  Yal.    Gold   Co.,   106   Cal.   547, 
,552,   553,   40   Pac.   27. 


EXTINCTION    THEREOF.  697 


AETICLE  7. 

EXTINCTION  OF  MOETGAGE. 

Subdivision    1.     Rules    Governing    Extinction    of    All 
Mortgages. 

374:,  Extinction  in  general. 

375.  Extinction  by  lapse  of  time. 

376.  Not  extinguished  by  tender  after  maturity. 

377.  Change  in  mode  of  evidencing  indebtedness  does 

not  extinguish  mortgage. 

Subdivision  2.    Special  Modes  of  Extinction  of  Movable 
Property  Mortgage, 

378.  Movable  property  mortgage  extinguished  by  au- 

thorized sale  by  mortgagor  of  the  mortgaged 
property. 

379.  Extinction  by  removal. 

Subdivision  3,    Extinction  of  Recorded  Mortgage  must 
be  Recorded. 

380.  Extinction  of  recorded    mortgage    must    be    re- 

corded. 

381.  Certificate  of  discharge    must    be    recorded    at 

length. 

382.  Mortgage  required  under  penalty  to  make  cer- 

tificate of  discharge, 

383.  Discharge  by  foreign  executors. 

384.  Eelease  of  mortgage  of  record  by  mistake  bind- 

ing as  to  certain  parties  and  until  set  aside  as 
to  all  others. 


598  MORTGAGE.  §    374 

Subdivision    1.    Rules    Governing    Extinction    of 
all  Mortgages, 

374.  Extinction  in  General. 

Except  as  otherwise  in  this  article  provided, 
a  mortgage  is  extinguished  as  provided  in  sec- 
tions 81  to  89^  inclusive,  above. 

375.  Extinction  by  Lapse  of  Time. 

A  mortgage  is  extinguished  by  the  lapse  of 
time  within  which  an  action  can  be  commenced 
for  the  foreclosure  thereof.^ 

[376.    Not  Extinguished  by  Tender  After  Matur- 
ity. 
A  mortgage  is  not  extinguished  by  the  refusal 
of  a  sufficient  tender  of  the  principal  obligation 
made  after  the  maturity  thereof.]^ 

1  Extinction  by  Lapse  of  Time. 

Civil  Code,  section  2911:  ''A  lien  is  extinguished 
by  the  lapse  of  time  within  which  ....  an  action 
can  be  brought  upon  the  principal  obligation.'' 

This  section  is  not  wholly  applicable  to  the  case  of 
mortgages,  for  where  the  principal  obligation  is  not 
evidenced  in  writing,  the  remedy  thereon  is  barred 
in  two  years,  but  the  remedy  on  the  written  instru- 
ment of  mortgage  is  not  barred  for  four  years:  See 
NewhaU  v.  Sherman,  Clay  &  Co.,  124  Cal.  509,  511,  57 
Pac.   387. 

So  the  statement  found  in  some  of  the  cases  (for 
instance,  AUen  v.  AHen  (Cal.),  27  Pac.  30,  32A), 
that  a  mortgage  is  extinguished  or  barred  by  the  lapse 
of  the  time  within  which  an  action  may  be  maintained 
upon  the  principal  obligation  is  fully  applicable  only 


§    377  EXTINCTION    THEREOF.  599 

377.  Change  in  Mode  of  Evidencing  Indebted- 
ness does  not  Extinguish  Mortgage. 
A  mere  change  in  the  mode  of  evidencing  an 
obligation  secured  by  mortgage  does  not  extin- 
guish the  mortgage  unless  so  intended  to  oper- 
ate.^ 

where  the  principal  obligation  is  evidenced  by  a 
writing.     See  section  393,  below. 

2  Not  Extinguished  by  Tender  After  Maturity. 
Perre  v.  Castro,  14  Cal.  519,  530,  76  Am.  Dec.  444; 

Himmelmann  v.  Fitzpatrick,  50  Cal.  650  (this  case 
being  decided  after  the  enactment  of  the  code) ; 
Chielovicli  v.  Krauss  (Cal.),  11  Pac.  945. 

Compare,  however,  the  remarks  of  a  contrary  tend- 
ency in  Hayes  v.  Josephi,  26  Cal.  535,  546;  Mahler  v. 
Newbaur,  32  Cal.  168,  171,  91  Am.  Dec.  571;  Ketchum 
v.  Crippen,  37  Cal.  223,  226. 

Section  83,  above,  Civil  Code,  section  2905,  seems 
to  have  been  wholly  neglected  in  reaching  this  con- 
clusion. 

It  is  clear  that  a  tender  on  the  law  day  of  the 
mortgage  would  be  sufficient  to  discharge  it. 

3  Tolman  v.  Smith,  85  Cal.  280,  287-289,  24  Pac. 
743;  London  etc.  Bank  v.  Bandmann,  120  Cal.  220, 
65  Am.  St.  Eep.  179,  52  Pac.  583;  Bonestell  v.  Bowie, 
128  Cal.  511,  514,  515,  61  Pac.  78. 

Illustration.— Where  a  mortgage  was  given  to  secure 
'Hhe  present  indebtedness ''  of  the  mortgagor,  and 
*^such  advances  as  said  bank  may  hereafter  make'' 
to  him  with  interest,  and  the  principal  obligation 
was  evidenced  by  two  promissory  notes,  ^Hhe  present 
indebtedness''  and  not  the  notes  was  the  principal 
obligation,  and  a  surrender  of  the  original  notes,  and 
a  substitution  of  others  for  them,  does  not  extinguish 
the  mortgage,  but  continues  it  until  thei  expiration  of 
four  years  from  the  maturity  of  such  notes.  And  the 
same  is  true  as  to  the  advances  made:   London  etc. 


600  MORTGAGE.  §    378 

Subdivision  2.     Special  Modes  of  Extinction  of 
Movable  Property  Mortgage. 

378.  Movable  Property  Mortgage  Extinguished 
by  Authorized  Sale  by  Mortgagor  of  the 
Mortgaged  Property. 

The  sale  of  mortgaged  movable  property  by 
the  mortgagor  under  the  authorization  of  the 
mortgagee  extinguishes  the  mortgage.^  When 
the  proceeds  of  such  sale  are  received  by  the 
mortgagor,  no  lien  is  created  thereon  for  the 
benefit  of  the  mortgagee,'*  but  if  the  proceeds 
are  to  be  received  by  the  mortgagee  directly,  they 
are  impressed  with  a  lien  in  his  favor.^ 

Bank  v.  Bandmann,  120  Cal.  220,  65  Am.  St.  Rep.  179, 
52  Pac.  583. 

4  Maier  v.  Freeman,  112  Cal.  8,  53  Am.  St.  Itep. 
151,  44  Pac.  357. 

5  Proceeds  Received  by  Mortgage  Directly.— Where 
a  movable  property  mortgagor,  the  mortgagee  consent- 
ing on  condition  that  the  purchaser  pay  the  mortgage 
obligation  to  the  mortgagee  as  part  of  the  purchase 
price,  transfers  the  property  to  a  third  person,  a  lien 
ottachep  to  the  purchase  money  in  favor  of  the  mort- 
gagee, so  that  a  third  person  attaching  it  in  the 
hands  of  the  purchaser  secures  no  rights  thereto  as 
against  the  mortgagee;  and  the  purchaser  will  not 
render  himself  liable  to  the  attachment  creditor  by 
paying  the  amount  to  the  mortgagee. 

Referring  to  Maier  v.  Freeman,  the  court  said: 
*'The  facts  of  the  two  cases  are  widely  variant.  In 
that  case  the  sheep  had  not  been  sold  at  the  time  the 
agreement  between  the  mortgagor  and  mortgagee  was 
inade;  and,  in  addition  to  that  important  fact,  there, 
the  mortgagor  was  to  receive  the  proceeds  of  the  sale 
of  the  sheep.     Here,  neither  of  these  controlling  cir- 


§    379  EXTINCTION    THEREOF.  601 

379.     Extinction  by  Removal. 

As  to  a  bona  fide  purchaser  or  encumbrancer 
for  value  and  as  to  any  creditor,  a  mortgaged 
crop  is  released  from  the  operation  of  the  mort- 
gage by  the  removal  of  the  crop  from  the  land 
upon  which  it  was  raised  with  the  consent  or 
through  the  laches  of  the  mortgagor.^  Except 
as  between  the  parties  to  a  mortgage,  any  mort- 
gaged movable  property  (except  the  rolling  stock 
of  a  common  carrier)  is  released  from  the  opera- 
tion of  the  mortgage  thereof  by  its  removal  from 
the  county  in  which  it  was  situate,  unless  within 
thirty  days  after  the  removal  the  mortgage  is 
duly  recorded  in  the  county  to  which  the  prop- 
erty has  been  removed.'' 

cumstances  is  presented'':  Mclntyre  v.  Hauser,  131 
Cal.  11,  14,  63  Pac.  69. 

There  does  not,  however,  seem  to  be  a  foundation 
for  this  distinction,  as  in  both,  cases  the  mortgagee 
consented  to  the  sale  before  it  was  made,  the  only 
difference  being  that  in  the  Mclntyre  case  the  money 
was  paid  directly  to  the  mortgagee,  while  in  the  Maier 
case  it  was  received  by  the  mortgagor,  and  by  him 
deposited  immediately  to  the  credit  of  the  mortgagee. 

6  See  section  297,  above. 

Where  mortgaged  grain  was  removed  three  miles 
from  the  land  of  the  mortgagor,  the  mortgage  was 
extinguished:   Waterman  v.   Green,   59  Cal.   142. 

Where  a  mortgaged  crop  of  grain  was  grown  on 
one  parcel  of  land,  and  removed  to  the  adjoining 
parcel  to  be  more  conveniently  threshed,  the  mortgage 
thereagainst,  is  extinguished:  Horgan  v.  Zanetta,  107 
Cal.  27,  32,  40  Pac.  22. 

'^  See   section   296,   above. 


602  MORTGAGE.  §    380 

Subdivision  S.    Extinction  of  Recorded  Mortgage 
M%st  lye  Recorded. 

380.     Extinction  of  Recorded  Mortgage  must  be 
Recorded.® 

The  partial^  or  entire  discharge  of  a  recorded 
mortgage  must  be  entered  upon  the  record, 
either 

(1)  by  an  entry  in  the  margin  of  the  record  of 
the  mortgage^  signed  by  the  mortgagee  or  his 
personal  representatives  or  assignee,  acknowl- 
edging the  partial  or  entire  satisfaction  of  the 
mortgage  in  the  presence  of  the  recorder, 
who  must  certify  the  acknowledgment  in  form 
substantially  as  follows:  ^^Signed  and  acknowl- 
edged before  me,  this  day  of  — '■ ,  in 

the  year  .      A  B,  Eecorder/'^^  or 

8  See  Civn  Code,  sections  2938  and  2939.  (Com- 
pare Stats.  1850,  p.  249,  c.  101,  sees.  37  and  38; 
HittelPs  Gen.  Laws,  sees.  679  and  680,  in  effect  April 
16,  1850.) 

The  purchaser  of  a  recorded  mortgage  is  charged 
with  notice  of  its  assignment  or  satisfaction,  when 
duly  entered  of  record:  Peters  v.  Jamestown  Bridge 
Co.,  5  Cal.  334,  63  Am.  Dec.  134. 

8  Partial  Releases  are  authorized  by  Civil  Code, 
section  2938,  and  subsequent  sections:  Woodward  v. 
Brown,  119  Cal.  283,  297,  63  Am.  St.  Eepi.  108,  51  Pac. 
2,  51  Pac.  542. 

lO  The  entry  in  the  margin  of  the  record  is  not 
required  to  state  anything  in  regard  to  the  in- 
debtedness to  secure  which  the  mortgage  was  given. 
Thus,  where  the  entry  read:  *^Full  payment  and 
satisfaction  of  the  within  note  and  mortgage    hereby 


§    380  EXTINCTION     THEREOF.  603 

(2)  by  the  officer  having  the  custody  of  the  rec- 
ord, on  the  presentation  to  him  of  a  certifi- 
cate signed  by  the  mortgagee  or  his  personal 
representatives  or  assignee,  acknowledged  or 
proved  and  certified  as  a  transfer  of  property 
is  required  to  be  in  order  to  be  entitled  to  rec- 
ordation, stating  that  the  mortgage  has  been 
discharged  in  part  or  in  whole. 

381.  Certificate  of  Dischargee  must  be  Recorded 
at  Length. 

A  certificate  of  the  discharge  of  a  mortgage, 
and  the  proof  or  acknowledgment  thereof,  must 
be  recorded  at  length,  and  a  reference  made  in 
the  record  to  the  book  and  page  where  the  mort- 
gage is  recorded,  and  in  the  minute  of  the  dis- 
charge made  upon  the  record  of  the  mortgage 
to  the  book  and  page  where  the  discharge  is  re- 
corded.^^ 

382.  Mortgagee    Required    under    Penalty    to 
Make  Certificate  of  Discharge.*^ 

When  any  mortgage  has  been  satisfied,  the 
mortgagee  or  his  assignee  must  immediately,  on 

acknowledged/'  the  words  ^'full  payment''  and 
''note''  are  surplusage:  Beal  v.  Stevens,  72  Cal.  451, 
457,  14  Pac.  186. 

11  Civil  Code,  section  2940,  (Compare  Stats.  1850, 
p.  249,  c.  101,  see.  39;  Hittell's  Gen.  Laws,  sec.  681.) 

12  Civil  Code,  section  2941. 

Historical.— Civil  Code,  section  2941,  provides: 
''When  any  mortgage  has  been  satisfied,  the  mortgagee 


604  MORTGAGE.  §    382 

the  demand  of  the  mortgagor,  execute,  acknowl- 
edge, and  deliver  to  him  a  certificate  of  the  dis- 
charge thereof,  so  as  to  entitle  it  to  be  recorded, 
or  he  must  enter  satisfaction,  or  canse  satisfac- 
tion of  such  mortgage  to  be  entered  of  record; 
and    any    mortgagee,  or  assignee  of    any  mort- 

or  his  assignee  must  immediately  on  }■  80n  )■  the  ■{  ngO  ^ 
demand  of  the  mortgagor,  \  73-4n  }-  execute,  [  80n  }■  ac- 
knowledge, -I  n80^  and  deliver  to  him  a  certificate  of 
the  discharge  thereof  [80o]  [a]  so  as  to  entitle  it  to 
be  recorded,  or  he  must  -|  n73-4^  enter  satisfaction  or 
cause  satisfaction  to  be  entered  of  record;  and  any 
mortgagee  or  assignee  of  such  mortgagee  [b]  who 
[73-4o]  [e]  refuses  [►  73-4n  }■  to  execute,  }►  80n  [► , 
acknowledge  -(  n80-j  and  deliver  to  the.  mortgagor,  the 
certificate  of  discharge  [08O0]  [d],  or  -|  n73-4^  to  enter 
satisfaction  or  |^  73-4n  [  cause  satisfaction  of  the  mort- 
gage to  be  entered  ■{  n73-4-[  as  provided  in  this 
chapter,  is  liable  |-  73-4m  \-  [e]  to  the  mortgagor  or 
his  grantee  or  heirs  for  all  damages  which  he  or  they 
may  sustain  by  reason  of  such  refusal,  and  also  for- 
feit to  him  or  them  the  sum  of  one  hundred  dollars 
]  m73-4  ]  . 

(a)  Here  was  inserted  ' '  \-  73-4n  \-  and  must,  at  the 
expense  of  the  mortgagor,  acknowledge  the  execution 
thereof    -(  n73-4^  .'' 

(b)  As  enacted  1873-74,  this  word  was  '*  mortgage. ' ' 

(c)  As  enacted   1872:    ''neglects   or/' 

(d)  Here  was  inserted:  '*  }- 73-4n  }-  and  to  acknowl- 
edge the  execution  thereoi    ^  n73-4  -{  . " 

(e)  Original  reading,  1872:  *'in  damages  to  such 
mortgagor,  or  his  grantee  or  heirs,  in  the  sum  of 
one  hundred  dollars,  to  be  recovered  in  a  civil  action 
before    any    court    of    competent    jurisdiction/' 

Original  section  in  effect  January  1,  1873;  amended 
Stats.  1873-74,  c.  612,  sec.  261,  in  effect  July  1,  1874; 
and  Stats.  1880,  c.  81,  in  effect  April  15,  1880. 

Compare  Stats.  1850,  p.  249,  c.  101,  sec.  40;  Hitt ell's 
Gen.  Laws,  sec.  682. 


§    382  EXTINCTION    THEREOF.  605 

gagee,  who  refuses  to  execute,  acknowledge,  and 
deliver .  to  the  mortgagor  the  certificate  of  dis- 
charge, or  to  enter  satisfaction,  or  cause  satis- 
faction of  the  mortgage  to  be  entered,  as  pro- 
vided in  this  chapter,  is  liable  to  the  mortgagor, 
or  his  grantee  or  heirs,  for  all  damages  which 
he  or  they  may  sustain  by  reason  of  such  refusal, 
and  shall  also  forfeit  to  him  or  them  the  sum  of 
one  hundred  dollars.*^ 

383.  Discharge  by  Fareign  Executors. 

Foreign  executors  and  administrators  may  sat- 
isfy mortgages  on  the  records  of  any  county  of 
this  state,  upon  producing  and  recording  in  the 
office  of  the  county  recorder  of  the  county  in 
which  such  mortgage  is  recorded  a  duly  certified 
and  authenticated  copy  of  their  letters  testa- 
mentary or  of  administration,  and  which  certifi- 
cate shall  also  recite  that  said  letters  have  not 
been  revoked.^^ 

384.  Release  of  Mortgage  of  Record  by  Mistake 

Binding  as  to  Certain  Parties  and  until 
Set  Aside  as  to  All  Others. 
A  satisfaction  of  a  mortgage  entered  of  record 
by  mistake  of  fact  or  law  at  the  instance  of  the 

13  In  an  action  to  recover  the  penalty  prescribed 
in  this  section,  an  averment  of  the  ownership  of  the 
property  by  the  plaintiff  is  essential:  Eandolph  v. 
Kraemer,  106  Cal.  199,  39  Pac.  533. 

14  Civil  Code,  section  2939%,  new  section  in  effect 
March   8,    1895. 


606  MORTGAGE.  §    384 

holder  thereof  extinguishes  such  mortgage  as 
against  bona  fide  purchasers  and  encumbrancers 
without  notice  irrevocably/^  but  merely  until  set 
aside  by  a  direct  proceeding  for  that  purpose  as 
to  the  mortgagor  himself  .^^ 

15  Miller  v.  Hicken,  92  Cal.  229,  28  Pac.  339; 
Wittenbrock  v.  Parker,  102  Cal.  93,  107,  41  Am.  St. 
Eep.  172,  36  Pac.  374. 

16  Russell  V.  Mixer,  39  Cal.  504,  509;  42  Cal.  475. 


§  385  A  PRIMARY  SECURITY.  607 


AETICLE  8. 
THE    MOETGAGE    A    PEIMAEY    SECUKITY.l 

385.  Mortgaged  property  must  first  be  resorted  to. 

386.  Waiver  of  mortgage  waives  personal  liability  of 

mortgagor. 

387.  Failure   to   foreclose    does   not   impair   remedies 

against  secondary  parties. 

388.  Loss  of  securit}''  without  fault  of  mortgagee  does 

not  bar  personal  action. 

385.     Mortgaged   Property    must    First    be   Re- 
sorted to. 

The  proceeds  of  a  sale  at  the  instance  of  the 

1  A  Primary  Security.— Code  of  Civil  Procedure, 
section  726:  '*  There  can  be  but  one  action  for  the 
recovery  of  any  debt,  or  the  enforcement  of  any  right 
secured  by  mortgage  upon  real  estate  or  personal 
property,  which  action  must  be  in  accordance  with  the 
provisions  of  this  chapter.  In  such  action  the  court 
may,  by  its  judgment,  direct  a  sale  of  the  encumbered 
property  (or  so  much  thereof  as  may  be  necessary), 
and  the  application  of  the  proceeds  of  the  sale ' ' 

Practice  Act,  sec.  246,  as  amended  1861,  contained 
a   similar   provision. 

The  three  essentials  here  provided  for  are: 

(1)  to  confine  any  recovery  to  one  action  [see  sections 
390,    391,    and   392,   below], 

(2)  to  make  the  mortgaged .  property  the  primary 
fund  out  of  which  such  satisfaction  may  be  had 
[sections   385   through   ii88],   and 

(3)  to  give  the  plaintiff  a  personal  judgment  for  such 


G08  MORTGAGE.  §    385 

mortgagee  of  the  entire^  mortgaged  property 
constitute  the  primxary  fund^  for  the  satisfaction 
of  any  mortgage  obligation,  and  the  personal  lia- 

balance  as  may  remain  due  after  the  exhaustion  of 

the  mortgaged  property  [section  165,  above] : 
Toby  V.  Oregon  Pacific  E.  R.  Co.,  98  Cal.  490,  494,  495, 
33  Pac.  556;  Otto  v.  Long,  127  Cal.  471,  475,  476,  59 
Pac.  895. 

A  Violation  of  the  Policy  Here  Established  Bars  a 
Foreclosure  Action. 

Thus  where  a  personal  action  was  brought  in  Ohio 
on  an  obligation  secured  by  mortgage  on  property  in 
this  state,  but  the  judgment  therein  obtained  remained 
wholly  unsatisfied,  an  action  to  foreclose  the  mort- 
gage cannot  thereafter  be  maintained  in  this  state: 
OuM  V.  Stoddard,  54  Cal.  613. 

Where  a  mortgage  is  given  as  additional  security 
for  and  to  extend  the  time  of  payment  of  a  debt  then 
being  enforced  by  a  pending  action,  while  the  plain- 
tiff mortgagee,  in  the  absence  of  a  plea  in  bar,  may 
continue  such  action,  yet  the  continued  prosecution 
of  such  action  amounts  to  a  waiver  of  the  right  to 
foreclose.  The  mortgage  was  a  security  which  must 
first  have  been  resorted  to:  Commercial  Bank  v. 
Kerahner,  120  Cal.  495,  498,  499,  52  Pac.  848. 

Historical,— Before  the  amendment  of  1861  (Stats. 
1861,  p.  306,  c.  315)  to  Practice  Act,  sec.  246  (Code  of 
Civil  Procedure,  section  726),  a  personal  judgment  for 
the  full  amount  of  the  secured  obligation  could  be 
rendered  in  the  first  instance,  the  mortgaged  prop- 
erty not  being  considered  a  primary  fund  for  the  sat- 
isfaction thereof:  Eollins  v.  Forbes,  10  Cal.  299;  Rowe 
V.  Table  Mountain  Water  Co.,  10  Cal.  441;  Rowland 
v.  Liebv,  14  Cal.  156;  Ladd  v.  Ruggles,  23  Cal.  232; 
Englund  v.  Lewis,  25  Cal.  337,  348,  350,  558;  Cul- 
ver V.  Rogers,  28  Cal.  520,  524. 

2  The  deficiency  which  may  take  the  form 
of  a  personal  judgment  is  a  deficiency  arising  from 
the  sale  of  the  whole,  not  of  a  part  of  the  mort- 
gaged   property:    Hopkins    v.    Warner,    109    Cal.    133, 


§  385  A  PRIMARY  SECURITY.  609 

137,  41  Pac.  808;  Woodward  v.  Brown,  119  Cal.  283, 
288,  63  Am.  St.  Eep.  108,  51  Pac.  2,  542.  See,  also, 
Stockton  Sav.  etc.  Soc.  v.  Harrold,  127  Cal.  612,  617, 
60  Pac.   165. 

In  the  early  case  of  Mascarel  v.  Eaffour,  51  Cal. 
242,  the  contrary  was  held. 

3  Proceeds  of  Sale  a  Primary  Fund:  Porter  v. 
Muller,  65  Gal.  512,  513,  4  Pac.  531.  See,  also,  Mc- 
Kean  v.  German-American  Sav.  Bank,  118  Cal.  334, 
336,  50  Pac.  656;  Woodward  v.  Brown,  119  Cal. 
283,  292,  63  Am.  St.   Eep.  108,  51  Pac.  2,  542. 

^^The  statute  is  imperative.  The  word  ^secured,' 
in  the  section,  does  not  mean  that  the  securitj^ 
shall  be  adequate,  or  that  in  case  prior  liens  upon 
it  would  exhaust  the  money  derived  from  the  land 
conveyed  as  security  on  a  sale  of  it,  that  then  the 
plaintiff  is  relieved  from  bringing  the  action  to 
foreclose.  The  proper  construction  of  the  language 
of  the  statute  is,  that  if  the  mortgage  on  its 
face    purports    to    De     a    security     to     the     plaintiff, 

then  he  must  bring  his  action  for  foreclosure 

The  plaintiff  is  not  authorized  to  waive  the  security 

and    bring    au    action    on     the     indebtedness 

Having  elected  to  take  the  security  at  the  value  it 
possessed  when  the  mortgage  was  originally  exe- 
cuted, no  change  in  value  having  since  occurred,  he 
cannot  be  allowed  to  urge,  to  evade  a  compliance 
with  the  provisions  of  section  726,  that  it  has  be- 
come valueless. '^  Code  of  Civil  Procedure,  section 
537,  permitting  in  certain  cases  an  attachment,  al- 
though the  indebtedness  is  secured  by  mortgage, 
'^refers  to  a  case  where  the  security  has  changed  in 
the  value  it  had  when  originally  taken — has  so  de- 
preciated as  to  become  of  no  value' ^:  Barbieri  v. 
Eamelli,    84    Cal.    154,    23    Pac.    1086. 

Considering  Barbieri  v.  Eamelli,  the  court,  in  Otto 
V.  Long,  127  Cal.  471,  476,  59  Pac.  895,  says:  ^^The 
ruling  was  to  the  effect  that  so  long  as  he  [the 
junior  mortgagee]  had  a  lien  on  real  property  given 
as  security  he  must  foreclose.  In  effect,  this  is  say- 
ing that  a  foreclosure  and  sale  is  the  special  mode 
provided  for  determining  whether  there  is  anything 
Liens— 39 


610  MORTGAGE.  §    385 

bilitj  of  the  principal  obligors  is  contingent  upon 
the  exhaustion  and  insufficiency  of  this  fund.^ 

for   a   particular   mortgagee   in   the   property   subject 
to  the  lien/' 

Illustrations.— Where  the  security  of  a  debt  se- 
cured by  pledge,  mechanic's  lien,  judgment  lien,  at- 
tachment, or  otherwise,  is  reinforced  by  a  mortgage 
against  the  same  or  other  property,  there  can  be  but 
one  action  for  the  enforcement  of  the  debt,  which 
action  must  be  brought  against  the  mortgaged  prop- 
erty: Commercial  Bank  v.  Kershner,  120  Cal.  495, 
498,  499,  52  Pac.  848. 

Where  the  mortgagee  holding  a  defaulted  mort- 
gage debt  is  a  bank  with  an  open  account  of  the 
mortgagor,  such  mortgagee  has  no  right  to  a  set- 
off: McKean  v.  German- American  Sav.  Bank,  118 
Cal.  334,  50  Pac.  656. 

4  Personal  Liability  Contingent  upon  Exhaustion 
of  Fund.— Thus  the  creditor  must  exhaust  the  se- 
curity before  recourse  may  be  had  to  the  general 
assets  of  the  debtor.  The  personal  liability  of  the 
mortgagor  is  contingent  upon  the  failure  of  the 
sale  of  the  mortgaged  property  to  satisfy  the  debt 
and  costs:  Bartlett  v.  Cottle,  63  Cal.  366;  Biddle  v. 
Brizzolara,  64  Cal.  354,  362,  30  Pac.  609;  Brown  v. 
Willis,  67  Cal.  235,  7  Pac.  682;  Bull  v.  Coe,  77  Cal. 
54,  60,  11  Am.  St.  Eep.  235,  18  Pac.  808;  Lavenson 
V.  Standard  Soap  Co.,  80  Cal.  245,  248,  13  Am.  St. 
Kep.  147,  22  Pac.  184;  Crim  v.  Kessing,  89  Cal.  478, 
487,  23  Am.  St.  Eep.  491,  26  Pac.  1074;  Savings  Bank 
of  St.  Helena  v.  Middlekauff,  113  Cal.  463,  467,  45 
Pac.  840;  Eoberts  v.  Fitzallen,  120  Cal.  482,  484, 
52  Pac.  818;  Commercial  Bank  v.  Kershner,  1^:0 
Cal.  495,  500,  52  Pac.  848;  Stockton  Sav.  etc.  Soc. 
V.  Harrold,  127  Cal.  612,  617,  60  Pac.  165;  Bair  v. 
Watkins,  130  Cal.  540,  542,  62  Pac.  929;  Meyer  v. 
Weber,  133  Cal.  681,  684,  685,  65  Pac.  1110;  Newhall 
V.  Bank  of  Livermore,  136  Cal.  533,  69  Pac.  248,  250A. 
See,  also,  McKean  v.  German-American  Sav.  BanK, 
118  Cal.  334,  33(5,  50  Pac.  656. 


§    386  A    PRIMARY    SECURITY.  611^ 

386.     Waiver  of  Mortgage  Waives  Personal  Lia- 
bility of  Mortgagor. 

A  mortgagee,  who  by  his  own  act  or  neglect,® 

Yet  '^it  is  not  altogether  or  literally  true,  as  de- 
clared m  some  of  the  cases,  that  tne  mortgagor  only 
undertakes  to  pay  the  deficiency  which  may  remain 
after  the  return  is  maae  of  the  result  of  the  sale  on 
foreclosure.  He  undertakes  to  pay  the  debt,  but 
if  there  exists  a  valid  lien  to  secure  its  payment 
the  result  is  the  same  as  though  his  contract  had 
only  been  to  pay  the  deficiency'':  Otto  v.  Long,  127 
Cal.   471,   477,   59  Pac.   895. 

S  If  a  mortgagee  loses  the  right  to  enforce 
his  mortgage  by  his  negligence,  as  by  a  failure  to 
present  a  claim  on  the  homestead  of  a  deceased  mort-^ 
gagor,  he  cannot  resort  to  a  personal  remedy:  Hearn 
V.  Kennedy,  85  Cal.  55,  24  Pac.  606,  per  Sharpstein, 
Fox,  McFarland,  and  Thornton,  J  J.;  Beatty,  C.  J., 
dissenting;  Hibernia  Sav.  etc.  Soc.  v.  Thornton,  109 
Cal.  427,  50  Am.  St.  Kep.  52,  42  Pac.  447;  Savings 
Bank  v.  Central  Market  Co.,  122  Cal.  28,  35,  54  Pac. 
273. 

But  a  mortgagee  who  fails  to  join  as  a  party  de- 
fendant in  a  foreclosure  action  the  grantee  of  rec- 
ord of  the  mortgaged  property,  in  consequence  of 
which  the  right  of  action  against  the  grantee  is 
barred  by  lapse  of  time  and  all  recourse  against 
the  mortgaged  property  is  lost,  does  not  thereby  lose 
his  remedy  against  the  mortgagor:  Frost  v.  Witter, 
132  Cal.  421,  428,  84  Am.  St.  Eep.  .53,  64  Pac.  705. 
'  In  the  Frost  case,  Hibernia  Sav.  etc.  Soc.  v, 
Thornton  is  said  to  have  ^'no  application,''  as  in 
the  Hibernia  case  ^^the  action  was  brought  on  the 
note  alone,  and  the  decision  was  simply  an  appli- 
cation of  the  rule  established  by  other  decisions  in 
this  state,  that  the  mortgagee  ^is  not  authorized 
to  waive  the  security  and  to  bring  an  action  on  the 
indebtedness.'  Had  the  mortgage  been  set  up— 
whether  it  had  become  valueless  by  neglect  or  other- 
wise—the result  would  have  been  different." 


G12  MORTGAGE.  §    386 

without  the  consent  of  the  mortgagor,^  deprives 
himself  to  any  extent  of  recourse  against  the 
mortgaged  property,  is  deprived  to  the  full  value 
of  the  property  against  which  recourse  is  losf 

It  is  clear,  however,  that  where  the  mortgagor  has 
ceased  to  own  the  property  the  court  cannot  order 
it  to  be  sold  when  the  new  owner  is  not  made  a 
party.  Under  such  circumstances  a  judgment  *'for 
the  foreclosure  of  the  mortgage  and  for  the  docket- 
ing of  a  deficiency  judgment^'  is  a  mere  sham,  and 
is  equivalent  in  its  operation  to  an  ordinary  personal 
judgment.  But  a  personal  judgment  cannot  be  ren- 
dered in  the  first  instance  (section  385),  nor  can 
the  same  thing  be  done  under  another  name.  The 
Frost  case  is  irreconcilable  with  the  other  cases  cited 
under   sections   385   and   386. 

Act  not  Amounting  to  Waiver.— A  mortgage  is  not 
waived  by  a  mere  presentation  of  the  secured  de- 
mand against  the  estate  of  thq  deceased  obligor 
without  stating  that  the  demand  was  secured  by 
mortgage,  the  only  elfect  of  such  presentation  being 
to  render  the  presentation  ineffectual:  Bank  of  So- 
noma County  V.  Charles,  86  Cal.  322,  327,  328,  24 
Pac.  1019. 

6  Without  Consent  of  Mortgagor.— But  the  en- 
tering of  a  discharge  of  a  mortgage  with  the  consent 
of  a  mortgagor  does  not  of  itself  discharge  the  debt, 
but  merely  the  security:  Sherwood  v.  Dunbar,  6  Cal. 
53. 

7  Deprived  of  Recourse  to  Value  of  Property  Re- 
leased.— If  a  mortgagor  releases  any  portion  of  the 
mortgaged  property  without  the  consent  of  the  mort- 
gagor, he  must,  on  foreclosure,  credit  the  mortgagor 
with  the  full  value  of  the  portion  released,  and  a  de 
ficiencv  judgment  can  then  be  rendered:  Woodward 
v.  BroVn,  119  Cal.  283,  288,  291-295,  63  Am.  St.  Eep. 
108,  51  Pac.  2,  542.  Compare  Bank  of  Ukiah  v.  Eeed, 
131  Cal.  597,  603,  63  Pac.  921. 


§    386  A    PRIMARY    SECURITY.  613 

of  the  right  to  a  personal  recovery^  against  the 
mortgagor  or  his  surety.^ 

387.     Failure  to  Foreclose  does  not  Impair  Reme- 
dies Against  Secondary  Parties. ^^ 

Failure  to  foreclose  a  mortgage  given  to  se- 
cure an  obligation  does  not  impair  the  right  to 
maintain  a  personal  action  against  any  guaran- 
tor^^ or  indorser^^  of  the  secured  obligation ;  but 
a  surety  is  discharged  thereby. ^''^ 

8  Right  to  Personal  Recovery  Lost  by  Waiver.— 

A  mortgagee  is  not  authorized  to  waive  the  security 
and  bring  an  action  upon  the  indebtedness:  Barbieri 
V.  Eamelli,  84  Cal.  154,  156,  157,  23  Pac.  1086;  Hi- 
bernia  Sav.  etc.  Soc.  v.  Thornton,  109  Cal.  427,  50 
Am.  St.  Eep.  52,  42  Pac.  447;  123  Cal.  62,  55  Pac. 
702;  127  Cal.  575,  60  Pac.  37;  Woodward  v.  Brown, 
119  Cal.  293,  63  Am.  St.  Eep.  108,  51  Pac.  2, 
51  Pac.  242;  Savings  Bank  v.  Central  Market  Co., 
122  Cal.  28,  35,  54  Pac.  273. 

The  personal  liability  of  the  mortgagor  being  con- 
tingent upon  the  fact  that  a  foreclosure  sale  of  the 
premises  fails  to  satisfy  the  debt  and  costs,  a  fail- 
ure to  enforce  the  security  or  waiver  thereof  results 
in  a  loss  of  personal  remedy:  Biddel  v.  Brizzolara,  64 
Cal.  354,  362,  363,  30  Pac.  609;  Hall  v.  Arnott,  80 
Cal.  348,  355,  22  Pac.  200. 

9  As    to    surety,    see    section    387. 

10  Code  of  Civil  Procedure,  section  726  (Prac- 
tice Act,  sec.  246,  as  amended  1860  and  1861): 
* '  There  can  be  but  one  action  for  the  recovery  of 
any  debt,  or  the  enforcement  of  any  right  secured 
by  mortgage.'' 

11  May  be  Maintained  Against  Guarantor:  Adams 
V.  Wallace,  119  Cal.  67,  71,  51  Pac.  14. 

Rationale.— ^ '  The  contention  that  the  action  can- 
not  be  maintained   at   all,   as  being  violative   of   the 


614  MORTGAGE.  §    387 

provisions  of  section  726  of  the  Code  of  Civil  Pro- 
cedure, is  not  well  taken.  This  is  not  an  action  for 
the  collection  of  the  mortgagor's  debt  as  such,  even 
if  it  be  conceded  that  this  debt  was  secured  by 
mortgage.  It  is  an  action  upon  an  independent  con- 
tract of  the  defendant  [the  guarantor],  with  which 
the  mortgagor  has  nothing  to  do,  and  which  might 
have  been  entered  into  by  the  parties  to  it  with- 
out his  knowledge  or  against  his  wishes.  There  is 
no  privity,  or  mutuality,  or  joint  liability  between 
the  principal  debtor  and  his  guarantor'':  Adams  v. 
Wallace,    119   Cal.   67,   71,   51   Pac.   14. 

12  May  be  Maintained  Against  Indorser:  Carver 
V.  Steele,  116  Cal.  116,  58  Am.  St.  Eep.  156,  47  Pac. 
1007. 

In  Carver  v.  Steele  the  facts  were  that  a  sec- 
ond mortgagee,  joined  as  a  party  defendant  in  an 
action  to  foreclose  a  first  mortgage,  failed  to  set 
up  and  foreclose  his  mortgage  whereby  his  security 
was  lost.  He  then  brought  this  action  against  the 
indorsers  of  the  secured  note  to  enforce  their  lia- 
bility. This  case  would  clearly  come  under  the  prin- 
ciple of  section  388,  subdivision  1,  below,  and  of 
Savings  Bank  v.  Central  Market  Co.  there  cited; 
but  the  court  argued  it  on  the  hypothesis  that  the 
mortgagee .  had  failed  to  enforce  his  mortgage,  not 
that  the  mortgage  had  been  lost  without  his  fault, 
and  said:  ''The  rule  is  that  the  creditor  loses  no 
rights  against  the  indorser,  whose  liability  has  be- 
come fixed,  by  simple  failure  to  enforce  his  lien 
against  property  mortgaged  for  security  of  the  debt. 
....  It  is  a  familiar  provision  of  our  statutes  that 
there  can  be  but  one  action  for  the  recovery  of  any 
debt,  or  the  enforcement  of  any  right  secured  by 
mortgage  upon  real  estate  or  personal  property, 
which  action  must  be  first  directed'  to  the  exhaus- 
tion of  the  security [But]   the  promise  of  the 

maker  of  the  note  is  one  thing  and  the  promise  of 
an  indorser  is  another;  and  their  [the  indorsers'] 
promise   was   not   secured   by   the   mortgage   held   by 

Montgomery     [the     mortgagee] The     loss     of 

personal   remedy   against   the   maker,   or   of   the   lien 


§    387  A    PRIMARY    SECURITY.  615 

Upon  the  mortgaged  property,  following  as  a  con- 
sequence of  mere  inaction  on  the  part  of  the  holder, 
is  of  no  moment  in  the  case.  The  court  therefore 
erred  in  holding  that  the  indorsers  had  been  re- 
leased. ^ ' 

13  Surety  Discharged.— A*dams  v.  "Williams,  119 
Gal.   67,    70,   51  Pac.   14. 

Civil  Code,  section  2831:  ''A  surety  is  one  who, 
at  the  request  of  another  and  for  the  purpose  of 
securing  to  him  a  benefit,  becomes  responsible  for 
the  performance  by  the  latter  of  some  act  in  favor 
of  a  third  person,  or  hypothecates  property  as  se- 
curity  therefor. ' ' 

Section  2849:  ^'A  surety  is  entitled  to  the  benefit 
of  every  security  for  the  performance  of  the  prin- 
cipal obligation  held  by  the  creditor,  or  by  a  co- 
surety at  the  time  of  entering  into  the  contract  of 
suretyship,  or  acquired  by  him  afterward,  whether 
the  surety  was  aware  of  the  security  or  not." 

Section  2850:  ^^  Whenever  property  of  a  surety  is 
hypothecated  with  property  of  the  principal,  the 
surety  is  entitled  to  have  the  property  of  the  prin- 
cipal first  applied  to  the  discharge  of  the  obliga- 
tion.'^ 

In  discussing  the  difference  between  the  position 
of  a  surety  and  of  a  guarantor,  the  court,  in  Adams 
V.  Williams,  said:  '^Were  she  [the  defendant]  a 
mere  surety,  as  distinguished  from  a  guarantor,  she 
would  have  the  unquestioned  right  to  demand  that 
plaintiff  [the  mortgagee]  should  first  apply  to  the 
discharge  of  the  debt  the  property  of  the  principal, 
which  had  been  mortgaged.  Upon  the  other  hand, 
if  she  be  a  guarantor  for  the  payment  of  the  debt 
upon  default,  then  it  would  matter  not  whether  there 
were  other  security  for  the  payment  of  that  debt; 
the  principal  creditor  would  have  the  right  to  prose- 
cute his  action  against  the  guarantor  without  pro- 
ceeding to  realize  upon  other  securities,  or  without 
going   into    equity   to   foreclose   his   mortgage." 

Also  compare  Commercial  Bank  v.  Kershner,  120 
Cal.   495,   500-501,   52   Pac.   848. 


616  MORTGAGE.  §    388 

388.     Loss  of  Security  Without  Fault  of  Mort- 
gagee does  not  Bar  Personal  Action. 

When,  without  the  fault  of  the  mortgagee, 
(1)   the    mortgagor's  .title    has    become    extin- 
guished   subsequent    to  the  execution  of    the 
mortgage  by  title  paramount/^  or 

14  Mortgagor's  Title  Extinguished.— Where  a  sec- 
ond mortgagee,  though  duly  joined  as  defendant^ 
took  no  part  in  the  action  to  foreclose  the  first 
mortgage,  and  the  property  sold  for  less  than  suffi- 
cient to  satisfy  the  first  mortgage,  a  personal  action 
is  maintainable.  The  second  mortgagee  *'has  no 
longer  a  lien  upon  the  property,  and  his  debt  is  not 
secured  by  mortgage.  He  did  not  voluntarily  re- 
lease his  security.  He  has  not  waived  nor  lost  it  by 
his  negligence.  It  was  lost  by  the  fault  of  the  mort- 
gagor in  not  paying  the  first  mortgage.  If  there 
had  been  a  surplus  and  the  plaintiff  [second  mort- 
gagee] had  failed  to  get  it  by  his  neglect,  it  might 
be  different.  ....  The  particular  mode  of  entering 
the  judgment  for  the  deficiency  is  not  an  important 
matter  in  the  policy  inaugurated  by  section  726. 
The  important  matter  was  to  prevent  a  multiplicity 
of  suits  and  to  compel  the  creditor  to  first  exhaust 
his  security.  The  mode  provided  for  the  entry  of 
judgment  is  a  mere  matter  of  convenience — is,  in 
fact,  a  privilege  given  to  the  mortgagee' ':  Savings 
Bank  v.  Central  Market  Co.,  122  Cal.  28,  36,  54  Pac. 
273. 

Likewise  where  such  a  second  mortgagee  took  no 
part  in  the  foreclosure  action  upon  the  first  mort- 
gage, and  some  property  remained  unsold,  he  may 
thereafter  maintain  an  action  to  foreclose  his  mort- 
gage on  such  property:  Greenebaum  v.  Davis,  131 
Cal.  146,  148,  82  Am.  St.  Rep.  338,  63  Pac.  165. 

Where,  however,  the  second  mortgagee  makes  him- 
self an  actor  in  the  action  to  foreclose  the  first  mort- 
gage, he  cfinnot  maintain  a  separate  piersonal  action, 
although   the   security  was   exhausted   in   satisfaction 


§    388  A    PRIMARY    SECURITY.  617 

(2)  the  mortgaged  property  has  heen  destroyed 
or  has  ceased  to  exist  or  has  become  valueless 
after  the  execution  of  the  mortgage/^  or 

(3)  by  mistake^  the  mortgagee  does  not  obtain 
a  mortgage  upon  anything/^ 

a  personal  action  upon  the  principal  obligation  is 
in  the  first  instance  maintainable. 

of  the  first  mortgage  (see  section  390,  below) :  Brown 
V.  Willis,  67  Cal.  235,  7  Pac.  682,  as  interpreted  in 
Savings  Bank  v.  Central  Market  Co.,  at  page  34. 

15  Property  Destroyed  or  Become  Valueless.— 
When  the  mortgaged  property  has  been  destroyed  or 
has  ceased  to  exist,  a  personal  action  is  in  the  first 
instance  maintainable:  Tobv  v.  Oregon  Pacific  E.  E. 
Co.,  98  Cal.  490,  495,  33  Pac.  556. 

It  also  seems  that  if  the  security  should  become 
valueless  after  the  mortgage  was  taken,  without  the 
fault  of  the  mortgagee,  a  personal  action  could  be 
maintained  in  the  first  instance.  Code  of  Civil  Pro- 
cedure, section  537,  permits  an  attachment  when  the 
security  of  an  obligation  for  the  direct  payment  of 
money,  originally  secured  by  mortgage,  has  '^with- 
out the  act  of  the  plaintiff,  or  the  person  to  whom 
the  security  was  given,  become  valueless' ':  Barbieri 
V.  Eamelli,  84  Cal.  154,  23  Pac.  1086. 

If,  however,  the  security  is  worthless  when  taken, 
the  personal  action  cannot  be  maintained:  Barbieri 
V.  Eamelli,  84  Cal.  154,  23  Pac.  1086;  Savings  Bank 
V.  Central  Market  Co.,  122  Cal.  28,  35,  54  Pac.  273. 

16  By  Mistake  no  Mortgage  Obtained.— *^ A  fort- 
closure  and  sale  is  the  special  mode  provided  for 
determining  whether  there  is  anything  for  a  par- 
ticular   mortgagee    in    the    property    subject    to    the 

lien The    liability    of    a   mortgagor    is    only   to 

pay  any  deficiency  which  there  may  be  after  fore- 
closure   and    sale    of    the    mortgaged    premises 

To  inquire  whether  there  is  any  such  property  an 
that    which    the    mortgage     purports     to    cover,    or 


618  MORTGAGE.  §    388 

-whether,  for  any  reason,  it  failed  to  create  a  lien, 
is  not  to  violate  ....  the  policy  of  the  statute. 
If  it  can  be  made  to  appear  that  there  is  no  such 
property  as  that  which  the  mortgage  purports  to 
describe,  it  would  demonstrate  that  there  was  no 
lien,  and  the  debt  would  not  be  one  secured  by  mort- 
gage upon  real  estate.  If,  when  the  mortgagor  exe- 
cuted the  mortgage,  he  had  neither  possession,  nor 
any  estate,  title,  or  interest  of  any  kind  or  character 
in  the  mortgaged  premises,  and  never  at  any  time 
acquired  any,  it  is  equally  evident  that  the  debt  is 
not  one  secured  by  a  lien  upon  real  estate.  One  can- 
not by  his  contract  create  a  lien  upon  property  which 
he  does  not  possess,  or  to  which  he  had  no  title  of 
any  character  whatever.  If  the  mortgagor  was  in 
good  faith  asserting  a  claim  to  the  property,  or  had 
color  of  title,  or  was  asserting  an  equity  in  reference 
to  it,  perhaps  the  mortgagee  would  be  compelled  to 
foreclose.  Here,  confessedly,  the  mortgagor  had  no 
claim  of  title.  Nor  was  the  mistake,  if  one  there 
was,  such  as  could  be  corrected  in  a  court  of  equity. 
....  Under  such  circumstances  it  does  not  violate 
the    policy    established    by   section    726    to   allow   a 

personal     action If,     however,     without     the 

fault  on  the  part  of  the  mortgagee  the  lien  be  lost, 
he  [the  mortgagor]  may  be  held  for  thel  entire  debt. 
And  if  by  some  mistake  the  mortgagee  does  not  get 
a  lien  upon  anything,  the  rule  should  be  the  same. 
Why  should  he  go  through  the  senseless  form  of  fore- 
closure, when  confessedly  he  does  not  really  have  a 
lienr'  Otto  v.  Long,  127  Cal.  471,  476,  477,  59  Pac. 
895. 

Where  a  husband  attempted  himself  alone  to 
execute  a  mortgage  on  the  homestead  of  himself 
and  wife,  although  the  mortgage  is  void,  the  obliga- 
tion attempted  to  be  secured  remains  good  and  is 
enforceable  as  though  the  mortgage  liad  never  been 
executed:  Kraemer  v.  Eevalk,  8  Cal.  66,  74,  68  Am. 
Dec.  304  (decided  before  the  amendment  of  1861  to 
Practice  Act,  sec.  246;  see  page  607,  note  1,  above). 


ENFORCEMENT    THEREOF.  619 


AETICLE  9. 
ENFOECEMENT     OF    MORTGAGE     OBLIGATION. 

SuMivision  1.    Modes  of  Enforcement. 
389.     Modes  of  enforcing  obligation  secured  by  mort- 


SuMivision    2.    Enforcement    hy    Judicial    Proceeding, 

390.  Multiplicity  of  actions  against  mortgagor  must 

be  avoided. 

391.  Plurality    of    actions   permitted   in   case    of   ne 

cessity. 

392.  Plurality   of   actions  permissible   against   secon- 

dary parties. 

393.  Foreclosure   action   must   be   commenced   within 

four  years. 

394.  Enlargement  of  time  of  commencing  action  by 

continuance  of  principal  obligation. 

395.  Enlargement  of  time  of   commencing  action  by 

renewal  of  security. 

396.  Expiration    of    time    for    commencing    action    is 

affirmative   defense. 

397.  Receiver  may  be  appointed  wlien  security  pre- 

carious or  insufficient. 

398.  Attorney's  fee  when  allowable  to  be  fixea  by 

court. 

^uMivision  3.    Enforcement  hy  Exercise  of  Power  of 
Sale. 

399.  Power  of  sale  cannot  be  exercised  when  secured 

obligation  uncertain  or  disputed. 


620  ENFORCEMENT    OF    MORTGAGE.  §    389 

400.  Sale   when    exaggerated   amount    claimed   to    be 

due   generally  valid. 

401.  Person   selling   for   article   of   fluctuating   value 

chargeable  with  highest  value  of  property  sold. 

402.  Eecitals  in  deed  to  purchaser  binding  on  mort- 

gagor or  trustor. 

403.  Sale  made  notwithstanding  injunction  voidable. 

404.  Sale  to  person   selling  voidable. 

405.  Person  selling  to  himself  and  afterward  resell- 

ing must  account  for  profits. 

406.  Mortgagee    must    account    for    surplus    realized. 

407.  Mortgagee  may  maintain  action  for  deficiency. 

Subdivision  1,     Modes  of  Enforcement. 

389.     Modes  of  Enforcing  Obligation  Secured  by 
Mortgage. 

An  obligation/  the  performance  of  which  is 
secured  by  mortgage,  may,  when  performance  is 
dne,^  be  enforced 

1  Secured  Obligation  must  "be  Proved.— A  mortgage 
being  a  mere  incident  of  the  principal  obligation,  as 
a  prerequisite  to  a  foreclosure  of  the  mortgage,  the 
obligation  must  be  first  proved:  Bennett  v.  Tavlor, 
5    Cal.    502. 

2  When  Performance  is  Due.— A  judgment  for  the 
principal  of  a  note  secured  by  mortgage  and  for  the 
sale  of  the  encumbered  property  for  its  satisfaction 
cannot  be  rendered  before  the  note  becomes  due:  Hunt 
v.  Dohrs,  39  Cal.  304. 

But  where  an  action  is  brought  to  foreclose  a  su- 
perior mortgage  which  is  due,  although  an  inferior 
encumbrance  against  the  same  property  is  not  yet  due, 
the  holder  of  the  superior  encumbrance  has  the  right 
to  have  the  sale  made:  Hawkins  v.  Hill,  15  Cal.  499, 
76  Am.  Dec.  499.  Compare  Orange  Growers^  Bank 
V.  Duncan,  133  Cal.  254,  256,  65  Pac.  469. 


§    389  IN    GENERAL.  621 

(1)  in  every  ease,  by  a  judicial  sale  of  the  mort- 
gaged property  obtained  in  a  foreclosure  ac- 
tion,^ or 

(2)  in  case  of  a  movable  property  mortgage,  by 
a  sale  of  the  property  by  the  mortgagee  made 
in  the  manner  and  upon  the  notice  prescribed 
for  the  sale  of  pledged  property,^  or 

Where  a  foreclosure  action  is  brought  on  a  superior 
encumbrance  which  is  due  and  on  an  inferior  encum- 
brance upon  the  same  property  which  is  not  yet  due, 
and  during  the  continuance  of  the  action  the  inferior 
encumbrance  becomes  due,  and  thereafter  the  mort- 
gagor tenders  the  amount  of  the  superior  encumbrance, 
the  right  to  continue  the  action  and  foreclose  the  in- 
ferior encumbrance  is  not  thereby  abated:  Hawkins 
V.  Hill,   15  Cal.  499,  76  Am.  Dec.  499. 

See  section  96,  above. 

3  May  be  Enforced  by  Foreclosure  Action.— Civil 
Code,  section  2931:  *'A  mortgagee  may  foreclose  the 
right  of  redemption  of  the  mortgagor  in  the  manner 
prescribed   by  the   Code   of   Civil   Procedure." 

The  only  sort  of  action  by  which  a  mortgage  can 
be  foreclosed  is  a  foreclosure  action  under  the  Code 
of  Civil  Procedure,  section  726:  Combs  v.  Hawes 
(Cal.),   8   Pac.   597,   598. 

See  sections  91   through   185,  above. 

Averment  of  Complaint.— In  an  action  to  foreclose 
a  mortgage,  the  mortgagee  need  not  aver  that  the 
obligation  secured  by  the  mortgage  was  also  other- 
wise secured,  if  in  fact  it  was  otherwise  secu  ed,  as 
by  pledge:  Savings  Bank  of  St.  Helena  v.  Middle- 
kauff,  113  Cal.  463,  466,  45  Pac.  840;  McArthur  v. 
Magee,  114  Cal.  126,  129,  45  Pac.  1068. 

4.  Sale  as  of  Pledged  Property.— Civil  Code,  sec- 
tion 2967:  ''A  mortgagee  of  personal  property,  when 
the  debt  to  secure  which  the  mortgage  was  executed 
becomes  due,  may  foreclose  the  mortgagor's  right 
of   redemption   by   a   sale    of   the   property,    made   in 


622  ENFORCEMENT    OF    MORTGAGE.  §    389 

(3)  in  case  of  express  agreement  by  the  parties 
■    to  that  effect,  by  the  exercise  of  a  power  of 

sale  by  the  person  entitled  to  do  so  in  the  mode 

and  manner  agreed  upon.^ 

But  without  a  sale,  a  contract  of  mortgage 
cannot  provide  for  the  termination  of  the  rights 
of  the  mortgagor  in  the  property  in  satisfaction 
of  the  secured  obligation.^ 

the  manner  and  upon  tlie  notice  prescribed  by  the 
title  on  Pledge  [see  sections  232  to  240,  above],  or 
by  proceedings  under  the  Code  of  Civil  Procedure/' 

5  By  Exercise  of  Power  of  Sale:  See  sections  255 
and  256. 

A  power  of  sale  contained  in  a  mortgage  is  a  mere 
cumulative  reanedy,  not  in  the  lesat  impairing  the 
right  to  a  foreclosure  at  judicial  sale:  Cormerais  v. 
Genella,  22  Cal.  116,  125;  Felton  v.  Le  Breton,  92 
Cal.  457,  465,  28  Pac.  490;  Godfrey  v.  Monroe,  101 
Cal.  224,  227,  35  Pac.  761. 

6  Mortgage  cannot  Provide  for  Forfeiture  in  Sat- 
isfaction  Thereof:    See   sections   335   and   336,   above. 

Code  of  Civil  Procedure,  section  744  (Practice  Act, 
sec.  260),  provides:  ^^A  mortgage  of  real  propsrty 
shall  not  be  deemed  a  conveyance,  whatever  its 
terms,  so  as  to  enable  the  owner  of  the  mortgage  to 
recover  possession  of  the  real  property  without  a 
foreclosure   and   sale.'' 

''The  object  of  the  provision  ....  was  to  pre- 
clude any  arrangement  between  the  mortgagor  and 
mortgagee  by  which  the  former's  right  to  the  prop- 
erty could  be  cut  of!;  without  a  sale  of  the  same.  It 
therefore  held  that  the  mortgage  should  not  operate 
as  a  conveyance,  whatever  its  termS;  until  a  fore- 
closure and  sale.  The  foreclosure  might  be  by  ju- 
dicial proceedings  in  equity  or  by  any  other  regular 
proceedings  which  resulted  in  extinguishing  the  mort- 
gagor's  right   of  property  by   sale":    Bell   etc.   Min. 


§    390  BY   JUDICIAL   PROCEEDING.  623 

Subdivision   2,     Unforcemmt    hy    Judicial    Pro- 
ceeding. 

390.     Multiplicity    of     Actions    Against    Mort- 
gagor must  be  Avoided^ 

The  mortgagee  must  in  a  single  action  ex- 
haust every  remedy  for  the  collection  of  the  se- 

Co.  V.  First  Nat.  Bank  of  Butte,  156  U.  S.  470,  475, 
476,  15  Sup.  Ct.  Eep.  440,  39  Law  ed.  497. 

This  statutory  provision  does  not  preclude  a  mort- 
gage from  containing  a  power  of  sale:  See  note  5, 
above. 

7  Multiplicity  of  Actions  Must  be  Avoided.— Code 
of  Civil  Procedure,  section  726,  provides:  '*  There  can 
be  but  one  action  for  the  recovery  of  any  debt,  or 
the  enforcement  of  any  right  secured  by  mortgage." 

One  object  of  this  provision  is  '*to  prevent  mul- 
tiplicity of  suits  and  the  attendant  annoyance  and 
additional  cost  to  the  debtor":  Commercial  Bank  v. 
Kershner,    120    Cal.    495,    500,    52    Pac.    848. 

On  its  object    see,  also,    page    607,  note    1,  above. 

Where  a  person  holding  a  mortgage  upon  certain 
property  commences  an  action  to  foreclose  it,  in 
which  he  joins  as  party  defendant  another  person 
holding  a  subsequent  mortgage  covering  the  same 
property  and  certain  other  property,  the  second  mort- 
gagee may  rightfully  file  a  cross-complaint  to  fore- 
close his  mortgage  upon  all  the  property  affected 
thereby.  It  is  evident  that  if  he  should  not  be  per- 
mitted by  his  cross-complaint  to  foreclose  his  mort- 
gage upon  the  entire  property  affected  thereby,  ho 
would  lose  part  of  his  security  because  he  must  ob- 
tain all  his  relief  in  a  single  action,  and  also  would 
be  barred  from  personal  remedy  against  his  mort- 
gagor: Stockton  Sav.  etc.  Soc.  v.  Harrold,  127  Cal. 
612,   60   Pac.   165. 

Likewise,  where  a  second  mortgagee  commences  an 
action  to  foreclose  his  mortgage  upon  an   undivided 


624  ENFORCEMENT    OF    MORTGAGE.  §    390 

cured  obligation*^  whether  in  rem  or  in  personam, 
obtainable  against  the  primary  debtor  and  the 
mortgagor  in  the  judicial  forum  in  which  such 
action  has  been  commenced.     But  where  an  ob- 

iuterest  in  certain  property,  and  joins  therein  as 
party  defendant  the  first  mortgagee,  whose  mort- 
gage covers  the  remainder  of  the  property  as  well, 
the  first  mortgagee  may  rightfully  file  a  cross-com- 
plaint to  foreclose  his  mortgage  upon  the  entire  prop- 
erty and  bring  in  as  party  defendant  a  second  mort- 
gagee upon  the  other  undivided  interest  in  the 
property;  and  all  the  parties  will  be  bound  by  the 
judgment:  Newhall  v.  Bank  of  Livermore,  136  Cal. 
533,   69  Pac.   2^48. 

''It  frequently  occurs  that  a  mortgage  or  trust 
deed  executed  to  secure'  an  indebtedness  embraces 
several  tracts  of  land  lying  in  different  counties,  and 
in  such  case  they  must  all  be  embraced  in  one  action, 
as  it  is  declared  by  the  code  that  there  can  be  but  one 
action  for  the  recovery  of  any  debt  or  the  enforcement 

of   any  right   secured  by  mortgage Unless   the 

creditor  in  his  action  includes  in  his  action  all  the 
property  on  which  there  is  a  lien  to  secure  the  debt, 
he  waives  the  lien  as  to  the  property  not  included  in 
the  action  ....  and  cannot  bring  a  separate  action 
to  enforce  a  lien  thereon '*:  Murphv  v.  Superior  Court 
of  Los  Angeles  County   (Cal.),   70  Pac.   1070,   1070B. 

8  Every  Remedy  must  be  Exhausted  in  a  Single 
Action. — Where  mortgages  executed  upon  various 
pieces  of  land  owned  by  various  parties  are  given 
to  secure  the  same  obligation,  there  is  no  misjoiner  in 
foreclosing  them  all  in  the  same  action;  but  they  not 
only  may,  but  must,  be  foreclosed  in  one  action  or  the 
security  is  irrevocably  lost:  Security  Loan  and  Trust 
Co.  V. 'Mattern,   131   Cal.  326,   331,   63  Pac.  482. 

Where  a  mortgage  covers  several  items  of  property, 
but  is  enforced  against  part  only,  the  lien  on  the  re- 
mainder of  the  property  is  thereby  irrevocably  lost: 
Mascarel  v.  Eaffour,  51  Cal.  242;  Bull  v.  Coe,  77 
Cal.  54,  11  Am.  St.Kep.  235, 18Pac.  808;Hallv.  Arnott, 


§    390  BY   JUDICIAL   PROCEEDING.  625 

ligation  secured  by  mortgage  is  also  secured  by 
other  encumbrance,  the  mortgagee  may,  after 
having  maintained  an  action  merely  to  preserve 
such  other  security,^  maintain  a  second  action 

80  Cal.  348,  354,  22  Pac.  200;  Commercial  Bank  v. 
Kershner,  120  Cal.  495,  500,  52  Pac.  848;  Stockton  Sav. 
etc.  Soc.  V.  Harrold,  127  Cal.  612,  616,  60  Pac.  165; 
Geri^  v.  Loveland,  130  Cal.  512,  514,  62  Pac.  830;  Bank 
of  Ukiah  V.  Eeed,  131  Cal.  597,  603,  63  Pac.  921;  New- 
hall  V.  Bank  of  Livermore,  136  Cal.  533,  '536,  69  Pac. 
248. 

What  Does  not  Amount  to  Foreclosure  so  as  to  Bar 
Action. —Where  a  person  holding  a  mortgage  upon  cer- 
tain property  commenced  an  action  to  foreclose  it, 
and  joined  as  party  defendant  another  person  holding 
a  subsequent  mortgage  covering  the  same  property 
and  certain  other  property,  and  the  second  mortgagee 
answered  asking  that  the  surplus  proceeds  of  the  sale 
after  the  satisfaction  of  the  prior  mortgage  be  applied 
in  liquidation  of  his  own,  this  does  not  amount  to  a 
foreclosure  of  his  mortgage  so  far  as  to  bar  a  subse- 
quent action  to  foreclose  it:  Brill  v.  Shively,  95  Cal. 
674,  29  Pac.  324;  Pauly  v.  Eogers,  121  Cal.  294,  296, 
53  Pac.  808  (this  case  holding  that  a  so-called  cross- 
complaint  was  merely  an  answer).  Compare  Stockton 
Sav.  etc.  Soc.  v.  Harrold,  127  Cal.  612,  619,  620,  60  Pac. 
165. 

Likewise,  where  the  second  mortgagee  made  de- 
fault in  the  action  to  foreclose  the  first  mortgage, 
he  may  maintain  a  second  action  in  which  his  prayer 
was,  in  substance,  that  any  portion  of  the  lands  not 
sold  to  satisfy  the  prior  mortgage  be  sold,  and  that 
&ny  surplus  proceeds  paid  into  court  (as  was  ordered 
to  be  done)  under  the  judgment  foreclosing  the  prior 
mortgage  to  be  paid  to  the  plaintiff:  Green ebaum 
V.  Davis,  131  Cal.  146,  148,  82  Am.  St.  Eep.  338,  63 
Pac.  16o. 

0  May  After  Action  to  Preserve  Security  Proceed 
to  Foreclose.— Where  a  note  secured  by  mortgage  was 
Liens — 40 


G26  ENFORCEMENT    OF    MORTGAGE.  §    390 

for  the  foreclosure  of  his  mortgage.  Moreover, 
a  mortgagee  who  fails  by  mistake  of  fact  to 
foreclose  upon  the  entire  mortgaged  property  in 
the  first  instance  may,  as  against  everyone  ex- 
cept a  person  prejudiced  by  such  mistake,  main- 
tain a  second  action  to  cause  the  sale  to  be  set 
aside  and  a  foreclosure  judgment  to  be  rendered 
against  the  entire  property.*®  [Where  a  mort- 
gagee voluntarily  dismisses  his  foreclosure  action, 
and  the  dismissal  is  not  intended  as  a  final  dis- 
position of  the  controversy,  the  dismissal  is  not 
a  bar  to  a  second  action.]** 

given  as  collateral  security  for  a  note  and  mortgage, 
and  the  mortgagee  enforced  the  collateral  security 
first,  he  may  afterward  resort  to  the  mortgaged  prop- 
erty, as  the  first  action  was  in  its  nature  an  action 
to  preserve  the  security,  and  the  fact  that  part  pay- 
ment was  thereby  received  was  but  an  incident,  and 
moreover  two  actions  were  necessary  in  any  event, 
the  mortgage  not  securing  the  entire  obligation. 
Mercel  Security  Sav.  Bank  v.  Casaccia,  103  Cai. 
641,  645,  37  Pac.  648;  McArthur  v.  Magee,  114  Cai. 
120,  130,  45  Pac.  1068. 

10  Gerig  v.  Loveland,  130  Cai.  512,  62  Pac. 
830. 

11  Voluntary  Dismissal  not  Bar  to  Subsectuent  Ac- 
tion: Westbay  v.  Gray,  116  Cai.  660,  668,  48  Pac. 
800. 

Thus  where  a  mortgagee  commenced  an  action  to 
foreclose  his  mortgage,  and  after  certain  proceedings 
were  had  the  axjtion  was  dismissed  at  the  plaintiff  ^s 
instance,  the  judgment  of  dismissal  reciting  that  the 
dismissal  was  made  ^'without  prejudice  at  plaintiff ^s 
costs,''  the  mortgagee  may  afterward  maintain  a 
second  action  against  the  mortgagor  to  foreclose  this 
mortgage,   the   first    judgment   not   being   a   bar   to   a 


§    391  BY   JUDICIAL   PROCEEDING.  027 

391.     Plurality  of  Actions  Permitted  in  Case  of 
Necessity. 

Where  the  mortgage  obligation  cannot  be 
satisfied  in  a  single  action  against  the  mortgaged 
property,  the  mortgagee  may  maintain  other  sub- 
sequent actions  against  the  primary  debtor  and 
the  mortgagor.^^ 

subsequent    action:    Hibernia    Sav.    etc.    Soc.    v.    Por- 
tener,    Cal.,    May   13,    1903,   in    department. 

In  neither  of  these  decisions  was  section  726  of 
the  Code  of  Civil  Procedure  referred  to;  but  in 
view  of  the  fact  that  one  of  its  principal  objects  is 
to  confine  the  recovery  to  one  action  and  to  prevent 
a  multiplicity  of  actions,  these  decisions  seem  er- 
roneous. 

13  Plurality  of  Actions  Permitted  in  Case  of  Ne- 
cessity.—The  code  *^does  not  prohibit  successive 
foreclosures — when  required  by  the  circumstances — 
for  distinct  debts  secured  by  the  same  mortgage": 
Stockton  Sav.  etc.  Soc.  v.  Harrold,  127  Cal.  612, 
620,  621,  60  Pac.  165.  See,  also,  McDougal  v. 
Downey,  45  Cal.  16'5. 

Where  personal  service  of  summons  and  a  valid 
deficiency  judgment  is  not  obtainable  in  the  fore- 
closure action,  a  subsequent  personal  action  in  main- 
tainable when  the  primary  debtor  comes  within  the 
nurisdiction:  Blumberg  v.  Birch,  99  Cal.  416,  37  Am, 
St.  Eep.  67,  34  Pac.  102.  See,  also,  Merced  Security 
Sav.  Bank  v.  Casaccia,  103  Cal.  641,  643,  644,  37 
Pac.  648. 

Where  the  encumbrancer  was  obliged  to  foreclose 
in  another  state,  as  in  Oregon,  the  mortgaged  proj) 
erty  being  there  situate,  a  personal  action  for  a  re- 
sulting deficiency  is  afterward  maintainable  in  this 
state,  the  mortgagor  residing  here:  Felton  v.  West, 
102  Cal.  266,  36  Pac.  676. 

Where  a  mortgagor  personally  liable  for  the  mort- 
gage obligation   was  nonresident  at  the  date  of  the 


028  ENFORCEMENT    OF    MORTGAGE.  §    392 

392.     Plurality  of  Actions  Permissible  Against 
Secondary  Parties. 

A  plurality  of  actions  is  permissible  against  a 
guarantor  or  an  indorser  of  the  secured  obliga- 
tion>4 

foreclosure  of  the  mortgage,  after  his  death  an  ac- 
tion may  be  maintained  against  his  resident  admin- 
istrator (who  had  rejected  the  claim)  for  the  recov- 
ery of  the  deficiency  which  arose  at  the  foreclosure 
sale  of  the  mortgaged  property:  Chapman  v.  Pennie 
(Cal.),   39   Pac.    14,    15A. 

14  Plurality  of  Actions  Permissilsle  Against  Sec- 
ondary Parties. 

Where  an  unsatisfied  deficiency  remains  after  the 
sale  of  the  mortgaged  property,  an  action  may  be 
maintained  against  an  indorser  for  such  sum:  Vande- 
water  v.  McEae,  27  Cal.  596;  Allins  v.  Williams,  97 
Cal,  403,  406,  407,  32  Pac.  441.  See,  also,  Merced  Se- 
curity Sav.  Bank  v.  Casaccia,  103  Cal.  641,  643,  37 
Pac.  648. 

And  against  a  guarantor  of  the  second  obligation: 
County  Bank  v.  Greenberg,  127  Cal.  26,  59  Pac.  139. 

Rationale,— CodiQ  of  Civil  Procedure,  section  72o 
(Practice  Act,  sec.  246,  as  amended  1860  and  1861) 
provides:  *' There  can  be  but  one  action  for  the  recov- 
ery of  any  debt,  or  the  enforcement  of  any  right  se- 
cured by  mortgage. '^  ^^The  words  ^secured  by 
mortgage'  are  descriptive  of  the  right  or  personal 
liability  contemplated  by  the  section,  and  any  per- 
sonal  liability  not    so   secured   is   manifestly   without 

its   purview The   promise   of    the   maker    of   a 

note  is  one  thing,  and  the  promise  of  the  indorser  is 
another.  One  is  primary  and  the  other  is  secondary; 
one  is  absolute  and  the  other  turns  upon  conditions; 
each  may  be  secured  by  a  separate  mortgage,  or  one 
mortgage  may  be  so  framed  as  to  secure  both  of  them. 
But  a  mortgage  which  by  its  terms  is  made  appli- 
cable to  the  promise  of  the  maker  only  can  in  no 
just  sense  be  regarded  as   collateral  to  the  personal 


§    393  BY    JUDICIAL   PROCEEDING.  629 

393.     Foreclosure    Action    must    be  Commencecl 
Within  Four  Years.^^ 

Subject  to  the  usual  circumstances  enlarging 
the  time  of  commencing  an  action,  an  action  to 
foreclose  a  mortgage  executed  in  this  state  must 
(unless  the  principal  obligation  has  been  con- 
tinued or  the  mortgage  renewed)  be  com- 
menced^^ within  four  years^''  after  the  ma- 
liability  or  to  the  'right'  of  which  the  contract  of 
indorsement  is  the  source.  On  the  ground,  then,  that 
an  action  against  an  indorser  is  brought  to  enforce 
a  right  which  is  unsecured  by  mortgage,  we  consider 
that  the  indorsers  may  be  pursued  in  personam  on 
their  contract  of  indorsement'':  Yandewater  v.  Mc- 
Eae,  27  Cal.  596,  602,  60o. 

15  Time  of  Commencement  in  General.— Code  of 
Civil  Procedure,  sections  335  and  337  (as  amended 
in  effect  July  1,  1874):  *'The  periods  prescribed  for 
the  commencement  of  actions  other  than  for  the  re- 
covery of  real  property  are  as  follows:  Within  four 
years:  An  action  upon  any  contract,  obligation,  or 
liability,  founded  upon  an  instrument  in  writing  exe- 
cuted in  this  state.''  See,  also.  Stats.  1850,  p.  343, 
c.  127,  sec.  17. 

Where  there  is  no  written  agreement  for  the  pay- 
ment of  the  principal  obligation,  the  remedy  there- 
on is  barred  in  two  years;  but  the  action  to  fore- 
close is  deemed  to  be  founded  on  the  written  agree- 
ment of  mortgage,  and  so  is  not  barred  for  four 
years,  although  a  personal  deficiency  judgment  can- 
not be  levied  after  the  principal  debt  is  barred: 
Union  Water  Co.  v.  Murphy's  Flat  Fluming  Co.,  22 
Cal.  620,  627,  632;  Newhall  v.  Sherman,  Clay  &  Co., 
124  Cal.   509,   57  Pac.   387. 

16  When  Action  Commenced.— Where  an  action 
was  commenced  on  a  promissory  note,  and  after  the 
lapse  of  the  statutory  time  an  amended  complaint 
was  filed  seeking  for  a  foreclosure  of  a  mortgage  se- 


630  ENFORCEMENT    OF    MORTGAGE.  §    393 

turity*®  of  the  principal  obligation.  After  the 
mortgaged  property  has  heen  transferred  by  the 
mortgagor  or  aif ected  by  an  inferior  encumbrance^ 

curing  Buch  note,  the  foreclosure  action  is  not  barred, 
because  the  ^' cause  of  action '^  is  the  principal  ob- 
ligation, and  the  amendment  merely  seeks  a  different 
remedy:  Frost  v.  Witter,  132  Cal.  421,  426-428,  84 
Am.  St.  Rep.  53,  64  Pac.  705. 

But  where  certain  necessary  parties  defendant 
were  not  joined  when  the  action  was  commenced, 
the  statute  of  limitations  as  to  them  is  not  stopped 
running  thereby;  and  the  expiration  of  four  years 
after  the  maturity  of  the  secured  obligation  before 
such  parties  are  joined  by  supplemental  complaint 
bars  the  right  of  action  against  them.  For  the  ac- 
tion as  to  them  is  not  commenced  until  the  filing  of 
the  supplemental  complaint:  Jeffers  v.  Cook,  58  Cal. 
147;  Spaulding  v.  Howard,  121  Cal.  194,  198,  53  Pac. 
563. 

17  Within  Four  Years  After  the  Maturity  of  the 
Principal  Obligation.— This  rule  applies  when  the 
property  has  been  transferred  to  a  purchaser  before 
the  maturity  of  the  principal  obligation,  the  same  as 
in    any   other    case. 

So  in  a  case  where  a  purchaser  to  whom  the  prop- 
erty was  transferred  before  the  maturity  of  the  se- 
cured obligation  assumed  the  payment  of  the  obliga- 
tion, the  court  held  that,  as  he  is  deemed  the  prin- 
cipal debtor  (section  368,  above),  the  right  of  ac- 
tion against  him  is  not  barred  upon  the  expiration 
of  four  years  after  his  written  promise  to  pay  the 
mortgage  obligation,  but  not  until  four  years  after 
the  maturity  of  the  mortgage:  Eoberts  v.  Fitzallen, 
120  Cal.  482,  483,  484,  52  Pac.  818. 

When  the  purchaser's  agreement'  to  assume  the 
mortgage  is  made  after  the  maturity  of  the  principal 
obligation,  it  amounts  to  a  continuance  thereof:  Sec 
section  394,  note  25,  below. 

18  When  Principal  Obligation  Matures.— Where 
an    obligation    secured    by    mortgage    and   payable    a 


§    393  BY   JUDICIAL   PROCEEDING.  631 

with  actual  or  constructive  notice  thereof  to  the 
"mortgagee,  the  absence  of  the  mortgagor  from 
the  state  does  not  enlarge  the  time  of  commenc- 
ing the  action.^^  In  general^  where  the  owner 
of  the  mortgaged  property  is  within  the  state, 
the  time  of  commencing  the  action  is  not  en- 
specified  time  after  date,  provides  that  upon  default 
in  the  payment  of  any  amount  which  may  become 
due  thereon,  the  whole  sum  of  principal  and  inter- 
est shall  immediately  become  due  and  the  mortgagee 
may  proceed  to  foreclose,  the  cause  of  action,  never- 
theless, does  not  accrue  in  the  sense  of  the  statute 
of  limitations  until  the  expiration  of  the  credit  fixed 
in  the  note,  the  acceleration  in  the  time  of  payment 
being  in  the  nature  of  a  penalty  for  the  sole  bene- 
fit of  the  creditor.  Thus  the  statute  does  not  begin 
to  run  until  the  expiration  of  the  full  period  of  cred- 
it fixed  in  the  note:  Belloc  v.  Davis,  38  Cal.  242,  248- 
255;  Mason  v.  Luce,  116  Cal.  232,  236,  237,  48  Pac. 
72;   Eichards  v.   Daly,   116   Cal.   336,   48   Fac.   220. 

This  rule  holds  although  upon  a  default  the  mort- 
gagee brings  a  foreclosure  action  which  is  afterward 
dismissed  by  him:  California  Sav.  etc.  Soc.  v.  Culver, 
127  Cal.  107,  112,  59  Pac.  292.  Compare  Moore  v. 
Eussell,  ia3  Cal.  297,  299,  300,  85  Am.  St.  Eep.  166, 
65  Pac.   624. 

19  Absence  of  Mortgagor  from  State  When  Prop- 
erty Transferred  does  not  Enlarge  Time.— This  is  so 
when  the  mortgagee  has  actual  notice  of  the  trans- 
fer:  Wood  V.   Goodfellow,  43   Cal.  185,   189,  190. 

Or  constructive  notice  through  the  recordation  of 
the  transfer:  Filipini  v.  Trobock,  134  Cal.  441,  66 
Pac.  587,  per  Beatty,  C.  J.,  Yan  Dyke,  Temple,  and 
Harrison,    JJ.;    McFarland,    J.,    dissenting. 

Likewise  when  the  property  is  affected  by  a  sub- 
sequent encumbrance,  as  an  attachment  lien,  the  ab- 
sence of  the  mortgagor  from  the  state  is  said  not 
to  enlarge  time:  Watt  v.  Wright,  66  Cal.  202,  206, 
207,   5  Pac.   91. 


C32  ENFORCEMENT    OF    MORTGAGE.  §    393 

larged  by  the  absence  of  the  principal    obligor 
therefrom.^^ 

394.  Enlargement  of  Time  of  Commencing  Ac- 
tion by  Continuance  of  Principal  Obliga- 
tion.^i 

An  action  to  foreclose  a  mortgage  executed 
in  this  state  and  given  to  secure  an  obligation 

20  Absence  of  Principal  Obligor  from  State.— When 
property  is  mortgaged  for  accommodation,  and  the 
principal  obligor  is  absent  from  the  state,  the  time 
is  not   enlarged:   Low  v.   Allen,   26   Cal.   141. 

-1  Distinction  Between  Continuance  and  Renewal. 
''When  a  debtor  makes  a  new  promise  before  an 
action  is  barred  upon  the  original  contract  .... 
the  old  promise  is  not  merged  into  the  new;  he 
merely  continues  his  original  liability  for  a  longer 
term.  In  other  words,  he  merely  waives  so  much 
of  the  period  of  limitations  as  has  run  in  his  favor. 
But  when  his  legal  obligation  is  at  an  end  by  reason 
of  the  lapse  of  the  full  period  of  limitation  ....  a 
new  promise  creates  a  new  obligation,  and  is  itself 
the  basis  of  the  action.  A  clear  recognition  of  this 
distinction  reconciles  all  seeming  conflict  in  the  de- 
cisions of  this  courf :  Southern  Pacific  Co.  v. 
Prosser,  122  Cal.  413,  417,  55  Pac.  145;  Daniels  v. 
Johnson,  129  Cal.  415,  417,  79  Am.  St.  Rep.  123,  61 
•Pac.  1107;  Concannon  v.  Smith,  134  Cal.  14,  17,  66 
Pac.  40;  Wilcox  v.  Gregory,  135  Cal.  217,  220,  221, 
67  Pac.  139.  See,  also,  Rodgers  v.  Byers,  127  Cal. 
528,  530,  60  Pac.  42. 

In  German  Sav.  etc.  Soc.  v.  Hutchinson,  68  Cv\. 
52,  8  Pac.  627,  where  shortly  after  the  maturity  of 
a  note  secured  by  mortgage  the  parties  entered  into 
an  agreement  postponing  the  time  of  maturity  of 
the  note,  the  court  said  that  "this  agreement  was 
a  renewal  of  the  note  and  mortgage,  within  section 
2922   of  the   Civil  Code,''  but  plainly  it  was  merely 


§    394  BY    JUDICIAL    PROCEEDING.  633 

which  has  been  continued  by  a  new  promise  in 
writing   to   pay   the   secured   obligation,^^   made 

an  extension  of  the  maturity  of  the  obligation,  or 
at   most    a   continuance,   but   not   a   renewal   at   all. 

Illustration  of  Contmitance.— Where  a  mortgagor 
acknowledges  the  secured  obligation  after  the  trans- 
fer *of  the  property  to  a  third  party,  and  thereafter, 
before  the  statutory  time  has  run  upon  such  ac- 
knowledgment, the  property  is  retransferred  to  him, 
the  mortgage  may  be  enforced  against  him:  Lent  v. 
Morrill,  25  Cal.  492,  500. 

22  Obligation  may  be  Continued  by  New  Promise 
in  Writing. 

See  Code  of  Civil  Procedure,  section  360  (Stats, 
1850,  p.  343,  c.  127,  sec.  31),  which  provides:  *'No 
acknowledgment  or  promise  is  sufficient  evidence  of 
a  new  or  continuing  contract,  by  which  to  take  the 
case  out  of  this  title,  unless  the  same  is  contained 
in  some  writing,  signed  by  the  party  to  be  charged 
thereby. ' ' 

Object  of  this  Enactment.— **  The  object  of  our  stat- 
ute was  to  change  a  rule  of  evidence,  and  now  to 
require  written,  where  verbal  testimony  was  for- 
merly sufficient.  The  matter  to  be  proved  is  the 
acknowledgment  or  promise,  and  the  only  competent 
evidence  is  a  writing  signed  by  the  party  to  be 
charged.  But  whether  the  acknowledgment  or  prom- 
ise, when  proved,  be  sufficient  to  take  the  case  out 
of  the  operation  of  the  act,  is  left  to  depend  upon 
reason  and  authority,  as  it  did  before'^  (p.  91). 
"The  object  of  the  statute  was  to  avoid  the  mischief 
arising  from  parol  testimony  to  prove  either  an  ex- 
press promise,  or  facts  from  which  a  promise  would 
follow  as  a  legal  and  logical  resulf  (p.  92):  ±'air- 
banks  v.  Dawson,  9  Cal.  89,  92. 

''This  section  does  not  purport  to  make  any  change 
in  the  effect  of  acknowledgments  or  promises,  but  to 
rJter  the  mode  of  their  proof;  and  is  directed,  prin- 
cipally at  least,  against  the  admission  of  oral  acknowl- 
edgments   and    promises Its    chief    object    was 


654  ENFORCEMENT    OF    MORTGAGE.  §    394 

to  require  that  to  be  evidenced  by  writing  which  pre- 
viously consisted  of  verbal  declarations  only'':  Bar- 
ron V.  Kennedy,  17   Cal.  474,  477. 

Its  purpose  is  to  establish  a  rule,  not  with  respect 
to  the  character  of  the  promise  or  acknowledgment 
from  which  a  promise  may  be  inferred,  but  with  re- 
spect to  the  kind  of  evidence,  by  which  the  promise  or 
acknowledgment  may  be  proved:  Biddel  v.  Brizzolara, 
56  Cal.  374,  380;  Tuggel  v.  Minor,  76  Cal.  96,  101,  18 
Pac.  131. 

**The  statute  does  not  prescribe  any  form  in  which 

the  acknowledgment  or  promise  shall  be  made 

The  imperative  thing  is,  that  it  shall  be  *  contained 
in  some  writing,  signed  by  the  party  to  be  charged 
thereby'  ":  Concannon  v.  Smith,  134  Cal.  14,  20,  66 
Pac.  40. 

A  writing  signed  by  the  party  to  be  charged  is  in- 
dispensable. Thus,  a  payment  on  account  is  insuifi- 
cient  to  establish  a  promise  to  pay:  Fairbanks  v.  Daw- 
son, 9  Cal.  89;  Pena  v.  Vance,  21  Cal.  142;  Heinlein 
V.  Castro,  22  Cal.  100. 

What  Amounts  to  a  Promise  to  Pay.— ^*  To  take  a 
case  out  of  the  operation  of  the  statute,  there  must 
have  been  either  an  express  promise  to  pay,  or  an 
admission  of  the  debt  in  terms  so  distinct  as  that  a 
promise  might  reasonably  be  inferred  therefrom.  If, 
however,  the  admission  was  accompanied  by  qualify- 
ing words,  then  it  would  not  amount  to  a  promise": 
Fairbanks  v.  Dawson,  9  Cal.  89,  91. 

**If  the  debtor  simply  acknowledges  an  old  debt, 
the  law  implies  from  that  simple  acknowledgment  a 
promise  to  pay  it,  for  which  promise  the  old  debt  is 
a  sufficient  consideration.  But  if  the  debtor  promises 
to  pay  the  debt  when  he  is  able,  or  by  installments, 
etc.,  the  creditor  can  claim  nothing,  more  than  the 
promise  gives  him":  Curtis  v.  City  of  Sacramento, 
70  Cal.  412,  414,  11  Pac.  748. 

In  order  to  amount  to  a  promise  to  pay,  an  acknowJ- 
edgment  must  be  a  distinct,  direct,  unqualified  admis- 
sion of  an  existing  debt,  which  the  party  is  willing  to 
pay:  McCormick  v.  Brown,  36  Cal.  180,  185,  95  Am. 


§    394  BY   JUDICIAL   PROCEEDING.  635 

Dec.  170;  Biddle  v.  Brizzolara,  '56  Cal.  374,  382; 
Pierce  v.  Merrill,  128  Cal.  473,  476,  79  Am.  St.  Eep. 
63,  61  Pac.  67. 

^'The  ^promise'  referred  to  [in  Code  of  Civil  Pro- 
cedure, section  360]  is  not  necessarily  a  promise  to 
pay  the  debt.  A  promise  not  to  plead  the  statute 
[of  limitations]  comes  equally  within  the  language 
used,  and  ....  will  equally  operate  to  prevent  the 
bar  of  the  statute'':  State  Loan  etc.  Co.  v.  Cochran, 
130  Cal.  245,  251,  62  Pac.  466,  600. 

'^Any  acknowledgment  of  the  mortgage  was  an  ac- 
knowledgment of  the  indebtedness  secured  thereby. 
It  was  not  necessary  that  -respondents  [the  persona 
to  be  charged  with  the  acknowledgment]  should  prom- 
ise to  pay  the  indebtedness  in  order  to  establish  a 
new  date  for  the  statute  to  commence  running  as  to 
the  mortgage.  All  that  was  required  was  a  plain  and 
distinct  acknowledgment  in  writing  of  the  existence 
of  the  mortgage'':  Foster  v.  Bowles  (Cal.,  Jan.  19, 
1903),  71  Pac.  494. 

No  particular  form  of  writing  is  necessary.  ^*The 
expression,  ^contained  in  some  writing/  clearly  in- 
dicates that  it  is  not  essential  that  the  acknowledg- 
ment or  promise  would  be  formal,  such  as  that  *I 
hereby  acknowledge,'  or  ^hereby  promise.'  It  is  suf- 
ficient if  it  shows  that  the  writer  regards  or  treats 
the  indebtedness  as  subsisting,  and  from  this  acknowl- 
edgment the  law  implies  a  promise  to  pay,  and  for 
which  promise  the  old  debt  is  a  sufficient  considera- 
tion": Concannon  v.  Smith,  134  Cal.  14,  20,  66  Pac 
40. 

But  an  acknowledgment  must  be  distinguished  from 
a  mere  conditional  promise  to  pay.  ^'In  the  case  of 
a  new  promise,  made  while  the  original  obligation 
is  legally  enforceable,  if  that  promise  be  not  a  gen- 
eral promise  to  pay  the  obligation  according  to  its 
tenor  and  terms,  but  is  a  promise  coupled  with  any 
condition,  and  an  action  is  brought  after  the  statute 
of  limitations  would  have  barred  the  remedy  upon  the 
original  obligation,  the  action  of  plaintiff  is  then  upon 
the  substituted  conditional  promise  and  not  upon  the 
original     obligation.     Such      substituted,     conditional 


G36  ENFORCEMENT  OF  MORTGAGE.         §  394 

within  four  years  after  its  maturity  and  signed^^ 
by  every  party  to  be  charged  thereby ,^^  must  be 
commenced  within  four  years  after  such  contin- 

promise  must  be  pleaded,  the  breach  of  it  averred, 
and  the  recovery  had  after  such  showing'^:  Rodgers 
V.  Byers,  127  Cal.  528,  530,  60  Pac.  42;  Curtis  v.  City 
of  Sacramento,  70  Cal.  412,  414,  11  Pac.  748. 

In  State  Loan  etc.  Co.  v.  Cochian,  130  Cal.  245,  251, 
62  Pac.  466,  600,  it  is  said  that  there  are  other  ways 
of  avoiding  the  operation  of.  the  statute  of  limitations 
besides  acknowledgments  and  promises.  That  is  true. 
The  maturity  of  the  obligation  may  be  postponed, 
and  thus  the  time  within  which  an  action  can  be 
brought  placed  at  a  later  time,  as  was  done  in  Smith 
v.  Lawrence,  38  Cal.  24,  28,  29,  99  Am.  Dec.  344.  But 
there  is  no  other  way  of  establishing  a  new  ptromise 
and  thereby  continuing  the  obligation  except  by  com- 
plying with  the  formalities  set  forth  in  the  Code  of 
Civil  Procedure,  section  360. 

Writings  Gonsfitutin(j  Acknowledgments.— A  jjayment 
of  interest  by  a  check,  accompanied  by  a  letter  stating 
that  the  payment  was  on  account  of  the  interest  due 
on  the  indebtedness,  is  sufficient:  Barron  v.  Kennedy, 
17  Cal.  474,  477. 

Where  mortgaged  property  had  been  conveyed  sub- 
ject to  the  mortgage  by  the  mortgagor  to  a  second 
party,  who  in  turn  had  conveyed  a  part  thereof  to  a 
third  party,  who  had  executed  a  trust  deed  upon  it, 
a  writing  subsequently  given  by  the  trustee  to  the 
second  party,  recitmg  that,  whereas  the  second  party 
would  thereafter  advance  moneys  for  the  payment  of 
the  interest  accrued,  or  thereafter  to  accrue,  upon  the 
said  mortgage,  and  for  other  purposes,  the  trustee 
would  pay  to  the  second  party  the  entire  income  of 
the  property  so  far  as  necessary  to  pay  such  advances, 
clearly  acknowledges  the  existence  of  the  mortgage; 
Foster  v.  Bowles  (Cal.,  January  19,  1903),  71  Pac.  491. 

23  ** Signed,**  not  Subscribed.— The  writing  is  not 
required  to  be  subscribed  by  the  party  to  be  charged, 
but  merely  to  be  signed.     So  an  acknowledgment  in 


§    304  BY    JUDICIAL    PROCEEDING.  637 

nance.  A  new  promise  so  made  by  a  transferee 
of  mortgaged  property  to  the  transferor  after 
the  maturity  of  the  secured  obligation  may  be 
availed  of  by  the  mortgagee  so  long  as  binding 
as  between  the  transferor  and  transferee,^^  yet 

the  handwriting  of  the  party  to  be  charged  and  con- 
taining his  name  is  sufficient:  Auzerais  v.  Naglee,  74 
Cal.  60,  69,  15  Pac.  371,  per  Searles,  C.  J.,  McFarland, 
Sharpstein  and  Paterson,  JJ.;  Temple  and  Thornton, 
J  J.,  dissenting;  Concannon  v.  Smith,  134  Cal.  14,  20, 
21,  66  Pac.  40. 

'  24  Signed  by  Every  Party  to  be  Charged.— The 
following  persons  must  sign  the  acknowledgment 
to    make    it   valid: 

Where  property  is  mortgaged  for  accommodation, 
the  owner  of  the  property  (as  distinguished  from 
the  person  personally  liable) :  Low  v  Allen,  26  Cal. 
141. 

Where  a  subsequent  mortgage  has  been  executed 
before  the  continuance,  by  the  subsequent  mort- 
gagee: California  Bank  v.  Brooks,  126  Cal.  198,  59 
Pac.  302.  See,  also,  Lent  v.  Shear,  26  Cal.  361,  369- 
371. 

Where  a  homestead  is  declared  on  property  pre- 
viously mortgaged,  the  wife  of  the  mortgagor: 
Barber  v.  Babel,   36   Cal.   11,   20,  21. 

Where  the  property  is  charged  with  a  subsequent 
encumbrance,  the  subsequent  encumbrancer:  Watt 
V.  Wright,   6Q  Cal.  202,  206,  5  Pac.  91. 

But  where  the  mortgage  has  been  continued  by 
the  acknowledgment  of  the  principal  obligation,  a 
subsequent  transferee  of  the  mortgaged  property 
without  notice  of  the  continuance  is  nevertheless 
bound  by  the  mortgage  during  the  period  running  from 
the  acknowledgment:  Lent  v.  Morrill,  25  Cal.  492,  501; 
Newhall  v.  Hatch,  134  Cal.  269,  275,  66  Pac.  266.  Com- 
pare, however,  section  276,  above. 

25  New    Promise    by    Transferee    of    Property    to 


638  ENFORCEMENT    OF    MORTGAGE.  §    394 

is  not  a  contract  between  the  transferee  and 
mortgagee,  but  may  be  rescinded  by  the  trans- 
feror and  transferee  at  their  pleasure,  and  can- 
not then  be  availed  of  by  the  mortgagee.^^ 

395.     Enlargement  of  Time  of  Commencing  Ac- 
tion by  Renewal  of  Security.^'' 
An  action  to  foreclose  a  mortgage  executed  in 
this  state  given  to  secure  an  obligation  which  is 

Mortgagor  Available  to  Mortgagee.— Thus  where  tho 
purchaser  of  mortgaged  property  acknowledges  or 
promises  to  •  pay  the  secured  obligation  (it  having 
already  matured)  by  recital  in  the  deed  under 
which  he  obtained  the  property,  the  mortgage  is  en- 
forceable for  four  years  thereafter:  Daniels  v. 
Johnson,  129  Cal.  415,  79  Am.  St.  Eep.  123,  61  Pac. 
1107. 

2G  Such  Promise  May  be  Rescinded  by  Agreement 
of  Transferee  and  Mortgagor.— The  y-romise  of  the 
purchaser  to  pay  the  mortgage  obligation  is  a 
promise  for  the  benefit  of  the  mortgagor,  simply 
for  his  indemnity,  and  is  not  to  be  regarded 
as  a  contract  with  the  mortgagee  for  his  benefit. 
Thus  the  parties  to  the  contract  may  rescind  and 
extinguish  it  at  their  pleasure.  The  mortgagee, 
however,  can  only  be  entitled  to  be  subrogated  to 
an  existing  remedy  of  his  debtor,  the  mortgagor, 
upon  a  legal  existing  stipulation;  so  that,  when  the 
promise  has  been  extinguished  (as  by  a  reconvey- 
ance of  the  mortgaged  property  from  the  purchaser 
to  the  mortgagor-vendor),  it  cannot  be  used  by  the 
mortgagee  as  an  acknowledgment  to  take  the  mat- 
ter out  of  the  statute  of  limitations:  Biddel  v.  Briz- 
zolara,   64  Cal.  354,  30  Pac.  609. 

27  Renewal.— When  the  secured  obligation  has 
once  been  barred,  the  mortgage  is  extinguished  (sec- 
tions 84  and  375,  above),  and  can  only  be  renewed  by 
a   writing   executed  with   the   formalities   required  in 


§  395  BY  Judicial  proceeding.  639 

barred  by  lapse  of  time,  which  mortgage  has 
been  renewed  by  a  writing  executed  with  the  for- 
malities required  in  case  of  the  execution  of  a 

case  of  the  execution  of  a  mortgage.  Where  the 
new  promise  is  made  after  the  bar  of  the  statute 
has  accrued,  the  action  is  based  on  the  new  promise: 
Wells  V.  Harter,  56  Cal.  342;  London  and  San  Fran- 
cisco Bank  v.  Bandmann,  120  Cal.  220,  223,  224,  65 
Am.  St.  Eep.  179,  52  Pac.  583;  Weinberger  v.  Weid- 
man,  134  Cal.  599,  600,  66  Pac.  869.  See,  also, 
Southern  Pacific  Co.  v.  Pressor,  122  Cal.  413,  417, 
418,  55  Pac.  145;  Conway  v.  Supreme  Council  Cath- 
olic Kiiights,  137  Cal.  384,  70  Pac.  222,  224. 

Historical.— Before  the  adoption  of  the  code,  a 
mortgage  could  be  renewed  by  the  acknowledgment 
of  the  owner  of  the  property  to  be  charged  without 
the  formalities  required  in  the  execution  of  the 
mortgage,  the  same  as  it  can  now  be  continued: 
Lord  V.  Morris,  18  Cal.  482,  490;  McCarthy  v.  White, 
21  Cal.  495,  82  Am.  Dec.  754.  See,  also,  Heinlein 
V.    Castro,   22    Cal.    100,   102. 

Rationale  of  Renewal.— *  ^  The  moral  obligation 
growing  out  of  the  original  liability  is  suffi- 
cient to  sustain  the  new  promise  to  pay  ....  the 
debt  barred  by  the  statute;  and  doubtless  this 
is  the  more  consistent  theory  upon  which  the 
new  promise  can  be  sustained,  ....  and  this  does 
away  with  the  solecism  of  a  supposed  subsisting  debt 
without  legal  liability;  for  the  idea  that  the  debt 
still  subsists  can  only  mean  that  the  moral  obligation 
still  continues;  for,  in  law,  the  debt  is  not  recog- 
nized as  subsisting,  except  as  a  valid  consideratioa 
for  a  new  promise,  and  the  moral  obligation  is  suffi- 
cient for  that,   and  is  universally  recognized   as  the 

ground  upon  which  the  new  promise  is  sustained 

The  moral  obligation  to  pay  the  debt  does  not  de- 
pend at  all  upon  the  question  whether  we  consider 
the  debt  itself  barred  by  the  statute,  or  only  the  rem- 
edy, but  upon  the  fact  that  the  debtor  has  received 
and   the    creditor   parted   with   the    consideration    for 


640  ENFORCEMENT    OF    MORTGAGE.  §    395 

mortgage^^  and  signed  by  every  party  to  he 
charged  therehy^^^  must  be  commenced  within 
four  years  after  such  renewal. 

396.  Expiration  of  Time  for  Commencing  Ac- 
tion is  Affirmative  Defense. 
That  the  time  within  which  an  action  can  be 
commenced  has  expired  is  a  plea  in  bar  of  such 
action  which  must  be  asserted^^  by  the  mort- 
gagor or  any  person  deriving  any  right  in  respect 
to  the  encumbered  property  from  him,^*  or 
otherwise  is  deemed  to  be  waived. 

the  debt,  that  it  has  never  been  in  fact  paid,  and  that 
in  foro  conscientiae  it  ought  to  be  paid,  notwithstand- 
ing the  bar'':  Chabot  v.  Tucker,  39  Cal.  434,  437,  438. 

28  Formalities  of  Execution  of  Mortgage:  See  sec- 
tion 242,  above. 

29  Signed  by  Every  Party  to  be  Charged:  See  sec- 
tion 394,  note  24,  and  section  8,  above. 

30  Must  be  Asserted,  or  is  Deemed  to  be  Waived: 
Grattan  v.  Wiggins,  23  Cal.  16,  25. 

31  Persons  Who  may  Assert  This  Defense. 

Junior  mortgagees:  Lord  v.  Morris,  18  Cal.  482,  491; 
Lent  V.  Shear,  26  Cal.  361,  365,  366;  California  Bank 
V.  Brooks,  126  Cal.  198,  200,  59  Pac.  302. 

Bona  fide  purchasers  for  value  of  the  mortgaged 
property:  McCarthy  v.  White,  21  Cal.  495,  82  Am.  Dec. 
754;  Grattan  v.  Wiggins,  23  Cal.  16,  25;  Jeffers  v. 
Cook,  58  Cal.  147,  151. 

Purchasers  at  foreclosure  sale  of  subordinate  encum- 
brances may  intervene  and  assert  it:  Coster  v.  Brown, 
23  Cal.  142. 

The  wife  of  a  mortgagor  who  after  the  execution 
of  the  mortgage  declared  a  homestead  upon  the  mort- 
gaged property:  Hefner  v.  Urton,  71  Cal.  479,  12  Pac. 
486;  Watts  v.  Gallagher,  97  Cal.  47,  51,  31  Pac.  626. 


§    397  BY   JUDICIAL   PROCEEDING.  641 

397.     Receiver  may  be  Appointed  when  Secudty 
Precarious  or  Insufficient.^^ 
A  receiver  may  be  appointed  by  the  court  or 
judge  thereof  in  which  a  foreclosure  action  is 
pending  when  it  appears 

(1)  that  the  mortgaged  property  is  in  danger  oi 
being  lost,  removed,  or  materially  injured,  or 

(2)  that  the  condition  of  the  mortgage-has  not 
been  performed,  that  the  rents  and  profits  of 
the  property  are  subject  to  the  mortgage,  and 
that  the  property  is  probably  insufficient  to  dis- 
charge the  mortgage  obligation.^^ 

32  See  Code  of  Civil  Procedure,  section  564,  subd.  2. 

The  court  has  no  power  to  appoint  a  receiver  ex- 
cept as  provided  for  by  statute.  The  parties  cannot 
confer  such  jurisdiction  by  stipulation:  Scott  v. 
Ilotchkiss,  315  Cal.  89,  94,  47  Pac.  45;  Baker  v.  Yar- 
ney,  129  Cal.  564,  79  Am.  St.  Eep.  140,  62  Pac.  100. 

33  The  Code  reads:  ^'That  the  condition  of  the 
mortgage  has  not  been  performed,  and  that  the  prop- 
erty is  probably  insufficient  to  discharge  the  mortgage 
debt.''  (It  was  applied  in  Societe  Francaise  v.  Sel- 
heimer,  57  Cal.  623,  and  Montgomery  v.  Merrill,  65 
Cal.  432,  4  Pac.  414.)  But  in  Locke  v.  Klunker,  123 
Cal.  231,  235-238,  55  Pac.  993,  the  court  pointed  out 
that  although  the  mortgaged  property  was  probably 
insufficient  to  satisfy  the  secured  obligation,  in  the 
absence  of  a  provision  in  the  mortgage  by  which  it 
was  to  include  the  rents  and  profits,  the  court  was  not 
authorized  to  appoint  a  receiver.  And  in  other  cases 
it  is  held  that  the  receiver  could  not  be  appointed  in 
the  absence  of  such  an  agreement,  as  the  estate  re- 
mains in  the  mortgagor  in  his  character  of  owner, 
and  must  continue  to  remain  so,  with  all  the  incidents 
of  ownership,  until  by  a  foreclosure  and  sale  a  new 

Liens — 41 


642  ENFORCEMENT    OF    MORTGAGE.  §    398 

398.     Attorney's   Fee    When    Allov/able    to    be 
Fixed  By  Court.^'* 
Where  a  mortgage  secures  an  attorney's  fee 
to  be  paid  the  mortgagee  in  case  of  foreclosure, 

owner  is  substituted:  Guy  v.  Tde,  6  Cal.  99,  65  Am. 
Dec.  490;  San  Jose  etc.  Bank  of  Sav.  v.  Bank  of  Ma- 
dera, 12  J  Cal.  543,  54  Pac.  85;  Baker  v.  Varney,  129 
Cal.  564,  79  Am.  St.  Rep.  140,  62  Pac.  100. 

Likewise,  during  the  period  of  redemption,  although 
the  mortgagor  is  insolvent,  the  purchaser  of  land  has 
no  right  to  have  a  receiver  of  the  rents  and  profits 
of  the  land  appointed,  but  is  restricted  to  an  action 
to  recover  them:  West  v.  Conant,  100  Cal.  231,  34  Pac. 
705.  See  sections  167  and  324,  and  285  through  287. 
Contra,   Shores  v.   Scott  River   Co.,   21   Cal.   135. 

In  Bank  of  Woodland  v.  Stephens,  137  Cal.  458,  70 
Pac.  293,  where  a  receiver  had  been  appointed  of  the 
rents,  income  and  profits  of  mortgaged  land  during 
the  pendency  of  the  foreclosure  action,  the  question 
of  the  regularity  of  the  appointment  was  not  raised. 
34  Stats.  1873-74,  p.  707,  c.  474,  effective  March  27, 
1874,  entitled  ''An  act  to  abolish  attorneys'  fees  and 
other  charges  in  foreclosure  suits,''  provides:  ''In  all 
cases  of  foreclosure  of  mortgages  the  attorneys'  fees 
shall  be  fixed  by  the  court  in  which  the  proceedings  of 
foreclosure  are  had,  any  stipulation  in  said  mortgage  to 
the  contrary  notwithstanding."  In  view  of  its  title, 
this  act  is  construed  to  refer  to  attorneys'  fees  pro- 
vided for  in  the  mortgage,  and  to  have  no  applica- 
tion where  none  are  provided.  The  act  merely  gives 
the  court  power  to  fix  the  fee  at  any  sum  not  exceed- 
ing the  amount  stipulated  for  by  the  mortgagee;  it 
cannot  allow  a  fee  greater  than  that  amount:  Monroe 
V.  Fohl,  72  Cal.  568,  14  Pac.  514;  Hewitt  v.  Dean,  91 
Cal.  5,  14,  27  Pac.  423;  Hotaling  v.  Monteith,  128  Cal. 
556,  61  Pac.  95. 

Compare  Hildreth  v.  Williams  (Cal.)   33  Pac.  1113. 
See,  also,  Alden  v.  Pryal,  60  Cal.  215,  220,  and  Bone- 
stell   V.  Bowie,  128  Cal.  511,  516,  61  Pac.  78,  cited  sec- 
tion  260,   note   42,   latter   part,   above. 


§    398  BY   JUDICIAL   PROCEEDING.  643 

the  court  on  rendering  judgment  may^  at  its  dis- 
cretion, allow  the  mortgagee  a  reasonahle.  sum 
not  exceeding  that  agreed  upon  by  the  parties^'^ 
to  reimburse  him  for  any  special  expense  actu- 

This  statute  was  codified  by  the  amendment  to  Code 
of  Civil  Procedure,  section  726,  effective  February  26, 
1901,  as  follows:  ^  ^ In  such  action  the  court  may,  by  its 
judgment,  direct  the  sale  of  the  encumbered  property 
(or  so  much  thereof  as  may  be  necessary),  and  the 
application  of  the  proceeds  of  the  sale  to  the  payment 
of  the  costs  of  court,  and  the  expenses  of  the  sale,  and 
the  amount  due  plaintiff,  including,  where  the  mort- 
gage provides  for  the  payment  of  attorneys'  fees,  such 
sum  for  such  fees  as  the  court  shall  find  reasonable, 
not  exceeding  the  amount  named  in  the  mortgage. ' ' 

Attorney's  fees  stipulated  to  be  paid  are  not  the 
cause  of  action,  but,  like  the  costs,  a  mere  incident  to 
it:  Carriere  v.  Minturn,  5  Cal.  432;  Monroe  v.  Fohl, 
72  Cal.  568,  571,  14  Pac.  514;  White  v.  Allatt,  87  CaL 
245,  248,  25  Pac.  420. 

See  section  604  and  note,  below. 

35  The  fee  is  to  be  fixed  by  the  court  at  its  dis- 
cretion, not  exceeding  the  stipulated  sum:  Carriere  v. 
Minturn,  5  Cal.  432;  Monroe  v.  Fohl,  72  Cal.  568,  571, 
14  Pac.  514.  Compare  Gronfier  v.  Minturn,  5  Cal.  492; 
Moran  v.  Gardner,  82  Cal.  96,  101,  23  Pac.  6;  Wood- 
ward V.  Brown,  119  Cal.  283,  309,  63  Am.  St.  Eep.  108, 
51  Pac.  2. 

So  a  stipulation  of  the  parties  as  to  what  is  a  rea- 
sonable sum  is  not  controlling:  Grangers'  Business 
Assn.  V.  Clark,  84  Cal.  201,  206,  23  Pac.  1081. 

Where  an  attorney  brought  an  action  and  tried  it, 
no  further  evidence  of  employment  is  necessary. 
''The  duty  of  fixing  the  amount  of  an  attorney's  com- 
pensation is  cast  upon  the  court,  and  nO  evidence  of 
the  value  of  services  is  necessary":  Woodward  v. 
Brown,  119  Cal.  283,  309,  63  Am.  St.  Eep.  108,  51  Pac. 
2:  Edwards  v.  Grand,  121  Cal.  254,  257,  53  Pac.  796; 
Security  etc.  Co.  v.  Mattein,  131  Cal.  326,  333,  63  Pac, 


644  ENFORCEMENT  OF  MORTGAGE.         §  398 

ally  ineurrecF^  for  an  attorney's  services  in  the 
foreclosure  action.  Where  the  sum  fixed  by  the 
trial  court  is  unreasonable,  it  will  be  corrected 

482;  Hellier  v.  Bussell,  136  Cal.  143,  68  Pac.  581;  Mc- 
Namara  v.  Oakland  Bldg.  etc.  Assn.,  131  Cal.  336,  347, 
63  Pac.  670;  Montgomery  v.  Merrill,  62  Cal.  385,  393. 

The  fact  that  a  case  was  commenced  in  and  tried 
before  the  court  rendering  the  judgment  afforded  suf- 
ficient evidence  of  the  services  of  an  attorney,  and 
the  court  had  the  discretion  to  fix  the  fee  without  call- 
ing for  the  opinion  of  witnesses  to  assist  it:  Hotaling 
V.  Monteith,  128  Cal.  556,  558,  61  Pac.  95. 

A  verdict  of  the  jury  is  merely  advisory:  Stockton 
Sav.  etc.  Soc.  v.  Donnelly,  60  Cal.  481,  494. 

Neither  an  averment  nor  a  finding  of  fact  as  to 
what  is  a  reasonable  fee  is  necessary:  Carriere  v.  Min- 
turn,  5  Cal.  435;  First  Nat.  Bank  of  Eiverside  v.  Holt, 
87  Cal.  158,  161,  25  Pac.  272;  White  v.  Allatt,  87  Cal. 
245,  248,  25  Pac.  420;  McNamara  v.  Oakland  Bldg. 
etc.  Assn.,  131  Cal.  336,  347,  63  Pac.  670.  See,  also. 
Orange  Growers^  Bank  v.  Duncan,  133  Cal.  254,  257, 
65  Pac.  469. 

Where  an  averment  in  a  complaint  that  a  certain 
sum,  not  exceeding  the  amount  stipulated  for,  is  a 
reasonable  sum  is  supported  by  the  evidence  at  the 
trial,  and  the  answer  denies  its  reasonableness,  but 
no  evidence  is  offered  to  support  the  denial,  the  court 
is  justified  in  allowing  the  sum  claimed:  Avery  v. 
Maude,  112  Cal.  565,  44  Pac.  1020.  See,  also,  Ogden 
V.  Packard  (Cal.),  35  Pac.  642,  where  the  appellate 
court  held  that  it  could  not  from  the  judgment-roll 
alone  determine  the  fee   allowed  to  be  unreasonable. 

36  Merely  Fee  Actually  Incurred  to  be  Allowed.— 
So  where  the  action  is  brought  and  prosecuted  by  the 
plaintiff  personally,  a  counsel  fee  cannot  be  allowed: 
Patterson  v.  Donner,  48  Cal.  369,  380;  Bank  of  Wood- 
land V.  Treadwell,  55  Cal.  379. 

^^Nor  is  such  allowance  in  the  nature  of  a  penalty, 
but  only  a  provision  against  an  actual  expense  to  be 


§    398  BY   JUDICIAL   PROCEEDING.  645 

by  the  supreme  court  on  appeal.^''  Where  judg- 
ment is  taken  by  default,  an  attorney's  fee  can- 
not, in  the  absence  of  a  special  prayer  therefor, 
be  allowed.^® 

incurred  by  the  creditor  on  account  of  the  failure 
of  the  debtor  to  fulfill  his  contract'':  Carriere  v.'Min- 
turn,  5  Cal.  435. 

A  mortgagee  *' cannot  be  allowed  any  sum  for  coun- 
sel fees  for  services  rendered  or  to  be  rendered  to 
it  [in  a  foreclosure  action],  unless  that  attorney  be 
entitled  to  recover  it  to  himself.  The  object  of  the 
law  allowing  counsel  fees  is  not  to  afford  an  oppor- 
tunity, under  cover  of  the  name,  for  a  speculation 
on  the  part  of  the  creditor,  but  to  reimburse  him, 
in  a  proper  amount,  for  a  sum  which  he  pays,  or  be^ 
comes  liable  to  pay,  or  to  relieve  him  of  the  burden 
of  paving  counsel  fees'':  Bank  of  Woodland  v.  Tread- 
well,  "^55  Cal.  379. 

So  where  a  corporation  mortgagee  employed  an 
attorney  at  a  fixed  salary  to  attend  to  its  legal  busi- 
ness, and  it  appears  that  any  fee  allowed  would  be- 
long to  the  mortgagee,  no  fee  is  allowable:  Bank  of 
Woodland  v.  Treadwell,  55  Cal.  379. 

The  signature  of  an  attorney  to  the  complaint  in 
foreclosure,  however,  authorizes  the  presumption  that 
he  was  employed  by  the  plaintiff  to  prosecute  the 
action  and  that  he  had  become  liable  to  pay  him  a 
reasonable  fee  for  his  services:  Avery  v.  Maude, 
112  Cal.  565,  44  Pac.  1020;  Woodward  v.  Brown,  119 
Cal.  283,  309,  63  Am.  St.  Eep.  108,  51  Pac.  2. 

37  Grangers'  Business  Assn.  v.  Clark,  84  Cal.  201, 
207,  23  Pac.  1081. 

38  Judgment  by  Default.— Where  judgment  in  a 
foreclosure  action  is  taken  by  default,  and  there  is 
no  special  prayer  for  attorney's  fees,  but  merely  for 
'^ costs  of  suit,"  none  are  allowable:  Brooks  v.  For- 
ington,  117  Cal.  219,  48  Pac.  1083. 


646  ENFORCEMENT    OF    MORTGAGE.  §    399 

Subdivision     3,     Enforcement     hy     Exercise     of 
Power  of  Sale.^^ 

399.  Power  of  Sale  cannot  be  Exercised  When 
Secured  Obligation  Uncertain  or  Disputed, 
A  sale  under  a  power  of  sale  must  not  be  made 
when  the  amount  of  the  secured  obligation  is  un- 
certain or  in  dispute;  if  made,  it  may  be  set 
aside,  or  if  attempted,  it  may  be  enjoined  until 
the  amount  due  has  been  ascertained  by  judicial 
proceeding  and  may  thereafter  be  controlled  by 
the  court.^ 

39  This  subdivision  applies  to  sales  under  power 
contained  in  deeds  of  trust  in  the  nature  of  mort- 
gages as  well  as  to  sales  under  powers  contained 
in  mortgages.  In  some  California  cases  (for  instance, 
Copsey  V.  Sacramento  Bank,  133  Cal.  659,  661,  85 
Am.  St.  Eep.  238,  66  Pac.  7)  the  law  as  regards  sales 
under  trust  deeds  and  mortgages  with  powers  of 
sale    are    treated    as    indistinguishable. 

*' Sales  under  powers  in  deeds  of  trust  and  mort- 
gages are  a  harsh  mode  of  foreclosing  the  rights  of 
the  mortgagor.  They  are  scrutinized  by  courts  with 
great  care,  and  will  not  be  sustained  unless  conducted 
with  all  fairness,  regularity,  and  scrupulous  integrity. 
Upon  very  slight  proof  of  fraud  or  unfair  conduct, 
or  any  departure  from  the  terms  of  the  power,  they 
win  be  set  aside'':  More  v.  Calkins,  85  Cal.  177,  188, 
24  Pac.   729. 

40  More  v.^  Calkins,  85  Cal.  177,-188,  24  Pac.   729. 

Where  a  mortgagee  or  trustee  advertised  the  en- 
cumbered property  for  sale,  but  the  mortgagor  or 
trustor  filed  a  complaint  setting  forth  that  a  consid- 
erable portion  of  the  secured  demand  is  unliquidated 
and  uncertain,  that  ten  thousand  dollars  of  the  liqui- 
dated  portion   is    disputed   on   the   ground   that   it   is 


§  400  BY  POWER  OF  SALE.  647 

400.  Sale  When  Exaggerated  Amount  Claimed 
to  be  Due  Generally  Valid. 
A  sale  under  a  power  of  sale,  where  the  amount 
claimed  to  be  due  is  greater  than  the  true 
amount  due,  is  valid  in  the  absence  of  proof  oi 
fraud,  or  that  the  property  or  the  rights  of  the 
mortgagor  or  trustor  were  injuriously  aifected, 
or  that  bidders  were  deterred  from  attending  the 
sale.'*^     The  purchaser  is  not  required  to  insti- 

without  consideration,  and  that  the  value  of  the 
portion  of  the  property  offered  for  sale  greatly  ex- 
ceeds the  amount  of  the  just  and  lawful  demand 
against  the  mortgagor,  the  court  might  properly  (1) 
order  an  accounting,  (2)  control  the  mode  of  sale  as 
to  the  notice  to  be  given,  the  limitation  of  the  amount 
and  portions  of  the  property  to  be  sold  and  whether 
or  not  it  should  be  sold  in  parcels,  (3)  appoint  its 
own  commissioner  to  conduct  the  sale  if  deemed  nec- 
essary to  secure  a  fair  sale  for  the  highest  obtain- 
able price,  and  (4)  pending  these  proceedings,  en- 
join a  sale  by  the  mortgagee  or  trustee:  More  v.  Cal- 
kins, 85  Cal.  177,  189,  190,  24  Pac.  729. 

41  Savings  etc.  Soc.  v.  Burnett,  106  Cal.  514,  536, 
39  Pac.  922   (trust  deed). 

It  is  not  absolutely  necessary  to  state  with  cer- 
tainty the  exact  amount  legally  due,  for  a  party 
under  a  mistake  of  law  or  fact  may  honestly  claim 
more  than  by  law  he  would  be  entitled  to,  and,  if  the 
other  party  is  not  shown  to  be  prejudiced  thereby, 
the  sale  will  not  be  disturbed.  The  mortgagee  may 
estimate  the  amount  according  to  the  strict  terms 
of  the  contract,  or  may  err  simply  in  a  computation 
of  the  interest,  and  if,  under  such  circumstances, 
he   claims  more  than  he  can  legally  recover,  it   does 

tnot  necessarily  vitiate  the  sale.  Perhaps  any  amount 
within  the  terms  of  the  contract  may,  in  good  faith, 
be  claimed  without  affecting  the  legality  of  tne  no- 


I 


648  ENFORCEMEJyT    OF    MORTGAGE.  §    400 

tute  an  examination  of  the  accounts  of  the  mort- 
gagee or  trustee  under  penalty  of  losing  the 
property  if  it  should  ultimately  appear  on  a  final 
settlement  that  the  secured  obligation  had  in 
fact  been  satisfied  before  the  sale.^^ 

401.  Person  Selling  for  Article  of  Fluctuating 
Value  Chargeable  with  Highest  Value  of 
Property  Sold. 

A  person  selling  under  a  power  of  sale^  not  for 
money^  but  for  an  article  of  fluctuating  value  is 
chargeable  with  the  highest  market  value  of  the 
property  sold.^^ 

402.  Recitals  in  Deed  to  Purchaser  Binding  on 

Mortgagor  or  Trustor. 

In  relation  to  a  bona  fide  purchaser  for  value, 
recitals  in  a  deed  given  by  a  person  selling  mort- 
gaged or  trust  property  to  the  effect  that  the 
sale  was  made  according  to  the  power  are  bind- 
ing upon  the  mortgagor  or  trustor,  notwithstand- 
ing any  irregularity  in  the  exercise  of  the 
power.^** 

tice.  And  even  if  the  excess  be  arbitrarily  and  wan- 
tonly claimed,  it  will  not  affect  the  sale,  unless  its 
amount  was  such  as  to  deter  bidders:  Savings  etc. 
Soc.  V.  Burnett,  106  Cal.  514,  534,  535,  39  Pac.   922. 

42  Thompson  v.   McKay,   41  Pac.   221,   231. 

43  Benham  v.  Eowe,  2  Cal.  387,  408,  56  Am.  Dec. 
342. 

44  Recitals  in  Deed  to  Purchaser  Binding  on  Mort- 
gagor  or   Trustor:    Simson   v.   Eckstein,   22   Cal.   580, 


§  403  BY  POWER  OF  SALE.  649 

403.  Sale   Made    Notwithstanding   Injunction 
Voidable. 

A  sale  made  under  a  power  of  sale  to  a  pur- 
chaser with  notice,  in  satisfaction  of  a  mortgage 
or  trust  obligation,  after  the  mortgagee  or  trustee 
had  been  served  with  an  injunction  prohibiting 
the  sale,  is  voidable,  not  void,  and  may  be  set 
aside  at  the  instance  of  the  mortgagor  or  trustor 
upon  a  proper  showing  being  made.^^ 

404.  Sale  to  Person  Selling  Voidable. 

A  sale  under  a  power  of  sale  made  either  di- 
rectly or  indirectly  to  the  person  selling  is  void- 
able at  the  option  of  the  mortgagor  or  trustor,^^ 

592,  593  (sale  of  mortg^aged  property).  Compare 
Carey  v.  Brown,  62  Cal.  373,  375  (sale  of  trust  prop- 
erty). 

Rationale.— The  mortgagee  is  the  agent  of  the 
mortgagor  for  the  purposes  of  the  sale,  and  the  repre- 
sentations and  admissions  of  the  a^ent  made  as  a 
part  of  the  transaction  of  sale  are  binding  upon  the 
mortgagor.  If  the  principal  is  injured  by  the  mis- 
conduct of  the  agent,  his  remedy  is  against  the  agent 
himself:  Simson  v.  Eckstein,  22  Cal.  580,  592,  593. 

So  in  a  sale  by  a  trustee  under  a  power  in  a  trust 
deed,  in  which  trust  deed  it  was  not  provided  that 
the  recitals  in  a  deed  which  might  be  given  by  the 
trustee  upon  a  sale  should  be  prima  facie  evidence 
of  the  facts  recited,  it  was  held  that  nevertheless, 
as  to  a  bona  fide  purchaser  for  value,  such  recitals 
were  prima  facie  evidence  of  a  due  sale  and  entitled 
him  to  the  possession  of  the  trust  property:  Sav- 
ings etc.  Soc,  V.  Deering,  66  Cal.  281,  5  Pac.  353. 

45  Powen  V.  Bank  of  Lemoore,  125  Cal.  468,  472, 
58   Pac.    83    (sale   of   trust   property). 

46  Sale   to   Party   Selling  Voidable.— A   sale  by   a 


650  ENFORCEMENT  OF  MORTGAGE.         §  404 

who  may^  within  a  reasonable  time  after  being 
apprised  of  the  sale,  maintain  an  action  to  com- 
pel a  reconveyance  of  the  property  upon  the  sat- 
isfaction of  the  secured  obligation.^'' 

trustee  of  property  affected  by  a  trust  deed,  when 
made  to  a  corporation  in  which  the  trustee  became 
interested  after  the  creation  of  the  trust,  is  void- 
able at  the  mere  instance  of  the  trustor:  Herbert 
Craft  Co.  V.  Bryan,  68  Pac.   1020. 

A  sale,  however,  by  trustees  to  a  bank  in  which 
they  were  stockholders  at  the  time  of  the  creation 
of  the  trust  is  not  a  sale  to  themselves  so  as 
to  render  the  sale  voidable,  unless  the  trustor 
shows  himself  damaged  by  the  sale:  Copsey  v.  Sac- 
ramento Bank,  133  Cal.  659,  662,  85  Am.  St.  Eep.  238, 
66  Pac.  7;  Sacramento  Bank  v.  Copsey,  133  Cal.  663, 
665,  85  Am.  St.  Eep.  242,  66  Pac.  8. 

In  Herbert  Craft  Co.  v.  Bryan,  the  court  attempts 
to  distinguish  these  cases.  (It  should  be  noted  that 
in  each  case  the  sale  was  made  to  the  beneficiary  of 
the    trust.) 

47  May  Redeem  the  Encumbered  Property:  Copsey 
V.  Sacramento  Bank,  133  Cal.  659,  662,  85  Am.  St. 
Eep.  238,  66  Pac.  7. 

^^  Where  a  power  of  sale  is  contained  in  a  mort- 
gage, and  under  a  sale  by  virtue  of  such  power  the 
mortgagee  becomes  the  purchaser,  the  equity  of  re- 
demption still  attaches  to  the  property  in  favor  of 
the  mortgagee '':  Benham  v.  Eowe,  2  Cal.  387,  407, 
56  Am.  Dec.  342. 

^'A  mortgagee  who  sells  under  a  power  contained 
in  the  mortgage  and  becomes  himself  the  purchaser 
indirectly  by  having  the  mortgaged  premises  bid  in 
for  himself,  cannot  hold  it  against  the  mortgagor  if 
the  latter  chooses  to  file  his  bill  to  set  aside  the 
sale  or  to  redeem,  provided  this  be  done  within  a 
reasonable  time  after  being  apprised  of  the  sale.  But 
the  sale  is  not  void.  It  is  onlv  voidable'':  Blockley 
V.  Fowler,  21  Cal.  326,  82  Am.  Dec.  747. 


§  405  BY  POWER  OF  SALE.  651 

405.  Person  Selling  to  Himself  and  Afterward 
Keselling  must  Account  for  Profits. 

A  person  who  sells  mortgaged  or  trust  property 
to  himself  and  afterward  resells  the  same  to  a 
third  party  at  an  advanced  price  must  account 
to  the  mortgagor  or  trustor  for  the  profits  de- 
rived from  the  resale  as  of  the  time  of  the  re- 
sale.^^ 

406.  Mortgagee  must  Account  for  Surplus  Real- 
ized. 

A  mortgagee  or  trustee  must  account  to  the 
mortgagor  or  trustor  for  any  surplus  which  may 
remain  after  the  satisfaction  of  the  secured  obli- 
gation.^^ 

407.  Mortgagee  may  Maintain  Action  for  Defi- 
ciency. 

A  mortgagee  or  cestui  que  trust  may  maintain 
a  direct  action  for  the  recovery  of  any  portion 
of  the  secured  obligation  which  may  remain  un- 
satisfied after  the  exhaustion  of  the  mortgaged 
or  trust  property.^^ 

48  Herbert  Craft  Co.  v.  Bryan,  68  Pac.  1020  (case 
of    trust    deed). 

49  So  where  a  mortgagee  under  an  absolute  deed 
sold  the  mortgaged  property,  the  mortgagor  may 
maintain  an  action  to  recover  such  surplus:  Scranton 
V.  Begol,  60  Cal.  642;  Bettis  v.  Townsend,  61  Cal.  333. 

50  Sacramento  Bank  v.  Copsey,  133  Cal.  663,  66"'}, 
85  Am.  St.  Eep.  242,  66  Pac.  8   (case  of  trust  deed). 


CHAPTER   2. 

EQUITABLE  LIEN"  IN  NATURE  OP  MORT- 
GAGE. 

408.  Equitable  lien  in  nature  of  mortgage  created  by 

informal  writing. 

409.  Validity  of  equitable  lien. 

410.  Eecordation    of    equitable   lien    as    constructive 

notice. 

411.  Equitable  lien   assignable. 

412.  Enforcement  of  equitable  lien. 

413.  Waived  by  suing  on  principal  obligation. 

408.     Equitable   Lien   in   Nature    of   Mortgage 
Created  by  Informal  Writing.^ 
Every  agreement  in  writing,  whereby  the  in- 

1  Higgins  V.  Manson,  126  Cal.  467,  469,  77  Am. 
St.  Eep.  192,  58  Pac.  907. 

Rationale. — '/The  maxim  of  equity  upon  which  this 
doctrine  rests  is,  that  equity  looks  upon  things  agreed 
to  be  done  as  actuall}^  performed;  the  meaning  of 
which  is,  that  equity  will  treat  the  subject  matter 
as  to  collateral  consequences  and  incidents  in  the 
same  manner  as  if  the  final  acts  contemplated  by 
the  parties  had  been  executed  exactly  as  they  ought 
to  have  been'':  Daggett  v.  Eankin,  31  Cal.  321,  327; 
Racouillat  v.  Sansevain,  32  Cal.  376,  389;  Love  v. 
Sierra  Nevada  etc.  Min.  Co.,  32  Cal.  639,  653,  91  Am. 
Dec.   602. 

(652) 


§  408  EQUITABLE  MORTGAGE.  653 

Civil  Code,  section  2922,  providing:  ^^A  mortgage 
can  be  created,  renewed,  or  extended  only  by  writ- 
ing, executed  with  the  formalities  required  in  the 
case  of  a  grant  of  real  property,'^  cannot  be  held 
to  deprive  a  court  of  equity  of  the  power,  in  a  proper 
case,  of  declaring  an  instrument  which  is  not  a  mort- 
gage in  form  one  in  effect:  Dingley  v.  Bank  of  Ven- 
tura,  57   Cal.   467,  471. 

Illustrations.— An  assignment  of  a  certificate  of 
purchase  of  land  issued  by  the  state,  by  way  of  se- 
curity for  a  debt  due,  operates  as  an  equitable  mort- 
gage on  the  interest  in  the  land  which  the  assignor 
acquired  bv  virtue  of  the  certificate:  Hill  v.  Eldred, 
49  Cal.  398.  Compare  San  Jose  etc.  Bank  of  Savings 
V.  Bank  of  Madera,  121  Cal.  539,  542,  54  Pac.  83, 
where  an  assignment  of  a  sheriff's  certificate  of  pur- 
chase at  foreclosure  sale  was  held  to  create  an  equi- 
table   mortgage. 

A  promissory  note  executed  with  an  instrument  at- 
tached providing  that  the  United  States  patent  of 
Cjsrtain  lands  should  be  deposited  with  the  payee, 
the  intention  being  that  the  land  should  stand  as 
security  for  the  debt,  creates  an  equitable  mortgage: 
Higgins  V.  Manson,  126  Cal.  467,  77  Am.  St.  Eep.  192, 
58   Pac.    907. 

An  agreement  to  convey  property  containing  a 
provision  that  ''the  said  property,  so  to  be  conveyed, 
as  is  hereinabove  set  forth,  is  to  be  chargeable  only 
with  the  debts  of  [certain  parties]  ....  exceptinqr 
an  indebtedness  due  the  Anglo-Calif ornian  Bank,'' 
creates  an  equitable  lien  in  the  nature  of  a  mortgage 
upon  the  propertv  to  secure  the  debt  due  the  bank: 
Kreling  v.  Kreling,  118  Cal.  413,  419,  50  Pac.  546. 
,  An  agreement  between  an  irrigation  company  and 
a  land  owner,  by  which  the  water  was  to  be  furnished 
to  the  owner  during  a  series  of  years  at  a  stated 
annual  price,  and  containing  a  provision  that  ''the 
water  furnished  under  this  agreement  is  intended  to 
form  a  part  of  the  appurtenances  to  said  sections 
or  quarter  sections  of  land,  and  the  right  thereto 
shall  be  transferable   only  with,   and   run  with,   said 


654  EQUITABLE  MORTGAGE.  §  408 

tention  is  clearly  indicated^  to  make  some  par- 
ticular immovable  property^  therein  described  a 
security  for  the  performance  of  an  obligation,  cre- 
ates a  specific  equitable  lien  or  inchoate  mortgage 
against  such  property. 

land,  and  that  the  party  of  the  first  part  is  bound 
by  this  instrument  to  all  subsequent  owners  of  said 
land,  but  to  no  other  person^ ^;  also,  that  ^^this  agree- 
ment, and  the  covenants  therein  contained  on  the 
part  of  the  party  of  the  second  part  [the  land  owner], 
shall  run  with  and  bind  the  land,''  creates  a  lien 
against  the  land  which  also  binds  any  successor  in 
interest  in  the  land  with  notice  of  it,  but  does  not 
create  any  personal  liability  on  the  part  of  sucn 
successors  in  interest:  Fresno  Canal  etc.  Co.  v.  Eowell, 
80  Cal.  114,  116j  118,  13  Am.  St.  Eep.  112,  22  Pac.  53; 
Presno  Canal  etc.  Co.  v.  Dunbar,  80  Cal.  530,  535,  22 
Pac.   275. 

2  Intention  to  Hypothecate  Property  must  Appear. 
The  form  of  the  writing  is  not  important,  provided 
it  sufficiently  appears  that  it  was  intended  thereby 
to  create  a  security.  If  that  intention  appears,  it 
will  create  a  mortgage  in  equity,  or  a  specific  lien 
on  the  property  so  intended  to  be  mortgaged:  Hig- 
gins  V.  Manson,  126  Cal.  467,  469,  77  Am.  St.  Eep. 
192,   58   Pac.   907. 

So  an  agreement  in  writing  to  give  a  mortgage,  or 
a  mortgage  defectively  executed,  or  an  imperfect 
attempt  to  create  a  mortgage,  or  to  appropriate  spe- 
cific property  to  the  discharge  of  a  particular  debt, 
will  create  a  mortgage  in  equity,  or  a  specific  equi- 
table lien  on  the  property  intended  to  be  mortgaged: 
Daggett  V.  Eankin,  31  Cal.  321,  326,  327;  Eacouillat 
V.  Sansevain,  32  Cal.  376,  389;  Love  v.  Sierra  Nevada 
etc.  Min.  Co.,  32  Cal.  639,  653,  91  Am.  Dec.  602;  Hig- 
gins  V.  Manson,  126  Cal.  467,  470,  77  Am.  St.  Eep. 
192,  58  Pac.  907;  Peers  v.  McLaughlin,  88  Cal.  294, 
297,  22  Am.  St.  Eep.  306,  26  Pac.  119.  Compare 
Thurber  v.  Meves,  119  Cal.  35,  39,  50  Pac.  1063. 


§  409  EQUITABLE  MORTGAGE.  055 

409.  Validity  of  Equitable  Lien. 

An  equitable  lien  in  the  nature  of  a  mortgage 
is  valid  between  the  parties'*  thereto,  and  as 
against  all  third  parties^  with  notice  thereof. 

410.  Recordation    of  Equitable    Lien  as    Con- 
structive Notice. 

The  recordation  of  an  equitable  lien  in  the  na- 
ture of  a  mortgage,  which  lien  is  contained  in  an 
informal  writing,  does  not  impart  constructive 
notice,^  but  when  contained  in  an  instrument  of 
conveyance  which  is  duly  acknowledged  and  re- 
corded becomes  notice  to  all  third  parties.'' 

Although  the  defective  execution  of  a  mortgage 
is  caused  by  a  mistake  of  law,  the  defective  execution 
can  be  aided;  for  where  there  is  a  defective  execu- 
tion of  a  power,  it  is  a  matter  of  no  equitable  mo- 
ment whether  the  error  came  from  a  mistake  of  law 
or  a  mistake  of  fact.  It  is  enough  that  the  power 
existed,  and  that  there  was  an  attempt  to  act  under 
it:  Love  v.  Sierra  Nevada  etc.  Min.  Co.,  32  Cal.  639, 
653,  654,  91  Am.  Dec.  602;  Eemington  v.  Higgins, 
54  Cal.   620. 

3  But  a  mere  deposit  of  a  deed  without  an  in- 
tention to  fix  a  lien  upon  the  land,  but  merely  upon 
the  deed,  is  not  sufficient:  Higgins  v.  Manson,  126 
Cal.  467,  470,  77  Am.  St.  Eep.  192,  58  Pac.  907. 

4  Between  the  parties  thereto:  Eacouillat  v.  San- 
sevain,  32  Cal.  376,  389,  390;  Daggett  v.  Eankin, 
31   Cal.   321,   326,   327. 

5  Against  third  parties  with  notice:  Eacouillat  v. 
Sansevain,  32   Cal.  376,  389,   390. 

6  Eacouillat  v.  Eene,  32   Cal.  450,  457. 

7  Dingley  v.  Bank  of  Ventura,  57  Cal.  467,  471,  472. 
Where     in     a     contract     of     an     irrigation     com- 
pany to  furnish  water  to   a   certain  tract   of  land   a 


656  EQUITABLE   MORTGAGE.  §  411 

411.  Equitable  Lien  Assignable. 

The  assignment  of  an  obligation  secured  by  an 
equitable  lien  in  the  nature  of  a  mortgage  carries 
with  it  the  security.^ 

412.  Enforcement  of  Equitable  Lien. 

An  equitable  lien  is  enforceable  by  a  foreclos- 
ure action^  and  the  sale  thereunder  is  subject  to 
redemption  where  redemption  is  allowable.^ 

413.  Waived  by  Suing  on  Principal  Obligation. 

An  equitable  lien  is  waived  by  the  commence- 
ment of  an  action  upon  the  principal  obliga- 
tion.io 

lien  was  created  against  the  land  to  secure  the  pay- 
ment of  the  stated  annual  price  of  the  water  fur- 
nished, the  acknowledgment  of  the  contract  by  the 
owner  of  the  land  alone  without  the  acknowledgment 
of  the  irrigation  company  is  sufficient  to  entitle  the 
contract  to  a  recordation  valid  as  against  the  succes- 
sors in  interest  of  the  land  owner:  Fresno  Canal  etc. 
Co.  V.  Eowell,  80  Cal.  114,  117,  13  Am.  St.  Eep.  112, 
22   Pac.   53. 

8  Dingley  v.  Bank  of  Ventura,  57  Cal.  467,  472. 

9  Dingley  v.  Bank  of  Ventura,  57  Cal.  467,  471. 

10  Campan  v.  MoHe,  124  Cal.  415,  417,  57  Pac. 
208.  (Is  not  the  truth,  rather,  that  the  security 
must   be    first    exhausted    (sections   385    and    424)  ?) 


CHAPTER   3. 

TEUST    DEED    IN    JSTATURE    OF    MORT- 
GAGE.i 

414.  Trust  deed  defined. 

415.  Trust    deed    valid. 

416.  Presumption   against   trust   deed. 

417.  Parol  evidence  admissible  to  show  absolute  deed 

^  trust   deed. 

418.  Trust  deed  conveys  legal  title. 

419.  Trustor  has  use  of  trust  property. 

420.  Certain  provisions  concerning  mortgages  applica- 

ble to  trust  deeds. 

421.  Barring  of  secured  obligation  by  lapse  of  time 

does  not  entitle  trustor  to  recover  property 
back. 

422.  Action  to  compel  sale  of  trust  property  main- 

tainable. 

423.  Trust  ceases  with  its  purpose. 

424.  Trust  property  a  primary  security. 

425.  Enforcement  of  trust  obligation. 

1  A  trust  deed  to  secure  the  payment  of  a  debt 
is  an  anomaly  in  our  system  and  inconsistent  with 
the  policy  of  the  statute  in  regard  to  mortgages. 
It  is  at  least  doubtful  if  they  would  now  be  sus- 
tained but  for  a  line  of  decisions  made  before  they 
were  severely  questioned.  The  doctrine  will  not 
be  extended  to  deeds  that  are  not  expressly  of  that 
character:  Hodgkins  v.  Wright,  127  Cal.  688,  692, 
60    Pac.    431. 

Liens— 42 

(657) 


658      .  TRUST    DEED.  §    414 

414.     Trust  Beed  Defined  ^ 

An  instrument^  conveying  property  to  a  sec- 
ond party  merely  as  security  for  the  future  per- 

2  Definition  of  Trust  Deed:  Powell  v.  Patison,  100 
Cal.    234,    34   Pac.    676. 

For  instruments  held  to  be  trust  deeds,  see  Koch  v. 
Briggs,  14  Cal.  256,  73  Am.  Dec.  651;  Fuquay  v. 
Stickney,  41  Cal.  583,  587;  Grant  v.  Burr,  54  Cal. 
298;  Bateman  v.  Burr,  57  Cal.  480;  Partridge  v. 
Shepard,  71  Cal.  470,  477,  478,  12  Pac.  480;  Savings 
etc.  Soc.  V.  Burnett,  106  Cal.  514,  528,  39  Pac.  922. 

Trust  Beed  and  Assignment  for  the  Benefit  of  Credi- 
tors Distinguished.— If  a  conveyance  is  to  a  trustee, 
and  the  debtor  intends  to  devest  himself  not  only  of 
the  title  to  the  property,  but  of  all  control  over  it; 
if  it  is  intended  as  an  absolute  conveyance  of  all 
his  property  (in  Sabichi  v.  Chase,  the  conveyance 
was  of  a  part  of  his  property  only),  and  is  made  for 
the  purpose  of  securing  a  distribution  of  its  proceeds 
among  his  creditors,  or  a  portion  of  them,  in  legal 
effect  it  is  an  assignment  for  the  benefit  of  credi- 
tors, no  matter  what  name  or  designation  the  parties 
may  have  given  it. 

If  the  intention  of  the  debtor  is  merely  to  secure 
his  debt  to  one  or  more  of  his  creditors,  and  the  con- 
veyance is  not  intended  as  an  absolute  disposition 
of  his  property,  but  he  reserves  to  himself  a  right 
therein,  the  conveyance  will  be  treated  as  a  mortgage, 
even  though  the  debtor  is  insolvent  at  the  time  and 
it  covers  all  his  property  and  but  a  portion  of  his 
debts  are  secured  by  it. 

A  provision  that  a  surplus  of  proceeds  remaining 
after  the  satisfaction  of  the  claims  of  the  creditors 
named  should  be  returned  to  the  grantor  does  not, 
of  itself,  distinguish  the  contract  as  one  of  security 
only.  The  reservation  of  an  interest  in  the  possible 
surplus— not  in  the  property  itself— makes  the  trans- 
action more  clearly  an  assignment  for  the  benefit  of 
creditors:  Sabichi \.  Chase,  108  Cal.  81,  87,  41  Pac. 
29. 


§    414  TRUST    DEED.  659 

formancG  by  the  first  party  of  an  obligation  [in 
favor  of  a  third  party]  ,^  whether  previously  ex- 
isting or  contemporaneously  made  or  thereafter 
to  arise^  and  the  conveyance  being  defeasible  on 

3  Must  be  Created  in  Writing.— Trusts  in  real  es- 
tate other  than  resulting  trusts  can  be  created  only 
by  writing:  Hodgkins  v.  Wright,  127  Cal.  688,  692, 
60   Pac.    431. 

4  Beneficiary  was  a  Third  Party  in  the  Following 
Cases:  Felton  v.  Le  Breton,  92  Cal.  457,  465,  28  Pac. 
490  (cited  at  section  255,  above) ;  Godfrey  v.  Mon- 
roe, 101  Cal.  224,  227,  35  Pac.  761;  Banta  v.  Wise, 
135  Cal.   277,   67  Pac.   129. 

Thus,  in  Levy  v.  Burkle  (Cal.),  14  Pac.  564,  the 
distinction  was  said  to  be  that  to  a  trust  deed  there 
were  three  parties  while  in  a  mortgage  but  two.  The 
court  said:  ^^Both  are  securities  only.  The  difference 
is  only  in  form.  In  one  case  the  mortgagee  is  the 
trustee;  in  the  other  a  third  person.^' 

In  More  v.  Calkins,  95  Cal.  435,  538,  29  Am.  St. 
Eep.  128,  30  Pac.  583,  however,  it  was  said  that  the 
beneficiary  need  not  be  a  third  party.  '^Whether 
the  conveyance  is  to  be  treated  as  a  mortgage  or  as 
a  deed  of  trust  must  depend  upon  its  essential  char- 
acter, as  shown  by  its  terms,  and  not  whether  the 
grantee  is  a  creditor  whose  debt  is  to  be  paid  out 
of  the  proceeds  to  arise  from  the  execution  of  the 
trust  which  is  declared.''  This,  however,  was  a 
case  of  a  true  trust  deed,  there  being  a  third  party 
who  was  the  beneficiary  (see  Hull  v.  Calkins,  137 
Oal.  84,  69  Pac.  838).  In  line  with  this  reason- 
ing, see,  also,  Thompson  v.  McKay,  41  Cal.  221,  230, 
231;  also  Mayhall  v.  Eppinger,  137  Cal.  2,  69  Pac. 
489,  where  the  trustee  was  also  the  beneficiary. 

But  compare  Cormerais  v.  Genella,  22  Cal.  116, 
where  it  was  held  that  a  conveyance  to  a  second 
party  on  an  express  condition  of  defeasance  to  secure 
obligations  due  third  parties  was  a  mortgage,  not  a 
trust  deed. 


660  TRUST    DEED.  §    414 

the  satisfaction  of  the  secured  obligation,^  and 
authorizing  the  second  party ,^  upon  a  default  of 
the  first  party  in  satisfying  the  secured  obligation 
as  agreed,  to  sell  the  property  and  apply  the  pro- 
ceeds to  the  satisfaction  of  the  secured  obliga- 
tion, is  a  trust  deed  in  the  nature  of  a  mortgage. 

415.     Trust  Deed  Valid. 

A  trust  deed  is  a  valid  form  of  security,''  and 
will  be  supported  by  the  courts.® 

s  Defeasible  on  Satisfaction.— This  is  characteristic 
of  a  trust  deed:  Herbert  Craft  Co.  v.  Bryan,  68  Pac. 
1020. 

6  Authority  to  Sell.— The  decisions  declaring  a  con- 
veyance to  one  person  to  secure  an  obligation  to  an- 
other person  a  trust  deed  ''apply  only  to  cases  where, 
by  the  terms  of  the  deed,  the  trustee  is  authorized 
to  sell  and  to  apply  the  proceeds  to  the  payment  of 
the  debt,  and  not  to  deeds  where  there  is  no  power 
of  sale  expressed^':  Banta  v.  Wise,  135  Cal.  277,  67 
Pac.  129. 

7  Trust  Deed  Valid.— A  trust  deed  is  not  void  upon 
the  ground  that  it  creates  a  trust  in  violation  of  the 
statute  against  perpetuities.  Notwithstanding  that  a 
trust  is  invalid  when  not  dependent  upon  the  dura- 
tion of  life  (Civil  Code,  sees.  715,  716,  771),  a  trust 
in  the  nature  of  a  mortgage  has  been  upheld  in  nu- 
merous decisions  that  should  not  be  disturbed.  The 
court  cannot  correct  the  evil  without  producing  wide- 
spread distrust  and  confusion:  Sacramento  Bank  v. 
Alcorn,  121  Cal.  379,  385,  53  Pac.  813;  Camp  v.  Land, 
122  Cal.  167,  170,  54  Pac.  839;  Staacke  v.  Bell,  125 
Cal.  309,  315,  57  Pac.  1012. 

8  So  an  injunction  will  not  issue  to  prevent  a 
sale  under  a  power  of  sale  in  a  trust  deed:  Grant 
V.  Burr,  54  Cal.  298;  Bateman  v.  Burr,  57  .Cal.  480; 
Durkin  v.  Burr,  60  Cal.  360. 


§    416  TRUST    DEED.  661 

416.  Presumption  Against  Trust  Deed. 

If  there  is  any  doubt  as  to,  whether  an  instru- 
ment was  intended  as  a  mortgage  or  a  trust  deed, 
such  doubt  should  be  resolved  in  favor  of  the 
mortgage  with  power  of  sale.^ 

417.  Parol  Evidence  Admissible  to  Show  Abso- 

lute Deed  a  Trust  Deed. 

The  acts  and  declarations  of  the  parties  are 
admissible  in  evidence  to  show  that  a  deed  abso- 
lute in  form  is  intended  as  a  trust  deed  in  the 
nature  of  a  mortgage.^^ 

418.  Trust  Deed  Conveys  Legal  Title. 

A  trust  deed  conveys  the  legal  title  to  the 
trustee^  but  only  so  far  as  to  enable  the  trustee 
to  convey  the  property,  the  trustor  retaining  the 
right  to  a  reconveyance  upon  the  satisfaction  of 
the  secured  obligation  or  to  a  sale  of  the  trust 
property  upon  default  therein.^^ 

9  Godfrey  v.  Monroe,  101  Cal.  224,  227,  35  Pac. 
761;  Banta  v.  Wise,  135  Cal.  277,  280,  67  Pac.  129. 

10  Raynor  v.  Lyons,  37  Cal.  452,  in  which  case 
certain  certificates  of  purchase  of  land  were  conveyed 
to  a  second  party  by  absolute  conveyance,  there 
being  a  parol  agreement  between  the  parties  that 
the  land  was  held  as  security  for  the  payment  of  a 
debt  due  a  third  party  from  the  grantor.  The 
grantee  sold  the  property,  and  the  grantor  brought 
an   action    to    enforce   an    accounting. 

11  Conveys  Legal  Title:  Koch  v.  BriggSj  14  Cal. 
256,  264,  73  Am.  Dec.  651;  Thompson  v.  McKay,  41 
Cal.  221,  230;  Fuquay  v.  Stickney,  41  Cal.  583,   587; 


662  TRUST    DEED.  §    419 

419.  Trustor  has  Use  of  Trust  Property. 

Until  the  execution  of  the  trust,  the  trustor 
is  entitled  to  the  possession  of  the  trust  prop- 
erty and  the  full  beneficial  use  thereof.^^ 

420.  Certain  Provisions  Concerning  Mortgages 
Applicable  to  Trust  Deeds. 

The  provisions  of  sections  343-351,  inclusive, 
are  applicable  to  the  assessment  and  taxation  of 

Bateman  v.  Burr,  57  Cal.  480,  483;  Savings  etc.  Soc. 
V.  Deering,  66  Cal.  281,  286,  5  Pac.  353;  Partridge 
V.  Shepard,  71  Cal.  470,  478,  12  Pac.  480;  Savings  etc. 
Soc.  V.  Burnett,  106  Cal.  514,  528,  39  Pac.  922;  Sac- 
ramento Bank  v.  Alcorn,  121  Cal.  379,  53  Pac.  813; 
Hazen  v.  Mcholls,   126   Cal.   327,   329,  58   Pac.   816. 

''The  passing  of  the  legal  title  ....  is  mostly 
ideal.  It  is  deemed  to  have  passed  only  for  the 
purpose  of  enabling  the  trustee  to  convey  a  title. 
In  all  other  respects  the  title  remains  in  the  trustor, 
and  is  still  the  right  by  which  he  holds  that  which 
is  his'^  Herbert  Craft  Co.  v.  Bryan,  68  Pac.  1020. 

To  the  estate  of  the  trustee  none  of  the  incidents  of 
ownership  attach  except  such  as  will  enable  him  to 
convey:  Sacramento  Bank  v.  Alcorn,  121  Cal.  379, 
384,  53  Pac.  813. 

12  The  trustor  is  entitled  to  possession  until  the 
execution  of  the  trust:  Bostwick  v.  McEvoy,  02 
Cal.  496,  500. 

Thus  the  trustor  ''may  maintain  an  action  to  re- 
cover possession,  even  when  the  trust  deed  is  silent 
upon  the  subject  of  possession^':  Sacramento  Bank  v. 
Alcorn,  121  Cal.  379,  383,  53  Pac.  813.' 

The  trustee  cannot  maintain  a  possessory  action 
against  the  trustor  to  get  possession  of  the  property: 
Tyler  v.  Granger,  48  Cal.  259,  269,  270. 

See,  also,  Sacramento  Bank  v.  Alcorn,  121  Cal.  379, 
384,  53  Pac.  813;  Herbert  Craft  Co.  v.  Bryan,  68  Pac. 
1020— both  cited  in  note  11  above. 


§   420  TRUST    DEED.  663 

property  affected  by  a  trust  deed.  Sections  307- 
314^  inclusive,  are  applicable  to  trust  deeds  given 
in  whole  or  in  part  to  secure  future  advances.^*'^ 
A  trust  deed  is  practically,  though  not  in  legal 
effect,  little  more  than  a  mortgage  with  a  power 
of  sale.^^ 

421.  Barring  of  Secured  Obligation  by  Lapse  of 

Time  does  not  Entitle  Trustor  to  Recover 
Property  Back. 

Although  the  secured  obligation  is  barred  by 
lapse  of  time,  the  trustor  cannot  cause  the  trust 
property  to  be  reconveyed  to  him  without  satis- 
fying the  secured  obligation,  nor  prevent  the  sale 
thereof  by  the  trustee  in  satisfaction  of  such  ob- 
ligation.  ^^ 

422.  Action  to  Compel  Sale  of  Trust  Property 
Maintainable. 

Although  the  secured  obligation  is  barred  by 
lapse  of  time,  the  debtor  may  maintain  an  action 
to  compel  the  sale  of  the  trust  property,  and  to 

13  Saving  etc.  Soc.  v.  Burnett,  106  Cal.  514,  533, 
39    Pac.    922. 

14  Sacramento  Bank  v.  Alcorn,  121  Cal.  379,  53 
Pac.  813;  Hodgkins  v.  Wright,  127  Cal.  688,  69?, 
60   Pac.   431. 

15  Compare  sections  216  and  338  and  notes,  above. 
The  expiration   of  the  statutory  time  for  bringing 

an  action  to  recover  a  debt,  or  to  enforce  any  personal 
obligation,  does  not  operate  either  as  an  extinguish- 
ment or  payment:  Grant  v.  Burr,  54  Cal.  298. 


664  TRUST    DEED.  §    422 

cause  an 3^  surplus  arising  from  such  sale  to  be 
paid  to  him.^^ 

423.  Trust  Ceases  with  Its  Purpose. 

When  the  purpose  for  which  the  trust  is  cre- 
ated ceases^  the  estate  of  the  trustee  also  ceases.^'' 

424.  Trust  Property  a  Primary  Security. 

The  proceeds  of  the  sale  of  the  entire  trust 
property  constitute  a  primary  fund  for  the  satis- 
faction of  the  secured  obligation  which  must  first 
be  exhausted  before  recourse  may  be  had  against 
the  general  assets  of  the  primary  obligor.^^    . 

425.  Enforcement  of  Trust  Obligation. 

An  obligation^  the  performance  of  which  is  se- 
cured by  trust  deed,  may,  when  performance  is 
due,  be  enforced 

(1)  in  every  case  by  a  foreclosure  action  con- 
ducted in  all  respects  the  same  as  in  the  case 
of  mortgaged  property/^  or 

16  Whitmore  v.  Savings  Union,  50  Cal.  145,  150. 

17  See  Civ.  Code,  sec.  871. 

Thus  upon  the  satisfaction  of  the  trust  before  a 
sale  of  the  trust  property,  the  trustee  must  reconvey: 
Bostwick  V.  McEvoy,  62  Cal.  496,  501. 

18  The  trust  property  is  the  primary  fund  for 
the  satisfaction  of  the  secured  obligation,  and  must 
first  be  exhausted:  Powell  v.  Patison,  100  Cal. 
236,  239,  34  Pac.  677;  Illinois  Trust  etc.  Bank  v.  Pac. 
Ey.  Co.,  117  Cal.  332,  342,  49  Pac.  197;  Herbert  Craft 
Co.  V.  Bryan  (Cal.),  68  Pac.  1020. 

19  Obligation  Secured  by  Trust  Deed  may  be  En- 
forced   by    Foreclosure    Proceedings:    Herbert    Craft 


§    425  TRUST    DEED.  665 

(2)  by  the  exercise  of  the  power  of  sale  in  the 
mode  and  manner  agreed  upon  and  in  accord- 
ance with  the  principles  laid  down  in  sections 
399-407  for  a  sale  under  a  power  contained  in 
a  mortgage.^^ 

Co.  V.  Bryan  (Cal.),  68  Pac.  1020.  See,  also,  Powell 
V.  Patison,  100  Cal.  234,  34  Pac.  676.  Compare  Felton 
V.  Le  Breton,  92  Cal.  457,  465,  28  Pac.  490. 

An  instance  where  a  deed  of  trust  was  foreclosed: 
Illinois  Trust  etc.  Bank  v.  Pac.  Ey.  Co.,  115  Cal.  285, 
47  Pac.  60,  117  Cal.  332,  49  Pac.  197. 

The  statement  to  the  contrary  in  Koch  v.  Briggs,  14 
Cal.  256,  264,  73  Am.  Dec.  651,  is  overruled  in  Herbert 
Craft  Co.  V.  Bryan. 

20  Although  a  trustee  under  a  trust  deed  (the 
trustee  being  also  the  cestui  que  trust)  has  com- 
menced an  action  for  the  foreclosure  of  the  deed,  he 
may  thereafter  without  dismissing  such  action  pro- 
ceed to  sell  the  trust  property  under  the  power  of  sale 
therein  contained;  and  an  injunction  will  not  under 
such  circumstances  be  granted  to  prevent  the  sale 
under  the  power:  Mayhall  v.  P^ppinger,^  137  Cal.  5,  69 
Pac.  489. 


:^  CHAPTER   4. 
VENDORS  SECUEITY.i 
AETICLE  1. 
VENDOE'S  SECURITY  PROPER.    . 

426.  Vendor's  rights  upon  sale  and  change  of. posses- 

sion of  immovable  property  without  transfer 
of  title. 

427.  Vendor's  security  assignable. 

428.  Payment    of    secured    demand    extinguishes    se- 

curity, but  trust  continues. 

429.  In  proper  case  vendee  may  recover  back  pay- 

ments made. 

430.  Vendor's  security  a  cumulative  remedy. 

431.  Security  continues  until  vendor's  demand  satis- 

fied. 

432.  Enforcement   of   secured   obligation   against   se- 

curity. 

426.     Vendor's  Rights  upon  Sale  and  Change  of 
Possession  of  Immovable  Property  With- 
out Transfer  of  Title  ^ 
TJpon  an  executory  sale  of  immovable  property, 

coupled  with  a  change  of  possession  thereof,  but 

1  **The  vendor's  security  is  something  stronger 
than  a  mortgage,  because  the  legal  title  is  retained  as 
security":  G§ssner  v.  Palmateer,  89  Cal.  89,  92  (24 
Pac.  608),  26  Pac.  789. 

(666) 


§  426  vendor's  security.  667 

without  a  transfer  of  title/  the  vendor  retains 
an  indefeasible*"^  interest  in  the  property  as  se- 
cnrity  for  the  payment  of  the  purchase  price. 

427.     Vendor's  Security  Assignable. 

The  vendor^s  security  may  he  assigned  by  tho 
assignment  of  the  notes  or  other  written  instru- 

The  possession  of  a  vendor  who  holds  the  title  as 
security  for  the  purchase  money  is  in  some  respects 
similar  to  that  of  a  mortgagee:  Sparks  v.  Hess,  15 
Cal.  186,  194;  Hill  v.  Grigsby,  32  Cal.  55,  58,  59. 

2  Where  the  vendor  holds  the  title,  he  is  the  trus- 
tee of  the  vendee,  but  can  be  compelled  to  convey 
the  title  only  upon  the  payment  of  the  purchase  price: 
Longmaid  v.  Coulter,  123  Cal.  208,  215,  55  Pac.  791. 

From  the  time  of  the  contract  for  the  sale  of  the 
land,  the  vendor,  as  to  the  land,  becomes  a  trustee  for 
the  vendee,  and  the  vendee,  as  to  the  purchase  money, 
a  trustee  for  the  vendor,  who  has  a  lien  upon  the  land 
therefor:  Willis  v.  Wozencraft,  22  Cal.  607,  616.  See, 
also,  Truebody  v.  Jacobson,  2  Cal.  269,  287. 

3  Vendor  has  Indefeasible  Interest.— The  vendee 
cannot  prejudice  such  title  or  in  any  way  devest  it 
except  by  the  performance  of  the  act  for  which  the 
vendor  holds  it:  Longmaid  v.  Coulter,  123  Cal.  208, 
213,  55  Pac.  791;  Gessner  v.  Palmateer,  89  Cal.  89,  02 
(24  Pac.  608),  26  Pac.  789. 

So  the  transfer  of  the  'property  from  the  vendee  to 
a  bona  fide  purchaser  for  value  cannot  defeat  such 
title:  Longmaid  v.  Coulter,  123  Cal.  208,  213,  55  Pac. 
791. 

The  interest  of  a  bona  fide  assignee  of  the  vendee 
for  value  can  only  be  protected  by  the  payment  of  tne 
purchase  money  to  the  vendor  at  the  right  time:  True- 
body  V.  Jacobson,  2  Cal.  269,  286,  287. 

The  rights  of  the  vendor  cannot  be  affected  by  the 
equities  of  third  parties  claiming  under  the  vendee: 
Truebody  v.  Jacobson,  2  Cal.  269,  286. 


668  vendor's    security.  §  427 

ments  given  for  the  purchase  money,^  or  of  the 
contract  of  purchase  together  with  the  convey- 
ance of  the  property.^ 

428.  Payment  of  Secured  Demand  Extinguishes 
Security,  but  Trust  Continues. 
Upon  the  pa3rment  of  the  purchase  price  by 
the  vendee^  while  the  title  does  not  ipso  facto 
pass  to  the  vendee^  the  property  is  no  longer 
held  by  the  holder  of  the  legal  title  as  security 
for  the  performance  of  an  obligation,  but  merely 
as  trustee  for  the  purchaser.® 

4  **The  assignee  of  notes  given  for  the  purchase 
money,  like  the  assignee  of  notes  secured  by  mortgage, 
is  entitled  to  the  benefit  of  the  security'':  Gessner  v. 
]?almateer,  89  Cal.  89,  93    (24  Pac.  608),  26  Pac.  789. 

5  Taylor  v.  McKinney,  20  Cal.  618;  Baum  v.  Grigs- 
by,  21  Cal.  172,  177,  178,  81  Am.  Dec.  153;  Averv 
V.  Clark,  87  Cal.  619,  625,  22  Am.  St.  Eep.  272,  25  Pac. 
919. 

6  Where  a  third  party  advances  the  purchase 
price  of  certain  land  direct  to  the  vendor,  receiv- 
ing a  conveyance  of  the  land  from  the  vendor  as 
security  for  the  payment  by  the  purchaser  of  the  sum 
advanced  to  his  use,  upon  the  repayment  of  the  sum 
loaned,  the  person  receiving  the  legal  title  had  no 
further  right  in  the  property  except  that  he  held  the 
legal  title  in  trust  for  the  purchaser,  the  relation  of 
beneficiary  and  trustee  existing  between  them. 

After  the  repayment  of  the  advance  the  legal  title 
did  not  at  once  pass  to  the  purchaser,  but  remained 
just  vrhere  it  was  when  the  transfer  was  first  made, 
and  is  held  in  trust  for  the  purchaser.  The  relation 
of  the  parties  was  a  trust  relation,  and  not  a  mere 
mortgage  relation.  The  payment  of  the  purchase 
price  by  one  and  the  transfer  of  the  property  to  the 


§  429  vendor's   security.  669 

429.  In  Proper  Case  Vendee  may  Recover  Back 
Payments  Made. 

Where  the  vendee  has  made  certain  payments 
as  agreed^  and  is  ready  to  complete  the  perfor- 
mance of  his  obligation  as  agreed,  but  the  vendor 
is  in  default,  the  vendee  must,  as  a  prerequisite 
to  maintaining  an  action  to  recover  back  the  pay- 
ments already  made,  offer  to  perform  his  part 
of  the  agreement.'' 

430.  Vendor's  Security  a  Cumulative  Remedy. 

The  right  to  maintain  an  action  against  the 
property  in  satisfaction  of  the  secured  obligation 
is  a  cumulative  remedy,  in  no,  manner  impairing 
the  right  to  a  direct  action  for  the  recovery  of 
the  purchase  money,  and  after  offering  a  deed  and 
demanding  performance  of  the  contract,  such  ac- 

other  established  a  *' resulting  trust."  When  the  pur- 
chase price  advanced  had  been  repaid  by  the  pur- 
chaser, the  mortgage  feature  of  the  transaction  was 
extinguished  and  eliminated,  and  thereafter  the  land 
was  held  by  the  person  advancing  the  money,  not  as 
mortgagee  at  all,  but  only  as  trustee:  White  v.  Costi- 
gan  (Cal.,  March  10,  1903),  72  Pac.  178. 

7  Leach  v.  Rowley,  Cal.,  March  30,  1903. 

''The  general  rule  is,  that  the  vendee  is  not  entitled 
to  a  conveyance  until  full  payment  of  the  purchase 
money,  and  the  acts  of  payment  and  conveyance  being 
mutual  and  dependent,  neither  party  is  in  default  un- 
til after  tender  and  demand  by  the  other":  Laffey  v. 
Kaufman,  134  Cal.  391,  393,  86  Am.  St.  Eep.  283,  66 
Pac.  471. 

8  Vendor's  Security  a  Cumulative  Remedy:  Glock 
V.  Howard  &  Wilson  Colony  Co.,  123  Cal.  1,  6,  69  Am. 


07 0  vendor's    security.  §  430 

tion  may  be  maintamed^^  but  an  attachment  can- 
not be  issued  therein.^ 

St.  Eep.  17,  55  Pac.  713.  ^^A  vendor  retaining  the 
title  may  ....  sue  at  law  for  the  balance  of  the  pur- 
chase monev,  or  file  his  bill  in  equity '^  Sparks  v. 
Hess,  15  Cal.  186,  194. 

Although  time  is  essential,  the  failure  of  the  vendee 
to  make  the  payments  provided  for  does  not  make  the 
contract  void,  so  far  as  the  vendor  is  concerned,  but 
the  vendor  has  the  option  to  avoid  or  enforce  the  con- 
tract, and  may,  if  he  so  elects,  after  offering  a  deed 
and  demanding  performance,  maintain  an  action  for 
the  recovery  of  the  unpaid  balance  of  the  purchase 
money:  Wilcoxson  v.  Stitt,  65  Cal.  596,  52  Am.  Eep, 
310,  4  Pac.  629;  Smith  v.  Mohn,  87  Cal.  489,  498,  25 
Pac.  696;  Newton  v.  Hull,  90  Cal.  487,  494,  27  Pac. 
429;  North  Stockton  Town  Lot  Co.  v.  Fisher  (Cal., 
Dec.  18,  1902),  70  Pac.  1082. 

''It  has  been  held  that  until  a  conveyance  has  been 
made  the  lien  constitutes  such  security  as  will  prevent 
the  creditor  from  suing  out  an  attachment,  but  it  has 
also  been  uniformly  held  that  such  contract  does  not 
establish  the  relation  of  mortgagor  and  mortgagee. 
There  is,  therefore,  no  statutory  prohibition  upon  the 
right  to  a  personal  action  to  enforce  the  debt  when 
it  becomes  due.  The  action  is  for  money  due,  as 
much  as  though  the  suit  were  upon  a  promissory  note. 
It  is  not,  therefore,  a  local  action^':  Samuel  v.  Allen, 
98  Cal.  406,  408,  33  Pac.  273;  North  Stockton  Town 
Lot  Co.  V.  Fisher  (Cal.,  Dec.  18,  1902),  70  Pac.  1082. 

9  Attachment  cannot  Issue.— The  vendor's  security 
is  a  lien  within  the  meaning  of  the  Code  of  Civil  Pro- 
cedure, sec.  537  (Practice  Act,  sec.  120),  which  dis- 
allows an  attachment  to  issue  upon  a- demand  secured 
bv  lien:  Hill  v.  Grigsby,  32  Cal.  55;  Gessner  v.  Palma- 
teer,  89  Cal.  89  (24  Pac.  608),  26  Pac.  789;  on  rehear- 
ing in  bank  (reversing  first  decision),  per  Paterson, 
De  Haven,  Garoutte,  and  Harrison,  JJ.,  and  Beatty, 
C.  J.;  McFarland,  J.,  dissenting.  See,  also,  Samuel 
V.  Allen,  as  quoted  in  preceding  note. 


§  431  vendor's   security.  671 

431.     Security  Continues  Until  Vendor's  Demand 
Satisfied. 

So  long  as  the  secured  obligation  remains  un- 
satisfied^ the  vendor^s  security  is  not  waived  nor 
impaired  by  recourse  to  remedies  in  personam/^ 
nor  by  taking^*  nor  enforcing^^  independent  se- 

10  Not  Waived  by  Recourse  to  Remedies  in  Per- 
sonam.— ^'The  sum  of  the  decisions  ....  is  that  the 
vendor  may  sue  at  law  on  the  debt  or  in  equity  to 
enforce  the  contract,  or  he  may  pursue  both  remedies 
concurrently;  that  the  right  to  pursue  the  property  is 
not  waived  by  taking  independent  security,  or  by 
other  acts  which  would  operate  as  a  waiver  of  the  im- 
plied [vendor's]  lien,  and  that  so  long  as  he  retains 
the  title  the  vendor  clearly  manifests  an  intention  to 
rely  upon  it  as  security  for  his  debt,  and  equity  will 
not  compel  him  to  part  with  his  title  until  his  debt 
has  been  paid;  and  that  the  institution  of  proceedings 
at  law  for  the  purchase  price,  whether  evidenced  by 
notes  or  not,  and  the  recovery  of  judgment  and  the 
issuance  of  execution  thereon,  do  not  affect  the  right 
of  the  vendor  to  satisfy  his  claim  for  the  purchase 
price  out  of  the  property,  except  so  far  as  such  judg- 
ment may  have  been  satisfied' ':  Longmaid  v.  Coulter, 
123  Cal.  208,  213,  214,  55  Pac.  791. 

In  this  respect  Code  of  Civil  Procedure,  section  726 
/see  sections  385-388  and  390-392  above),  is  inapplica- 
ble, because  the  relation  of  mortgagor  and  mortgagee 
does  not  exist:  Samuel  v.  Allen,  98  Cal.  406,  33  Pac. 
273;  Longmaid  v.  Coulter,  123  Cal.  208,  214,  215,  55 
Pac.   791. 

11  Not  Waived  by  Taking  Independent  Security.— 
Taking  a  note  for  the  purchase  money  does  not  affect 
this  lien;  and  even  if  part  is  paid,  the  lien  is  good  as 
to  the  residue:  Truel?ody  v.  Jacobson,  2  Cal.  269,  286. 

Taking  a  mortgage  to  secure  the  payment  of  the 
purchase  price  does  not  waive  the  vendor ^s  security: 
Kent  V.  Williams,  114  Cal.  537,  542,  46  Pac.  462. 

12  Not  Waived  by  Enforcing  Independent  Security. 


672  vendor's    security.  §  431 

CTirity,  nor  by  an  extension^^  of  the  time  of  pay- 
ment of  the  secured  obligation. 

432.     Enforcement  of  Secured  Obligation  Against 
Security. 

Upon  the  default^^  of  a  vendee  in  possession  in 
the  performance  of  his  contract  of  purchase,  the 
vendor  may,  after  offering  a  deed  and  demand- 
ing the  performance  of  his  contract  by  the  ven- 

Wliere  an  obligation  secured  by  vendor's  security  is 
also  secured  by  mortgage,  the  commencement  of  an 
action  to  foreclose  the  mortgage  does  not  vs^aive  the 
securitv:  Kent  v.  San  Francisco  Sav.  Union,  130  Cal. 
401,  407,  62  Pac.  420. 

13  Not  Waived  by  Extension  of  Time  of  Payment.— 
The  extension  of  the  time  of  payment  for  land  be- 
yond the  period  mentioned  in  the  title  bond  given 
by  the  vendor  to  the  vendee  does  not  release  the  se- 
curity:  Truebody  v.  Jacobson,  2  Cal.  269,  286. 

14  What  Amounts  to  Default.— Where  the  parties 
to  a  contract  expressly  declare  time  to  be  essential, 
the  vendee  must  perform  on  the  day  fixed  within  rea- 
sonable hours.  It  is  none  the  less  so  in  equity  than 
at  law,  unless  equitable  grounds  in  excuse  of  the  de- 
fault are  shown:  Grey  v.  Tubbs,  43  Cal.  359;  Clock  v. 
Howard  &  Wilson  Colony  Co.,  123  Cal.  1,  9,  69  Am. 
St.  Eep.  17,  55  Pac.  713. 

''Where  an  equitable  showing  is  not  made  to  ex- 
cuse the  breach,  the  vendor  has  the  right  in  equity, 
as  he  always  has  at  law,  to  retain  the  moneys  paid  by 
the  vendee '^  Clock  v.  Howard  &  Wilson  Colony  Co., 
123  Cal.  1,  11,  69  Am.  St.  Eep.  17,  55  Pac.  713. 

Where  a  vendee  gave  three  notes  in  part  payment 
for  land,  which  were  never  presented  for  payment, 
the  vendee  is  not  put  in  default  by  such  nonpayment: 
Gouldin  v.  Buckelew,  4  Cal.  107. 

Where  a  contract  for  the  sale  and  purchase  of  land 
was  made,  the  title  to  remain  in  the  vendor  until  pay- 


§  432  vendor's   security.  673 

dee/^  but  without  rescinding  the  contract  nor  re- 
turning any  payments  which  may  have  been  mad:^ 
by  him/^  maintain  an  action^  either, 
(1)   to  recover  the  possession  of  the  property, 
the  vendor  having  first  demanded  and  been 
refused  possession    except  where  the  contract 
provides  that  the  vendee's  right  to  possession 
shall  terminate  upon  his  default/''  and  also  to 

ment  by  the  vendee  of  the  full  purchase  price,  and 
the  payments  were  to  be  at  certain  times,  but  only  in 
case  the  title  was  satisfactory,  and  if  not  so  made,  the 
payments  to  be  forfeited,  where  the  vendor  failed  to 
give  good  title,  he  cannot  declare  the  payments  for- 
feited and  maintain  an  action  to  quiet  title:  Leach  v. 
Eowley,  Cal.,  March  30,  1903.  See,  also,  Benson  v. 
Shotwell,  87  Cal.  49,  60,  25  Pac.  249;  Birch  v.  Cooper, 
134  Cal.  636,  639,  69  Pac.  420. 

15  Vendor  must  Offer  Deed  and  Demand  Perform- 
ance. 

The  demand  of  payment  is  not  required  to  De 
written  nor  formal,  but  any  language  is  sufficient 
which  is  so  clear  as  to  leave  no  doubt  nor  misunder- 
standing as  to  what  is  intended  by  the  demand:  Will- 
iams V.  Long,  Cal.,  May  29,  1903. 

16  Hoffman  v.  Eemnant,  72  Cal.  1,  2,  12  Pac.  804; 
Hannan  v.  McNickel,  82  Cal.  122,  126,  127,  23  Pac. 
271;  Williams  v.  Long,  Cal.,  May  29,  1903. 

17  First,  may  Maintain  Action  to  Recover  Posses- 
sion: Thorne  v.  Hammond,  46  Cal.  530;  Whittier  v. 
Stege,  61  Cal.  238,  in  bank;  Hicks  v.  Lovell,  64  Cal. 
14,  20,  49  Am.  Eep.  679;  27  Pac.  942. 

The  vendor  ^'is  not  bound  to  wait  indefinitely  after 
the  failure  of  the  purchaser  to  comply  with  the  terms 
of  his  agreement.  If  the  payments  are  not  made 
when  due,  he  may,  if  out  of  possession,  bring  his  eject- 
ment and  recover  the  possessj-on^':  Keller  v.  Lewis, 
53  Cal.  113;  56  Cal.  466. 
Liens— 43 


674  vendor's    security.  §  432 

recover  the  value  of  the  rents  and  profits  accru- 
ing after  the  demand  was  made  without  deduct- 
ing therefrom  the  value  of  improvements 
made/®  or 
(2)  to  quiet  his  title  and  recover  possession  un- 
less within  a  certain  time  to  he  fixed  by  tho 
court  the  vendee  shall  perform  his  contract.^^ 

Where,  however,  a  contract  for  the  sale  of  property- 
provides  for  possession  by  the  purchaser,  and  does  not 
provide  that  upon  failure  to  comply  with  its  condi- 
tions his  right  to  the  possession  should  cease,  the 
vendor  cannot  maintain  an  ejectment  upon  default 
of  payment  (pp.  618,  619).  But  as  the  possession  of 
the  vendee  is  lawful,  an  ejectment  will  not  lie  against 
the  purchaser  without  a  demand  of  possession  and  a 
refusal  to  quit  (p.  616) :  Willis  v.  Wozencraf t,  22  Cal. 
607. 

The  statement  of  Keller  v.  Lewis  is  subject  to  the 
limitation  of  the  Willis  case:  Central  Pac.  E.  E.  Co. 
V.  Mudd,  59  Cal.  585,  590. 

Compare,  however,  the  remark  in  Gouldin  v.  Buck- 
elew,  4  Cal.  107,  that  the  vendor  ^^  might  have  recov- 
ered possession  of  the  premises,  in  which  case  he 
could  only  have  held  until  the  rents  and  profits  had 
paid  the  purchase  money,  and  then  equity  would  have 
compelled  him  to  convey  to  the  purchaser. '^ 

18  Hannan  v.  McNickel,  82  Cal.  122  127-128,  23 
Pac.  271. 

19  Second,  may  Quiet  Title,  etc.,  Unless  Perform- 
ance Made:  Fairchild  v.  Mullan,  90  Cal.  190,  194,  27 
Pac.  201;  Odd  Fellows'  Sav.  Bank  v.  Brander,  124  Cal. 
255,  257,  56  Pac.  1109.  See,  also.  Southern  Pac.  E.  E. 
Co.  V.  Allen,  112  Cal.  455,  462,  463,  44  Pac.  796. 

The  vendor  may  (2)  '^institute  proceedings  to  fore- 
close the  right  of  the  vendee  to  purchase, ''  the  judg- 
ment to  fix  *  *  a  day .  within  which  the  defendants 
should  pay  the  balance  due  upon  the  contract,  and 
costs,  etc.,  or  be  forever  foreclosed  of  all  right  or  in- 


§  432  vendor's  security.  675 

terest   in   the   lands,    or   to    a    conveyance   thereof": 
Keller  v.  Lewis,  53  Cal.  113. 

*'The  court  may  make  a  decree,  as  in  a  case  of 
strict  foreclosure,  ....  that  if  the  vendee  does  not 
pay  the  purchase  money  in  such  time  as  may  be  lim- 
ited for  that  purpose  by  the  court,  he  shall  be  barred 
and  foreclosed  of  his  right  to  claim  a  specific  perform- 
ance afterward":  Sparks  v.  Hess,  15  Cal.  186,  194. 

*'The  decree  ....  should  be  in  the  alternative": 
Sparks  v.  Hess,  15  Cal.  186,  194. 

An  assignee  of  the  vendee  can  have  no  cause  of 
complaint  at  such  a  decree:  Odd  Fellows'  Sav.  Bank 
V.  Brandon,  124  Cal.  255,  257,  56  Pac.  1109. 

Certain  early  cases  give  an  apparently  different 
statement  of  the  vendor's  rights  upon  default  of  ven- 
dee. 

Thus  in  Gouldin  v.  Buckelew,  4  Cal.  107,  it  is  said 
that  the  vendor  ''might  have  enforced  his  lien  in  a 
court  of  equity,  and  obtained  a  decree  to  sell  the  land, 
in  which  case,  if  the  sale  had  produced  more  than  the 
purchase  money,  the  surplus  would  belong  to  the  ven- 
dee." 

And  in  Sparks  v.  Hess,  15  Cal.  186,  194,  195,  the 
court  said:  ''In  the  present  case,  the  vendors  have 
retained  the  legal  title,  and  evidently  as  security  for 
the  purchase  money.  Their  position  is  in  some  re- 
spects similar  to  what  it  would  have  been  had  they 
executed  a  conveyance  to  the  vendee  and  taken  from 
him  a  mortgage  upon  the  property.  A  mortgage  is  in 
form  a  conveyance  of  the  legal  title,  though  intended 
only  as  security  for  the  debt.  Here  the  title  is  re- 
tained by  the  vendee  for  a  similar  purpose  of  security. 
A  mortgagee  may  pursue  his  remedy  at  law,  or  pro- 
ceed in  equity  for  a  sale  of  the  premises.  A  vendor 
retaining  the  title  may  in  like  manner  sue  at  law  for 
the  balance  of  the  purchase  money,  or  file  his  bill  in 
equity  for  the  specific  performance  of  the  contract, 
and  take  an  alternative  decree  that  if  the  purchaser 
will  not  accept  the  conveyance  and  pay  the  purchase 
money,  the  premises  be  sold  to  raise  such  money,  and 
that   the  vendee  pay  any  deficiency  remaining  after 


67^  vendor's    security.  §  432 

Except  where  the  contract  is  mntnally  abandoned 
or  rescinded  as  permitted  by  law^^^  a  vendee  in 

the  application  of  the  proceeds  upon  such  sale 

The  vendor  is  at  liberty  to  ask  either  for  a  decree 
directing  performance,  and  in  case  of  refusal,  a  sale 
of  the  premises,  or  a  decree  barring  the  right  of  the 
vendee  to  claim  a  conveyance  under  the  contract.  He 
may,  however,  insist  upon  the  sale,  where  the  perform- 
ance is  refused,  and  is  not  bound  to  take  a  mere  fore- 
closure   of   the   vendee's   right   to   a   deed.'' 

20  Abandonment  or  Rescission  of  Contract.— When 
a  contract  of  sale  and  purchase  of  lands  is  mutually 
abandoned  or  rescinded  by  the  parties,  and  in  this 
case  alone,  the  vendee,  whether  or  not  in  default,  is 
entitled  to  recover  back,  less  the  actual  damages  to 
the  vendor  occasioned  by  his  breach  of  contract  when 
such  there  is,  such  installments  of  the  purchase  money 
as  have  been  paid:  Cleary  v.  Folger,  84  Cal.  316,  321, 
18  Am.  St.  Eep.  187,  24  Pac.  280;  Phelps  v.  Brown, 
95  Cal.  572,  574,  575,  30  Pac.  774;  Bradford  v.  Park- 
hurst,  96  Cal.  102,  105,  31  Am.  St.  Eep.  189,  30  Pac. 
1106;  Shively  v.  Semi-Tropic  Land  etc.  Co.,  99  Cal. 
259,  260,  261,  33  Pac.  848;  Glock  v.  Howard  &  Wilson 
Colony  Co.,  123  Cal.  1,  13,  19,  69  Am.  St.  Eep.  17,  55 
Pac.  713;  Gwin  v.  Calegaris,  Cal.,  June  20,  1903.  See, 
also.  Drew  v.  Peddlar,  87  Cal.  443,  449,  450,  22  Am. 
St.  Eep.  257,  25  Pac.  749,  as  interpreted  in  Glock  v. 
Howard  &  Wilson  Colony  Co.,  123  Cal.  1,  13-16,  19, 
69  Am.  St.  Eep.  17,  55  Pac.  713. 

Where  the  vendee  is  in  default,  a  sale  and  convey- 
ance of  the  property  by  the  vendor  to  a  third  party 
does  not  amount  to  an  abandonment  by  the  vendor, 
although  he  has  never  tendered  a  deed  nor  demanded 
performance  by  the  vendee:  Joyce  v.  Shafer,  97  Cal. 
335,  32  Pac.  320;  Shively  v.  Semi-Tropic  Land  etc.  Co., 
99  Cal.  259,  261,  33  Pac.  848.  The  principle  of  these 
cases  was  thus  limited  in  Birch  v.  Cooper,  136  Cal. 
636,  639,  69  Pac.  420.  The  earlier  case  of  Garberino 
V.  Eoberts,  109  Cal.  125,  129,  41  Pac.  857,  on  the  con- 
trary had  extended  it. 

But  where,  before  a  default  of  the  vendee,  the  ven- 
dor entered  into  a  second  contract  for  the  sale  of  the 


§  432  vendor's   security.  677 

default  is  not  entitled  to  a  repayment  of  moneys 
paid.^^ 

property  to  another  vendee,  ''not  only  from  familiar 
principles  of  the  law,  but  from  the  contract  [of  sale 
to  the  first  vendee]  itself,  which  provides  for  forfeit- 
ure for  nonperformance,  '  except  in  case  of  failure  of 
title  on  the  part  of  the  vendors,'  "  the  default  of  the 
first  vendee  to  pay  or  offer  to  pay  any  part  of  the 
purchase  price  or  interest  is  excused,  and  the  vendor 
cannot  quiet  title  against  him,  for  the  second  vendee 
might  claim  adversely,  and  hence  prevent  a  clear  title 
being  given  to  the  first  vendee:  Birch  v.  Cooper,  136 
Cal.  636,  638,  639,  69  Pac.  420. 

Contra,  Garberino  v.  Boberts,  109  Cal.  125,  41  Pac. 
857,  where  before  default  on  the  part  of  the  vendee, 
the  vendor  sold  and  conveyed  the  property  to  a  third 
party,  and  this  was  held  not  to  amount  to  an  abandon- 
ment. 

Yet  where  the  vendee  is  not  in  default,  the  entry 
of  judgment  against  the  vendor  in  an  action  brought 
against  him  by  a  third  party,  defeating  his  title  to  a 
part  of  the  land  sold,  does  not  of  itself  amount  to  an 
abandonment  of  the  contract  of  sale,  for  the  vendor 
might  have  procured  such  title  from  the  third  party 
before  the  time  of  performance  of  his  contract  of  sale: 
Latimer  v.  Capay  Valley  Land  Co.,  137  Cal.  286,  70 
Pac.  82,  84A. 

21  Vendee  cannot  Recover  Payments  Made.— The 
vendee,  whether  in  default  or  not,  cannot,  while  the 
vendor  insists  upon  the  contract  and  is  in  no  wise 
in  default,  repudiate  the  contract  and  recover  the 
portion  already  paid:  Scott  v.  Glenn,  87  Cal.  221,  25 
Pac.  405  (vendor  in  possession,  purchaser  in  default); 
Dennis  v.  Strassburger,  89  Cal.  583,  26  Pac.  1070  (ven- 
dor in  possession,  purchaser  not  in  default);  Bradford 
V.  Parkhurst,  96  Cal.  102,  31  Am.  St.  Eep.  189,  30  Pac. 
1106  (purchaser  in  possession,  and  in  default);  Joyce 
V.  Shafer,  97  Cal.  335,  337,  338,  32  Pac.  320  (vendor  in 
possession,  purchaser  in  default) ;  Garberino  v.  Eob- 
erts,  109  Cal.  125,  41  Pac.  857   (vendor  in  possession, 


678  vendor's    security.  §  432 

purchaser  not  in  default);  Eayfield  v.  Van  Meter,  120 
Cal.  416,  52  Pac.  666  (purchaser  in  possession  of 
movable  property,  and  in  default);  Glock  v.  Howard 
&  Wilson  Colony  Co.,  123  Cal.  1,  9,  69  Am.  St.  Rep.  17, 
55  Pac.  713  (vendor  in  possession,  purchaser  in  de- 
fault); Odd  Fellows'  Sav.  Bank  v.  Brander,  124  Cal. 
255,  258,  56  Pac.  1109  (purchaser  in  possession,  and  in 
default). 

'^This  is  true  whether  or  not  the  contract  provides 
for  a  forfeiture  of  payments  made  in  case  of  the 
vendee's  refusal  to  complete  the  purchase'':  Odd  Fel- 
lows' Sav.  Bank  v.  Brander,  124  Cal.  255,  258,  56  Pac. 
1109;  Glock  v.  Howard  &  Wilson  Colony  Co.,  123  Cal. 
1,  12,  69  Am.  St.  Rep.  17,  55  Pac.  713. 

The  failure  to  tender  a  deed  and  demand  payment 
on  the  day  fixed,  although  time  is  essential,  does  not 
put  the  vendor  in  default,  the  stipulation  for  time 
being  for  the  benefit  of  the  vendor  alone:  Newton  v. 
Hull,  90  Cal.  487,  492-494,  27  Pac.  429;  Bradford  v. 
Parkhurst,  96  Cal.  102,  104,  105,  31  Am.  St.  Rep.  189, 
30  Pac.  1106;  North  Stockton  Town  Lot  Co.  v.  Fisher 
(Cal.,  Dec.  18,  1902),  70  Pac.  1082.  The  case  of  Cleary 
V.  Folger,  84  Cal.  316,  319,  18  Am.  St.  Rep.  187,  24 
Pac.  280,  to  the  contrary  being  overruled. 


433  vendor's   security.  679 


AETIOLE  2. 
SECUEITY  OF  GEANTEE  OF  YENDOE  IN  TEUST. 

433.  Transfer  from  vendor  to  third  party  as  security 
for  obligation  of  vendee  equivalent  to  ven- 
dor's security. 

433.  Transfer  from  Vendor  to  Third  Party  as 
Security  for  Obligation  of  Vendee  Equiva- 
lent to  Vendor's  Security. 
An  agreement  by  which  a  person  about  to  pur- 
chase immovable  property  procures  a  third  per- 
son to  advance  the  purchase  money  to  the  ven- 
dor and  receive  as  security  for  such  advance  a 
conveyance  of  the  property,  the  right  of  posses- 
sion to  be  in  the  purchaser,  causes  the  grantee  to 
become  the  holder  of  the  legal  title  to  the  prop- 
erty in  trust  for  the  purchaser  and  his  mortgages 
for  the  purchase  money.^  The  grantee  and  pur- 
chaser possess  the  same  rights  between  them- 
selves as  the  vendor  and  vendee  in  case  of  a  ven- 
dor's security.® 

1  Low  V.  Henry,  9  Cal.  538,  549,  550;  Woodward 
V.  Hennegan,  128  Cal.  293,  300,  301,  60  Pac.  769. 
Compare  Freeman  v.  Campbell,  99  Cal.  546,  34  Pac. 
114. 

2  Woodward  v.  Hennegan,  128  Cal.  293,  301,  302, 
60  Pac.  769. 


680  vendor's    security.  §  433 

In  Jones  v.  Sanders,  138  Cal.  405,  71  Pac.  506,  where 
the  purchaser  of  immovable  property  caused  it  to  be 
conveyed  by  the  vendor  direct  to  a  third  party  as 
security  for  a  portion  of  the  purchase  money  which 
was  loaned  by  the  third  party,  and  the  agreement  also 
provided  that  the  purchaser  might  sell  any  of  the 
property,  the  purchase  money  to  be  paid  to  the  trans- 
feree and  to  be  credited  upon  the  secured  obligation 
until  it  was  fully  paid,  the  transferee  to  convey  the  lots 
to  the  purchasers  upon  receipt  of  the  purchase  money, 
the  court, in  passing, said,  referring  to  this  agreement: 
*'We  think  that  it  is  not  a  matter  of  importance 
whether  the  transaction  [between  the  purchaser  and 
the  transferee]  ....  be  held  to  be  a  trust  or  a  mort- 
gage. As  between  themselves,  it  was  a  mere  security, 
and  therefore  a  mortgage;  and  as  to  the  direction  to 
convey  to  purchasers  it  would  seem  to  be  a  trust, 
though  that  power  was  in  aid  of  the  security.  In 
either  case*,  however,  [the  purchaser]  ....  was  the 
owner,  with  possession  and  the  sole  right  to  sell,  use 
and  control  the  property,  with  the  limitation  that  it 
must  not  be  so  used  as  to  materially  impair  the  se- 
curity of  [the  transferee]  ....  who  had  no  other  in- 
terest therein.'' 


PART  THREE. 

ENCUMBRANCES  IMPOSED   BY  OPER- 
ATION OF   LAW. 

LIENS. 

PEOPOSITIONS  COMMON  TO  ALL  LIENS. 

434.  Lien    defined. 

435.  Division    of   liens. 

436.  General  lien  defined. 

437.  Special  lien  defined. 

438.  Time  when  lien  arises. 

439.  Exempt   property  lienable. 

440.  Waived   by   taking   mortgage. 

434.     Lien  Defined. 

A  lien  is  a  charge  imposed  by  operation  of  law^ 
upon  specific  property,  by  which  it  is  made  se- 
curity for  the  performance  of  an  obligation. 

1  In  this  definition  the  meaning  of  the  word 
is  limited  to  charges  imposed  by  operation  of  law. 
Compare  Civil  Code,  sections  2872  and  2881,  where 
charges  created  by  contract  are  also  embraced  with- 
in the  scope  of  the  term. 

(681) 


682  LIENS.  §  435 

435.  Division  of  Liens. 
Liens  are 

(1)  dependent  on  possession  of  property  charged 
or  independent  of  possession  of  property 
charged,  and 

(2)  general  or  special.^ 

436.  General  Lien  Defined. 

A  general  lien  is  one  which  the  holder  thereof 
is  entitled  to  enforce  as  a  security  for  the  per- 
formance of  all  the  obligations,  or  all  of  a  par- 
ticular class  of  obligations,  which  exist  in  hi^ 
favor  against  the  owner  of  the  property.^ 

437.  Special  Lien  Defined. 

A  special  lien  is  one  which  the  holder  thereof 
can  enforce  only  as  security  for  the  performance 
of  a  particular  act  or  obligation,  and  of  such  ob- 
ligations as  may  be  incidental  thereto.^ 

438.  Time  When  Lien  Arises. 

.  E'o  lien  arises  by  mere  operation  of  law  until 
the  time  at  which  the  act  to  be  secured  thereby 
ought  to  be  performed.^ 

3  Liens  are  General  or  Special:  Civ.  Code,  sec.  2873. 

3  Civ.  Code,  sec.  2874. 

4  Civ.   Code,   sec.   2875. 

5  Civ.  Code,  sec.  2882. 


§  439  LIENS.  683 

439.  Exempt  Property  Lienable. 

Property  exempted  by  law  from  forced  sale  i3 
nevertheless  subject  to  the  operations  of  liens.® 

440.  Waived  by  Taking  Mortgage. 
Whenever  a  mortgage  is  received  as  security 

for  the  payment  of  an  obligation  secured  by  lien, 
the  lien  is  no  longer  available  as  security  for  such 
obligation,  but  is  waived  in  respect  thereto.'' 

6  "Code  of  Civil  Procedure,  section  690,  last 
clause,  as  amended  by  Statutes  of  1903,  March  10,  page 
114,  chapter  103,  in  effect  May  9,  1903,  provides:  '*No 
article  or  species  of  property  mentioned  in  this  sec- 
tion is  exempt  from  execution  issued  upon  a  .  .  .  .  judg- 
ment of  foreclosure  of  a  mortgage  [  03n  \-  or  other 
lien^  n03^    thereon.'' 

7  ''When  the  legislature  declared  that  there 
should  be  but  one  action  to  enforce  a  debt  secured  by 
mortgage,  it  did  not  mean  that  payment  could  be  en- 
forced against  the  consent  of  the  mortgagor  by  giv- 
ing a  bank  the  right  to  enforce  payment  under  a 
general  banker's  lien  upon  some  other  property,  and 
that,  too,  without  any  legal  proceedings  whatever. 
The  lien  given  on  the  mortgaged  premises  I  think  was 
intended  to  be  in  lieu  and  exclusive  of  all  implied 
liens.  I  do  not  see,  either,  why  a  bank  should  be 
given  a  right  to  forcibly,  and  against  the  consent  of 
the  depositor,  appropriate  his  money,  when,  if  it  came 
into  court  to  do  so,  the  action  would  not  lie,  and  we 
have  seen  it  would  not  lie  as  counterclaim,  setoff,  or 
in  whatever  other  form  it  may  be  presented ' ' :  McKean 
V.  German-American  Sav.  Bank,  118  Cal.  334,  340,  341, 
50   Pac.   656. 

See    sections    385-388,    above;    also    527-529,    below. 


TITLE  1 

LIENS  DEPENDENT  ON  POSSESSION  OF 
PEOPEETY  CHAEGED 

AGAINST  MOVABLE  PEOPEETY. 

441.  Lienor  may  retain  possession  until  secured  de- 

mand   satisfied. 

442.  Attachment  of  liened  property,  how  made. 

441.  Lienor  may  Retain  Possession  Until  Se- 
cured Demand  Satisfied. 
A  lienor  may  retain  possession  of  the  whole  or 
any  part  of  property  subject  to  a  lien  dependent 
on  possession  until  the  entire  demand  secured 
thereby  is  satisfied.^     Offering  to  give  good  se- 

1  Compare  Civil  Code,  section  1861,  last  clause, 
and  section  3052. 

So  a  marine  carrier  of  goods  may  retain  them  until 
the  freightage  is  paid:  Frothingham  v.  Jenkins,  1  Cal. 
42,  52  Am.  Dec.  286;  Brown  v.  Howard,  1  Cal.  423. 

A  carrier  has  a  lien  on  any  part. of  the  goods  for 
the  whole  freightage;  thus  the  surrender  of  a  part  of  the 
goods  does  not  proportionately  reduce  the  amount  of 
lien  upon  the  remainder,  but  they  may  be  held  for  the 
whole  sum  of  the  freightage:  Frothingham  v.  Jenkins, 
1  Cal.  42,  52  Am.  Dec.  286;  Mayo  v.  Stansbury,  3  Cal. 
465. 

(684) 


§  441         DEPENDENT  ON  POSSESSION.  685 

curity,  or  giving  good  security,  is  not  payment, 
and  does  not  discharge  the  lien.^ 

442.     Attachment    of    Liened    Property,     How 
Made. 

In  case  of  the  attachment  of,  or  the  levy  of 
an  execution  upon,  property  in  the  possession  of 
a  lienor  holding  it  under  a  lien  dependent  on  pos- 
session, upon  a  demand  against  the  owner 
of  the  property,  the  attaching  officer  can- 
not take  the  property  from  the  lienor,  but  must 
reach  the  interest  of  the  owner  by.  serving  a  gar- 
nishment upon  the  lienor.  Where  the  property 
is  capable  of  manual  delivery,  the  court  may, 
after  an  examination  of  the  lienor,  on  such  terms 
as  may  be  just,  having  reference  to  his  lien,  or- 
der the  property  to  be  delivered  to  the  officer.^ 

2  Frothingham  v.  Jenkins,  1  Cal.  42,  52  Am.  Dec. 

286. 

3  See   section   206,    and   notes   above. 
Illustrations.— Where  .property    was    affected    by    a 

livery-stable  keeper's  lien,  in  whose  possession  it  was, 
the  property  cannot  be  taken  from  his  possession  on 
attachment:  Johnson  v.  Perry,  53  Cal.  351,  353. 

AVhere  a  person  in  possession  of  movable  property 
has  a  lien  thereagainst  for  services  performed  thereon, 
he  is  entitled  to  the  possession  of  the  property,  and 
may  maintain  an  action  against  a  sheriff  who  seizes 
the  property  under  a  writ  of  execution  issued  against 
the  owner  of  the  land  upon  which  the  property  (rail- 
road ties  and  shakes)  is  cut:  Douglass  v.  McFarland, 
92  Cal.  656,  28  Pac.  687. 


CHAPTEE    1. 

BANKERS  UEN. 
443.     Nature   of   banker's   lien. 

443.     Nature  of  Banker's  Lien. 

A  banker  has  a  general  lien,  dependent  on  pos- 
session, upon  all  the  property  in  his  hands  be- 
longing to  a  customer,  for  the  balance  due  to  him 
from  such  customer  in  the  course  of  business.^ 

1  Civil  Code,  section  3054,  as  enacted  1872. 


(686) 


CHAPTER   2. 
FACTOE^S  LIEN. 

444.  Nature  of  factor's  lien. 

445.  Enforcement. 

444.     Nature  of  Factors  Lien. 

A  factor  has  a  general  lien,  dependent  on  pos- 
session, for  all  that  is  due  to  him  as  such,  upon 
all  articles  of  commercial  value  that  are  intrusted 
to  him  by  the  same  principal.^ 

A  factor^s  lien  may  be  transferred  by  a  written 
assignment  of  the  lien  coupled  with  a  transfer  of 
the  liened  property  to  the  assignee.  The  assign- 
ment of  the  lien  necessarily  involves  a  delivery  of 
the  possession  of  the  liened  property.^ 

3  Civil  Code,   section  3053,   as  enacted  1872. 

2  Assignable  under  Conditions  Stated.— Davis,  Be- 
lau  &  Co.  V.  National  Surety  Co.,  Cal.,  June  4,  1903. 

Averment.— But  conceding  that  a  transfer  of  the 
liened  property  is  essential  to  an  assignment  of  the 
lien,  it  does  not  follow  that  it  is  necessary  to  aver 
the  delivery  of  the  possession  of  the  property,  for 
the  ultimate  fact  is  the  assignment  of  the  lien,  and 
while  the  delivery  of  the  possession  must  be  proved 
in  order  to  establish  the  assignment,  the  pleading  is 
complete  without  an  averment  of  delivery;  and  no 
finding  on  such  fact  is  necessary  although  the  issue 
is  raised  by  the  pleadings:  Davis,  Belau  &  Co.  v. 
National   Surety   Co.,   Cal.,   June  4,   1903. 

(687)  ' 


688  factor's  lien.       •  §  445 

445.     Enforcement. 

A  factor,  forbidden  by  his  principal  to  sell  at 
the  market  price,  may  nevertheless  sell  for  his  re- 
imbursement, after  giving  to  his  principal  rea- 
sonable notice  of  his  intention  to  do  so,  and  of 
the  time  and  place  of  sale,  and  proceeding  in  all 
respects  as  a  pledgee.^ 

3  Civil  Code,  section  2027,  latter  clause,  as  en- 
acted  1872,   reads   substantially   as   above. 

As  to  sale  by  pledgee  see  sections  232  through  240, 
above. 


CHAPTER    3. 
LAUNDEYMAN^S    LIEN. 

446.     Nature   of  laundryman's  lien. 

446.     Nature  of  Laundryman's  Lien. 

Laundry  proprietors  and  persons  conducting  a 
laundry  business  have  a  general  lien,  dependent 
on  possession,  upon  all  movable  property  in  their 
hands  belonging  to  a  customer,  for  the  balance 
due  them  from  such  customer  for  laundry  work.^ 

3  Civil  Code,  section  3051,  last  clause;  new  pro- 
vision, in  effect  March  12,  1901. 

Liens— 44 


(689) 


CHAPTER  4. 
LIENS  OF  VAEIOUS  TRUSTEES. 

447.  Lien    exists    for    compensation    and    reimburse- 

ment. 

448.  Executor   has   lien   for    advances. 

447.    Lien  Exists  for  Compensation  and  Reim- 
bursement.^ 
Any  person  holding  property  in  a  fiduciary 

1  Various  Trustees  Have  Lien.— In  McLane  v. 
PlacerviUe  etc.  B.  R.  Co.,  66  Cal.  606,  622,  623,  6  Pac. 
748,  the  court  says: 

''It  is  objected  that  the  expenses  of  the  trustee  and 
receiver  mentioned  in  the  findings  and  decree  are 
not  a  lien  upon  the  road  and  piroperty  conveyed.  If 
the  expenses  were  reasonably  incurred  in  the  dis- 
charge of  the  trust,  we  see  no  reason  why  they  should 
not  be  a  lien.  Trustees  are  entitled  to  a  lien  on  the 
corpus  of  the  trust  property  for  all  such  disburse- 
ments. 

''The  law  on  this  subject  is  so  clearly  laid  down 
in  Renssalaer  and  Saratoga  E.  Co.  v.  Miller,  47  Vt. 
152,  that  we  insert  here  what  is  said  in  that  case  on 
the  point: 

"  'The  expenses  of  a  trustee  in  the  execution  of 
the  trust  are  a  lien  upon  the  estate,  and  he  will  not 
be  compelled  to  part  with  the  property  until  his  dis- 
bursements are  paid If  the  trust  fund  is  in- 
sufficient for  such  reimbursement,  he  may  call  upon 
the  cestui  que  trust,  in  whose  behalf  and  at  whose 
request   he   acted,   and   recover   from   him   personally 

!  (690)  i 


§  447  trustees'  liens.  691 

reasonable    compensation   for    the   time,    and    trouble, 

and  money  expended Trustees  have  an  inherent 

and  equitable  right  to  be  reimbursed  all  expenses  which 
they  reasonably  incur  in  the  execution  of  the  trust, 
and  it  is  immaterial  that  there  is  no  provision  for 
such  expenses  in  the  instrument  of  trust.  If  a  person 
undertakes  an  office  for  another  in  relation  to  prop- 
erty, he  has  a  natural  right  to  be  reimbursed  for  all 
money   necessarily    expended    in   the   performance    of 

the  duty The  cost  of  winding  up  a  trust  and 

distributing  the  money,  and  all  expenses  for  docu- 
ments, deeds  and  other  papers,  must  be  paid  from  the 

trust  fund The  trustee 's  lien  cannot  be  allowed 

to  control  the  estate  in  such  a  manner  as  to  destroy 
the  trust;  but  no  conveyance  will  be  ordered  or  allowed 
until  he  is  repaid.'  '' 

In  Glide  v.  Dwyer,  83  Cal.  477,  488,  23  Pac.  706,  where 
a  trustee  of  certain  mortgaged  property  held  in  trust 
for  the  benefit  of  the  holders  of  the  secured  notes  had 
expended  certain  moneys  in  order  to  discharge  a 
prior  encumbrance  upon  the  property,  the  court  said: 

'^For  the  moneys  so  expended,  the  party  was  en- 
titled to  a  return,  with  interest  and  costs  necessarily 
incurred  in  that  behalf,  and  to  have  the  same  re- 
turned out  of  the  whole  trust  fund.  It  was  as  much 
a  first  lien  on  that  trust  property  as  any  other  ex- 
pense legitimately  incurred  by  the  trustees,  and  could 
not,  in  law  or  in  equity,  be  so  limited  as  to  be  a  lien 
upon  a  moiety  only  of  the  trust  property.  The 
amount  to  be  allowed  on  account  of  that  expenditure 
was  for  the  court  to  determine.'' 

In  Adams  v.  Haskell,  6  Cal.  475,  the  court  said  that 
receivers  ''are  entitled  to  the  protection  of  the  court 
against  all  loss  for  disbursements  which  were  neces- 
sary and  proper,  and  such  as  a  reasonable  and  prudent 
man,  acting  as  receiver,  would  have  been  justified 
and  sustained  in  expending." 

That  a  receiver  has  a  lien,  see  Garniss  v.  Superior 
Court,  88  Cal.  413,  418,  26  Pac.  351  j  Ephraim  v. 
Pacific  Bank,  129  Cal.  589,  592,  62  Pac.  177.  Thus 
the  certificates  of  a  receiver  are  a  first  lien  upon 
the  property  of  a  street  railway  company  operated  by 


C92  trustees'  liens.  §  447 

him:  Illinois  Trust  etc.  Bank  v.  Pac.  Ry.  Co.,  115 
Cal.  285,  292,  295,  47  Pac.  60. 

In  Illinois  Trust  etc.  Bank  v.  Alvord,  99  Cal.  407, 
410,  33  Pac.  1131?,  where  a  receiver  had  been  appointed 
in  an  action  to  foreclose  a  mortgage,  the  court  said: 

'^The  appointment  of  a  receiver  is  for  the  benefit 
of  the  mortgagee,  and  is  made  upon  his  application. 
It  carries  with  it,  therefore,  the  necessarily  implied 
condition  that  he  is  to  be  answerable  for  the  legiti- 
mate costs  of  the  receivership,  that — as  against  him, 
at  least— the  receiver  shall  have  a  preferred  lien  upon 
the  funds  and  estate  which  came  into  his  hands,  and 
that  the  rents  and  income  of  the  property  may  be 
applied  to  the  payment  of  the  necessary  and  proper 
expenses  of  the  receivership*.  ^ ' 

The  court  in  Finnerty  v.  Pennie,  100  Cal.  404,  407, 
34  Pac.  869,  in  effect  recognizes  that  an  administrator 
has  such  a  lien.  In  that  case  the  trial  court  had  ad- 
judged in  a  judgment  of  distribution  of  an  estate  of  a 
deceased  person  that  the  property  be  distributed  sub- 
ject to  the  claim  of  the  administrator  for  his  compen- 
sation, and  the  appellate  court  affirmed  this  judgment, 
and  stated  that  it  created  a  lien  on  the  property  by 
operation  of  law  in  favor  of  the  administrator.  As, 
however,  a  lien  is  a  right  of  property  and  not  a  mat- 
ter of  procedure,  this  is,  in  effect,  an  adjudication  that 
the  administrator  has  such  a  lien  as  the  court  declared, 
for  its  province  is  not  to  create  legal  rights  for  people, 
but  to  declare  and  protect  those  which  they  already 
have. 

An  assignee  in  insolvency  has  such  a  lien.  ' '  Section 
32  of  the  Insolvent  Act  [of  1895]  allows  receivers 
[that  is,  assignees  in  insolvency]  *to  charge  and  re- 
ceive for  their  services  commissions  upon  all  sums  of 
money  coming  into  their  hands  and  accounted  for  by 
them,'  at  certain  rates  therein  specified.  The  evident 
contemplation  of  the  statute  is  that  this  allowance 
shall  be  made,  upon  the  settlement  of  each  account 
presented,  upon  the  amount  of  moneys  accounted  for 
in  such  account;  and,  as  this  charge  is  a  preferred 
demand  upon  the  funds  in  the  hands  of  the  assignee, 
it  should  be  allowed  and  satisfied  before  the  funds  are 


§  447  trustees'  liens.  693 

capacity  under  warrant  of  law^^  as  an  adminis- 
trator, executor,  guardian,  receiver,  or  other  trus- 
tee, who  faithfully  discharges  his  trust,^  except, 
however,  an  involuntary  trustee  who  becomes 
such  through  his  own  fault,'* 
(1)  has  a  lien  against  the  trust  property  in  his 
possession  as  security  for 

used  to  pay  creditors.  In  this  respect  the  method  of 
procedure  differs  from  that  in  the  settlement  of 
estates  of  deceased  persons,  where  the  representative 
is  usually  not  allowed  his  commissions  until  final 
settlement'':  Estate  of  Ealey,  123  Cal.  38,  40,  41,  55 
Pac.  790.     See  Insolvent  Act  of  1880,  sec.  28. 

2  Receiver  must  be  duly  appointed  in  order 
to  be  entitled  to  lien.  So  where  the  appoint- 
ment of  a  receiver  was  irregular  and'  unauthorized, 
he  must  look  to  the  parties  at  whose  instance  he  was 
appointed  for  his  compensation:  Ephraim  v.  Pacific 
Bank,  129  Cal.  589,  592,  62  Pac.  177. 

3  Trust  Must  be  Faithfully  Discharged  as  a  Con- 
dition Precedent  to  Becoming  Entitled  to  a  Lien.— 
Thus  in  In  re  Thompson,  101  Cal.  349,  355,  35  Pac.  199, 
36  Pac.  98,  '508,  where  a  trustee  had  been  appointed 
by  will,  the  court  said: 

*' Compensation  is  allowed  in  cases  of  this  kind 
only  to  faithful  stewards  for  their  care,  trouble,  and 
and  responsibility  in  the  management  of  an  estate,  and 
it  matters  not  that  the  will  itself  po-ovided  for  com- 
pensation, which  is  conditioned  upon  a  faithful  per- 
formance of  the  trust.  There  are  many  reported 
cases  in  which  the  courts  have  refused  to  allow  com- 
missions, where  the  negligence  exercised  by  the 
trustees  was  not  so  great  as  that  shown  by  the  trustees 
in  the  case  at  bar.'' 

4  An  Involuntary  Trustee,  Through  His  Own  Fault, 
not  Entitled  to  Lien.— Compare  Civil  Code,  section 
2275,  which  deprives  such  a  trustee  of  any  right  to 
compensation  or  reimbursement. 


694  TRUSTEES*    LIENS.  §    447 

(a)  the  compensation,^  if  any,  to  which  he  is 
entitled  for  his  services,  and 

(b)  reimbursement^  of  all  proper  expenses 
actually  incurred  in  the  execution  of  his 
trust,  and  also 

(2)   has  a  lien  against  any  profits  which  may  ac- 
crue from  any  undertaking  beyond  the  lawful 

5  Compensation. — The  compensation  of  a  trustee  is 
regulated  by  Civil  Code,  section  2274,  and  Code  of 
Civil  Procedure,   section  1700. 

That  a  trustee  is  entitled  to  compensation,  see 
Beattv  V.  Clark,  20  Cal.  11,  37;  More  v.  Calkins,  95 
Cal.  435,  441,  29  Am.  St.  Kep.  128,  30  Pac.  583. 

Compensation  of  an  assignee  for  the  benefit  of 
creditors:  See  Civ.  Code,  sees.  2274  and  3471.  Also 
Menke  v.  Miller,   56   Cal.   628. 

Of  an  executor  or  administrator:  See  Code  Civ. 
Proc,  sec.  1618;   and  sec.  1616,  last  clause. 

Of  a  guardian:  See  Code  Civ.  Proc,  sec.  1776. 

O  Reimbursement.— Civil  Code,  section  2273,  in  part: 
''A  trustee  is  entitled  to  the  repayment,  out  of  the 
trust  propierty,  of  all  expenses  actually  and  properly 
incurred  by  him  in  the  performance  of  his  trust'': 
See,  also,  Beatty  v.  Clark,  20  Cal.  11,  37;  More  v. 
Calkins,  95  Cal.  435,  441,  29  Am.  St.  Eep.  128,  30  ir^ac. 
583. 

Reimbursement  of  an  executor  or  administrator: 
See  Code  Civ.  Proc,  sec  1616. 

Of  a  guardian:  See  Code  Civ.  Proc,  sees.  1771  and 
1776. 

Of  a  receiver:  Items  for  the  following  may  be  in- 
cluded in  the  expenses  of  a  receiver:  (a)  reasonable 
counsel  fees  expended  by  him  to  aid  in  the  proper  dis- 
charge of  his  trust;  (b)  costs  of  litigation;  (c)  ex- 
penses of  taking  care  of,  protecting,  and  repairing 
the  property  in  his  charge:  McLane  v.  Placerville  etc. 
E.  R.  Co.,   66   Cal.   606,   623,   624,   6  Pac   748. 


§  447  trustees'  liens.  695 

scope  of  his  powers  in  which  he  may  engage,  for 
compensation  earned  and  reimbursement  for  ex- 
penses actually  incurred  therein.'' 

448.     Executor  has  Lien  for  Advances. 

An  advance  made  by  an  executor  or  adminis- 
trator to  a  legatee  of  the  decedent  whose  estate 
he  is  administering  may,  by  order  of  court,  be 
constituted  a  lien  against  the  distributive  share 
of  such  legatee.^ 

T  Trustee  to  be  Reimbursed  and  Compensated  in 
Unlawful  Undertakings,  When  Successful.— Civil  Code, 
section  2273,  in  piart  provides:  '*He  [a  trustee]  is 
entitled  to  the  repayment  of  even  unlawful  expen- 
ditures if  they  were  productive  of  actual  benefit  to 
the  estate.'' 

A  trustee  who  enters  an  undertaking  outside  the 
scope  of  his  powers  must  look  to  the  results  of  sucn 
undertaking  for  his  reimbursement  for  expenses  in- 
curred, and  a  suitable  allowance  for  his  services 
therein:  Beatty  v.  Clark,  20  Cal.  11,  37. 

8  In  re  Moore,  96  Cal.  522,  527-530,  31  Pac.  584. 


CHAPTER  5. 

LIEN   OF   YENDOE  OF   MOVABLE   PROP- 
ERTY. 

449.  Nature   of  vendor's  lien. 

450.  Property  held  for  purposes  of  lien  by  stoppage 

in    transit. 

451.  Insolvency   defined. 

452.  Transit  when  ended. 

453.  Stoppage   effected  by  notice   to   carrier. 

454.  Carrier  must  redeliver  goods  upon  demand. 

455.  Eight    of    stoppage    paramount. 

456.  Stoppage   does  not  rescind   sale. 

457.  Methods   of    enforcement    of   lien. 

449.     Nature  of  Vendor's  Lien.^ 

A  person  selling  movable  property  and  trans- 
ferring the  title^  thereto  has  a  lien  thereon,  de- 

1  Civil  Code,  section  3049,  as  enacted  1872: 
'*One  who  sells  personal  property  has  a  special  lien 
thereon,  dependent  on  possession,  for  its  price,  if  it  is 
in  his  possession  when  the  price  becomes  payable." 

This  section  ''contains  nothing  which  changes  the 
common-law  rule  upon  the  subject;  it  was  a  mere 
statement  in  a  convenient  form  of  what  the  common 
law  is'':  Eads  v.  Kessler,  121  Cal.  244,  246,  o3  Pac. 
656. 

3  Title  must  be  Transferred.— ''The  only  cases  in 
which  a  vendor  can  have  a  lien  on  the  goods  are 
those  in  which  the  title  to  the  goads  passes  to  the 
(696) 


§  449  vendor's   lien.  697 

pendent  on  possession,^  for  so  much  of  the  price 
as  remains  unpaid. 

450.  Property  Held  for  Purposes  of  Lien  by 
Stoppage  in  Transit.^ 
Except  as  against  a  bona  fide  purchaser  or  en- 
cumbrancer for  value,  taking  the  muniment  of 
title  to  the  sold  property  from  the  vendee  in  the 
usual  course  of  business,^  a  seller  or  consignor 

vendor  without  delivery  of  possession The  lien 

exists  only  when  the  property  has  passed  to  the  buyer, 
while  the  goods  themselves  are  still  in  the  actual  or 

constructive   possession   of   the   seller It   would 

he  an  incongruous  conception  that  the  vendor  might 
have  a  lien  upon  his  own  goods^':  Eads  v.  Kessler, 
321    Cal.   244,   246,   53   Pac.   656. 

3  pependent  on  Possession.— Where  the  goods  are 
sold,  and  the  possession  transferred  to  the  vendee, 
the  lien  is  lost:   Hewlet  v.  Flint,  7  Cal.  264. 

4  Civil  Code,  section  3076,  provides  as  this  sec- 
tion, omitting  the  exception  in  favor  of  the  bona 
fide  purchaser  or  encumbrancer: 

*^  Stoppage  in  transit  is  a  right  which  a  vendor  of 
goods  on  credit  has  to  recall  them,  or  retake  them, 
upon  the  discovery  of  the  insolvency  of  the  vendee, 
before  the  goods  liave  come  into  his  possession,  or 
any  third  party  has  acquired  bona  fide  rights  in 
them'':  Jones  v.  Earl,  37  Cal.  630,  632,  99  Am.  Dec. 
838. 

5  Bona  Fide  Purchaser  Taking  Muniment  of  Title 
Protected  Against  Stoppage  in  Transit. 

Civil  Code,  section  2127,  provides:  ^'All  the  title 
tc  the  freight  which  the  first  holder  of  a  bill  of  lad- 
ing had  when  he  received  it  passes  to  every  •subse- 
quent indorsee  thereof  in  good  faith  and  for  value, 
in   the   ordinary   course   of   business,   with   like   effect 


098  vendor's  lien.  §  450 

of  property^  whose  claim  for  its  price  or  proceeds 
has  not  been  extinguished,  "niay,  upon  the  insol- 
vency of  the  buyer  or  consignee  becoming  known 
to  him  after  parting  with  the  property,  stop  it 
while  on  its  transit  to  the  buyer  or  consignee  and 
resume  possession  thereof. 

and  in  like  manner  as  in  the  case  of  a  bill  of  ex- 
change. ' ' 

Section  2128  provides:  "When  a  bill  of  lading  is 
made  to  'bearer/  or  in  equivalent  terms,  a  simple 
transfer  thereof,  by  delivery,  conveys  the  same  title 
as   an   indorsement." 

Where  the  consignee  of  certain  goods  from  a  vendor 
to  whom  the  purchase  money  was  not  paid  pledged 
the  bills  of  lading  thereof,  the  pledgee  having  no 
notice  of  the  insolvency  of  the  consignee,  the  right  of 
possession  to  the  goods  becomes  vested  in  the  pledgee 
under  the  Civil  Code,  section  2127,  and,  upon  thp  dis- 
covery of  the  insolvency  of  the  consignee,  the  vendee 
cannot  exercise  his  right  of  stoppage  in  transit,  at 
least,  without  first  obtaining  an  accounting  and  tend- 
ering the  amount  advanced  by  the  pledgee  on  the 
credit  of  the  goods:  Sheppard  v.  Newhall,  47  Fed. 
(G.  0.)    468. 

As  Civil  Code,  sections  2127  and  2128,  merely  de- 
clare that  the  title  to  goods  described  in  bills  of  lad- 
ing drawn  to  order  passes  by  indbrsement,  or  in  bills 
drawn  to  bearer  by  delivery,  the  right  of  the  vendor 
of  goods  to  stop  the  goods  in  transit  upon  discovering 
the  insolvency  of  the  vendee  is  perfect,  not  only  as 
against  the  vendee,  but  as  against  all  others  (includ- 
ing a  pledgee  of  a  bill  of  lading  drawn  to  order,  but 
not  indorsed  by  him)  except  a  purchaser  for  value, 
taking  by  indorsement  of  the  bill  of  lading  in  the 
usual  course  of  business,  and  without  notice:  Shep- 
pard V.  Newhall,  54  Fed.  306,  311,  4  C.  C.  A.  352, 
9th  Cir. 


§   451  MOVABLE  PBOPEBTY.  699 

451.  Insolvency  Defined. 

A  person  is  insolvent,  within  the  meaning  of 
section  450,  when  he  ceases  to  pay  his  debts  in 
the  manner  nsnal  with  persons  of  his  business, 
or  Avhen  he  declares  his  inability  or  nnwillingne&s 
to  do  so.^ 

452.  Transit,  When  Ended. 

The  transit  of  property  is  at  an  end  when  it 
comes  into  the  possession  of  the  consignee,  or 
into  that  of  his  agent,  unless  snch  agent  is  em- 
ployed merely  to  forward  the  property  to  the 
consignee. '' 

G  See  Civ.  Code,  sec.  3077. 

T  Civ.  Code,  sec.  3078. 

The  right  to  stop  goods  in  transit  exists  until  they 
arrive  at  the  termination  of  their  journey,  or  have 
come  into  possession  of  the  consignee:  Mark- 
wald  V.  Creditors,  7  Cal.  213. 

Illustrations. — Depositing  goods  at  an  intermediate 
point,  with  the  agent  of  the  purchaser,  for  the  purpose 
of  being  forwarded,  does  not  terminate  the  transit: 
Markwald  v.  Creditors,  7  Cal.  213;  Blackman  v. 
Pierce,  23  Cal.  508. 

When  goods  come  into  the  possession  of  a  ware- 
houseman, the  agent  of  the  consignee  at  an  inter- 
mediate point,  the  transit  is  not  ended:  Blackman  v. 
Pierce,  23  Cal.  '508. 

Where  goods  have  reached  their  destination,  and 
the  vendee  has,  by  his  personal  and  affirmative  act, 
disposed  of  them,  and  his  assignee  has  given  bond 
for  the  payment  of  the  duties  upon  them,  and  de- 
posited them  in  his  own  name  in  a  bonded  warehouse, 
and  holds  the  warehouse  receipt  for  them,  the  transit 
has  ended,  and  the  goods  are  not  subject  to  stoppage 
in  transit:  Sheppard  v.  Newhall,  54  Fed.  306,  310, 
4  C.   C.   A.   352,   9th   Cir. 


700  vendor's  lien.  §  453 

453.  Stoppage  EffCQted  by  Notice  to  Carrier. 
Stoppage  in  transit  can  be  effected  only  by 

notice  to  the  carrier  or  depositary  of  the  prop- 
erty, or  by  taking  actual  possession  thereof.® 
The  notice  is  sufficient  if  the  carrier  is  clearly  in- 
formed that  it  is  the  intention  and  desire  of  the 
vendor  to  exercise  his  right  of  stoppage  in  tran- 
sit, although  without  an  express  demand  to  re- 
deliver the  goods.® 

454.  Carrier  must  Redeliver    Goods    upon    De- 

mand. 
Upon  demand  of  the  vendor  made  during  the 
continuance  of  the  right  of  stoppage  in  transit, 
the  carrier  or  depositary  must  redeliver  the  prop- 
erty to  the  vendor.^^ 

455.  Eight  of  Stoppage  Paramount. 

The  right  of  stoppage  in  transit  is  paramount 
to  any  charge  upon  the  property  claimed  by  third 

^  8  Civ.   Code,   sec.   3079. 

* «  Jones    V.    Earl,    37    Cal.    630,    632,    99    Am.    Dec. 
338. 

10  **Upon  demand  of  the  vendor,  while  the  right 
of  stoppage  in  transit  continues,  the  carrier  will  be- 
come liable  for  a  conversion  of  the  goods,  if  he 
declines  to  deliver  them  to  the  vendor,  or  delivers 
them  to  the  vendee*':  Jones  v.  Earl,  37  Cal.  630,  632, 
99  Am.  Dec.  338. 

'*The  right  to  retake  possession  of  the  property, 
where  the  right  to  stop  it  in  transit  exists,  necessarily 
implies  the  right  to  maintain  an  action  for  its  re- 
covery, where  resort  to  suit  is  necessary'':  Sheppard 
V.  Newhall,  54  Fed.  306,  309,  4  C.  C.  A.  352,  9th  Cir. 


§    455  MOVABLE    PROPERTY.  701 

persons  against  the  ]Durehaser/^  unless  the  muni- 
ment of  title  to  the  property  has  passed  from 
the  vendee  to  a  bona  fide  purchaser  or  encum- 
brancer for  value  in  the  usual  course  of  busi- 
ness.-'^^ 

456.     Stoppage  does  not  Rescind  Sale. 

Stoppage  in  transit  does  not,  of  itself,  rescind 
a  sale,  but  is  a  means  of  enforcing  the  lien  of  the 
seller.^^ 

11  **The  right  of  stoppage  in  ti-ansitu  is  para- 
mount to  any  lien  on  the  goods  claimed  by  third 
persons  against  the  purchaser.  Thus  it  may  be  used 
to  defeat  an  attachment  or  execution  levied  upon  the 
goods  by  a  creditor  of  the  vendee,  for  the  lien  ac- 
quired by  the  levy  operates  only  upon  the  interest 
acquired  by  the  debtor  but  cannot  defeat  the  para- 
mount right  of  a  stranger":  Blackman  v.  Pierce,  23 
Cal.  508. 

12  See    section   450,    above,    especially   note    5. 

13  Civ.  Code,  sec.  3080. 

"It  is  now  well  settled  both  in  this  country  and  in 
England,  that  the  true  nature  and  effect  of  the  right 
of  stoppage  in  transitu  is  simply  to  restore  the  goods 
to  the  possession  of  the  vendor,  so  as  to  enable  him 
to    exercise   his   rights   as   an   unpaid   vendor,   not   to 

rescind  the  sale In  California  it  is,  in  effect, 

'  so  provided  by  statute To  enforce  his  rights, 

the  vendor  must  be,  and  is,  entitled  to  retake  the 
possession  of  the  property,  and  must  hold  it  until  the 
expiration  of  the  credit,  so  as  to  be  able  to  deliver  it 
upon  the  payment  of  the  price,  for  up  to  that  time 
the  vendee  has  the  right  to  pay  the  price  and  take  the 
property' ':  Sheppard  v.  Newhall,  54  Fed.  306,  309,  4 
C.  C.  A.  352,  9th  Cir. 


702  vendor's  lien.  §  457 

457.     Methods  of  Enforcement  of  Lien. 
A  vendor's  lien  is  enforced 

(1)  by  a  foreclosure  action^  or 

(2)  by  a  sale  by  the  vendor  after  actual  notice 
to  the  vendee  conducted  as  prescribed  in  case 
of  pledged  property.^^ 

14  Civil  Code,  section  3049:  ^^One  who  sells  per- 
sonal property  ....  may  enforce  his  lien  in  like 
manner  as  if  the  propter ty  were  pledged  to  him  for 
ita   price.'' 

Sale  of  pledged  property:  See  sections  232  through 
240,  above. 


CHAPTER  6. 

LIEN  FOE  IMPEOYEMENT  OF  MOVABLE 
PEOPEETY. 

458.  Who  lienor. 

459.  Enforcement   of  lien. 

460.  Disposition  of  proceeds  of  sale. 

458.    Who  Lienor. 

x^ny  person  who  makes,  alters,  or  repairs  any 
article  of  movable  property,  at  the  request  of  the 
owner  or  legal  possessor  thereof,  has  a  lien  against 
the  same  for  his  reasonable  charges  for  work  done 
and  materials  furnished.^ 

1  See  Civil  Code,  section  3052,  first  clause,  as 
enacted  1872.  Stats.  1867-68,  page  589,  chap.  448,  sec. 
15,  gave  the  lien  to  '*any  mechanic,  artisan,  or  la- 
borer.^' Under  Stats.  1862,  page  384,  chap.  297,  sec- 
tion 20,  the  word  *' laborer ''  was  replaced  by  *^  ma- 
chinist.'' Stats,  of  1850,  p.  211,  chap.  87,  sec.  13, 
Stats.  1855,  p.  156,  chapter  130,  section  11,  and  Stat. 
1856,  page  203,  chapter  134,  section  10,  gave  the  lien 
solely  to  *'any  mechanic  or  artisan.'' 

Compare  Civil  Code,  section  3051,  first  sentence: 
''Every  person  who,  while  lawfully  in  the  possession 
of  an  article  of  personal  property,  renders  any  service 
to  the  owner  thereof,  by  labor  or  skill  employed  for 
the  protection,  improvement,  safekeeping,  or  carriage 
thereof,  has  a  special  lien  thereon,  dependent  on  pos- 
session, for  the  compensation,  if  ^ny,  which  is  due  to 
(703) 


704  mechanic's  lien.  §  459 

459.     Enforcement   of  Lien. 

If  such  charges  are  not  paid  within  two  months 
after  the  work  is  done^,  the  lienor  may  proceed  to 
sell  the  property  at  public  auction,  after  giving 
ten  days^  public  notice  of  the  sale  by  advertising 
in  some  newspaper  published  in  the  county  in 
which  the  work  was  done;  or,  if  no  newspaper  is 
published  in  such  county,  then  by  posting  notices 
of  the  sale  for  ten  days  previous  thereto  in  three 
of  the  most  public  places  in  the  town  where  the 
work  was  done.^ 

him  from  the  owner  for  such  service.''  As  enacted 
1872. 

In  Lewis  v.  Tyler,  23  Cal.  364,  it  was  declared  that 
this  lien  existed  independent  of  statute  in  favor  of 
one  who  by  his  labor  and  skill  imparts  additional 
value  to  goods. 

Illustration.— A  person  who  enters  upon  the  land 
of  another,  under  a  contract  with  the  owner,  for 
the  purpose  of  manufacturing  railway  ties  anc. 
shakes  for  the  owner,  at  a  certain  fixed  compensation, 
and  who,  after  manufacturing  them,  piles  them  up  on 
the  land  in  piles  of  a  certain  number  each,  and  marks 
each  pile,  and  remains  in  possession  thereof,  has  a 
lien  against  the  property  for  the  amount  due  him  for 
manufacturing  them,  and  the  right  to  retain  possession 
thereof  until  the  lien  is  discharged  by  the  payment  of 
the  amount  due  him:  Douglass  v.  McFarland,  92  Cal. 
656,  28  Pae.  687. 

S  See  Civil  Code,  section  3052,  second  sentence. 

Historical.— Stats.  1867-68,  page  589,  chap.  448,  sec- 
tion 15,  reads  substantially  the  same.  The  statute  of 
1862  omits  the  phrase,  near  the  end,  '^for  ten  days 
previous''  to  the  sale.  By  the  statutes  of  1850,  185'o, 
and  1856,  three  weeks'  notice  of  the  auction  was  re- 
quired, instead  of  ten  days.     By  statute  of  1855,  the 


§    460  MOVABLE    PROPERTY.  705 

460.     Disposition  of  Proceeds  of  Sale. 

The  proceeds  of  the  sale  mnst  be  applied  to 
the  discharge  of  the  lien,  and  the  cost  of  keeping 
and  selling  the  property;  the  remainder,  if  any, 
must  be  paid  over  to  the  owner  thereof.^ 

enforcement   by    sale    was    only   permitted    after    the 
lapse   of  six  months,  instead  of  two  months. 

3  Civil  Code,  section  3052,  last  sentence,  as 
enacted  1872. 

Previous  statutes  contained  a  similar  provision. 
Liens — 45 


CHAPTER   7. 

LIEN"  OF  CARRIER  OF  GOODS. 

461.  Who    lienor. 

462.  Enforcement   by    common   carrier   of   lien  upon 

perishable  property. 

461.    Who  Lienor. 

Every  person  who^  while  lawfully  in  possession 
of  an  article  of  movable  property,  renders  any 
service  to  the  owner  thereof,  by  labor  or  skill  em- 
ployed for  the  carriage  thereof,  has  a  special  lien 
thereagainst,  dependent  on  possession,  for  the 
compensation,  if  any,  which  is  due  to  him  from 
the  owner  for  such  service.^ 

1  See  Civil  Code,  section  3051,  first  sentence, 
quoted  at  section  458,  note  1,  above. 

Civil  Code,  section  2144,  provides:  ''A  carrier  has  a 
lien  for  freightage  which  is  regulated  by  the  title  on 
liens.*'     As  enacted  in  1872. 

The  owner  of  a  chartered  vessel  has  no  general  lien 
on  the  cargo  for  the  charter  price:  Mayo  v.  Stansbury, 
3  Cal.  465.     Compare  Brown  v.  Howard,  1  Cal.  423. 

This  lien  is  within  the  provisions  of  Practice  Act, 
sec.  120,  Code  of  Civil  Procedure,  sec.  537,  prohibiting 
the  issuing  of  attachments  upon  debts  secured  by  lien: 
Wingard  v.  Banning,  39  Cal.  543,  549. 

(706) 


§  462        LIEN  OF  CARRIER  OF  GOODS.  707 

462.     Enforcement  by  Common  Carrier  of  Lien 
upon  Perishable  Property. 

If,  from  any  other  cause  than  a  want  of  ordi- 
nary care  and  diligence  on  his  part,  a  common 
carrier  is  unable  to  deliver  perishable  property 
transported  by  him,  and  collect  his  charges  there- 
on^ he  may  cause  the  property  to  be  sold  in  open 
market  to  satisfy  his  lien  for  freightage.^ 

2  Civ.  Code,  sec.  2204.  New  section  in  effect  July 
1,  1874. 


CHAPTER   8. 
AGISTOE^S  AND  STABLE-KEEPER^S  LIEN. 

463.     Who   lienor. 

463.     Who  Lienor.^ 

Livery  or  boarding  or  feed  stable  proprietors 
and  persons  pasturing  horses  or  stock,  at  the  in- 
stance of  the  owner  or  his  agent,^  have  a  lien 
dependent  on  possession  for  their  compensation 
in  caring  for,  boarding,  feeding,  or  pasturing  snch 
horses  or  stock. 

1  Civil  Code,  section  3051,  second  sentence,  in 
effect  May  28,  -1878,  so  provides,  omitting  the  phrase 
'*at  the  instance  of  the  owner  or  his  agent.'' 

Historical. —Statutes  of  1869-70,  chapter  494,  in  ef- 
fect April  4,  1870,  provided:  ^'The  proprietors  of  sta- 
bles and  ranches  or  farms  shall  have  a  lien  on  all 
livestock  pastured,  kept  or  fed  by  them,  under  con- 
tract with  the  owners  thereof,  for  the  amount  and 
value  of  the  care,  feed  or  pasture  of  such  livestock, 
and  shall  be  entitled  to  recover  and  hold  possession 
of  such  livestock  until  the  amount  of  such  lien  shall 
be  paid.''  Section  2 'of  the  same  act  provided  for  the 
foreclosure  of  the  lien.  In  Johnson  v.  Perry,  53  Cal. 
351,  the  court  held  that  this  statute  was  not  repealed 
by  the  codes,  so  that  it  remained  in  force  until  suj^er- 
seded  by  the  above  code  provision. 

At  the  common  law  an  agistor  had  no  lien.  In 
Lewis  V.  Tyler,  23  Cal.  364,  the  court  said:  'f  An  agis- 

(708) 


§  463  agistor's  lien.  709 

tor  of  cattle  is  under  no  legal  obligation  to  take  the 
charge  of  or  keep  any  cattle  that  may  be  brought  to 
him  for  that  purpose.  He  may  receive  or  refuse  them 
without  violating  any  duty  or  obligation  imposed  on 
him  by  the  law;  and  he  is  at  perfect  liberty,  there- 
fore, to  impose  such  terms  and  conditions  as  he  may 
deem  proper.  And  he  may  require  an  agreement  that 
he  shall  have  a  lien  upon  the  animals  for  his  reason- 
able charges,  or  for  the  agreed  price,  if  he  shall  deem 
it  necessary  for  his  security;  That  class  of  bailees, 
however,  who  are  required  by  law  to  take»  the  charge 
and  custody  of  and  to  keep  animals  for  others,  have 
no  right  to  impose  conditions  upon  those  who  employ 
them;  and  the  law,  therefore,  very  properly  gives 
them  a  lien  upon  the  property  for  their  security. 
That  reason  does  not  exist  in  the  case  of  agistors  of 
cattle,  and  therefore  they  have  no  lien,  except  where 
there -is  a  special  agreement.'' 

2  At  Special  Instance  of  Owner.— In  order  for  the 
lien  to  attach,  it  is  necessary  that  the  animal  be 
placed  with  the  livery-keeper  by  its  owner,  or  some- 
one having  authority  from  him.  ^^It  has  been  held 
that  the  lien  given  by  the  common  law  to  an  inn- 
keepier  upon  the  horse  of  a  traveler  who  becomes  his 
guest  will  attach,  although  the  guest  may  have  stolen 
the  horse,  but  it  is  not  believed  that  such  a  lien  has 
ever  been  held  to  exist  upon  property  placed  with  one 
who  has  a  lien  only  by  force  of  statute,  by  a  person 
not  the  owner  or  the  agent  of  the  owner'':  Lowe  v. 
Woods,  100  Cal.  408,  410-412,  38  Am,  St.  Kep.  301,  34 
rac.  959. 


CHAPTER   9. 
LIEN  or  DEPOSITAEY  FOE  HIRE. 

464.  Who    lienor. 

465.  Enforcement  of  lien. 

466.  Enforcement    against   perishable   property,   bag- 

gage,   and    luggage. 

464.  Who  Lienor. 

A  depositary  for  hire  has  a  lien  for  storage 
charges.^ 

465.  Enforcement  of  Lien. 

This  lien  is  enforceable  by  a  sale  at  public 
auction  made  in  the  same  manner  as  a  sale  of 
pledged  property.^ 

1  Civil  Code,  section  1856:  *'A  depositary  for 
hire  has  a  lien  for  storage  charges,  which  is  regulated 
by  the  title  on  liens.''  New  section,  in  effect  March 
31,  1891. 

Compare  Civil  Code,  section  30'51,  first  sentence, 
as  quoted  under  section  458,  note  1,  above. 

3  See  Civ.  Code,  sec.  1856,  above. 

The  sections  in  regard  to  the  sale  of  pledged  prop- 
erty by  the  pledgee  are  appropriate  to  the  sale  of 
deposited  property,  because  of  the  general  similarity 
between  pledgeholders  and  depositaries:  Stewart  v. 
Naud,  125  Cal.  596,  599,  600,  58  Pac.  186. 
(710) 


§  466       LIEN  OF  DEPOSITARY  FOR  HIRE.  711 

466.     Enforcement  Against  Perishable  Property, 
Baggage,  and  Luggage. 

If  from  any  other  cause  than  want  of  ordinary 
care  and  diligence  on  his  part  a  depositary  for 
hire  is  unable  to  deliver  perishable  property,  bag- 
gage, or  luggage  received  by  him  for  storage,  or 
to  collect  his  charges  for  storage  due  thereon,  he 
may  cause  such  property  to  be  sold,  in  open  mar- 
ket, to  satisfy  his  lien  for  storage ;  provided,  that 
no  property  except  perishable  property  shall  be 
sold  under  the  provisions  of  this  section  upon 
which  storage  charges  shall  not  be  due  and  un- 
paid for  one  year  at  the  time  of  such  sale.^ 

Sale  of  pledged  property:  See  sections  232  through 
240,  above. 

So  actual  notice  to  the  owner  of  stored  goods  is  es- 
sential to  the  validity  of  the  sale  of  stored  goods  by 
the  depositary:  Stewart  v.  Naud,  125  Cal.  596,  600, 
58  Pac.  186. 

3  Civil  Code,  section  1857,  new  section  in  effect 
March  31,  1891. 


CHAPTER   10. 
LIBjSr  OF  FINDER  OF  LOST  ARTICLES. 

467.  Lien   may   be    enforced   by   sale   in   certain   in- 

stances. 

468.  Conduct  of  sale. 

467.  Lien  may  be  Enforced  by  Sale  in  Certain 

Instances. 
The  finder  of  a  thing  may  sell  it,  if  it  is  a  thing 
which  is  commonly  the  subject  of  sale,  when  the 
owner  cannot,  with  reasonable  diligence,  be  found, 
or,  being  found,  refuses  upon  demand  to  pay  the 
lawful  charges  of  the  finder,  in  the  following 
cases: 

(1)  when  the  thing  is  in  danger  of  perishing,  or 
of  losing  the  greater  part  of  its  value ;  or 

(2)  when  the  lawful  charges  of  the  finder  amount 
to  two-thirds  of  its  value.^ 

468.  Conduct  of  Sale. 

A  sale  under  the  provisions  of  the  last  section 
must  be  made  in  the  same  manner  as  the  sale  of 
a  thing  pledged.^ 

1  Civil   Code,   section   1869,   as   enacted   1872. 
Compare  Pol.  Code,  sees.  3136  tlirougli  3142. 

2  Civil  Code,  section  1870,  as  enacted  1872. 

(712) 


CHAPTER    11. 
IIsrNKEEPEE^S  LIEN.i 

469.  "Who    lienor. 

470.  Sale  of  liened  property  cannot   be  made  before 

expiration    of    certain    time. 

471.  Notice  of  sale  must  be  given. 

472.  Expense    of    advertising    becomes    lien    ratably. 

473.  Distribution   of   proceeds   of   sale. 

474.  Disposition  of  surplus. 

469.     Who  Lienor. 

A  hotelman,  or  boarding-honse  or  lodging- 
house  keeper  has  a  lien,  dependent  on  possession, 

1  There  is  a  noticeable  divergence  of  terminology 
between  sections  1861  and  1862  of  the  Civil  Code,  on 
which  this  chapter  is  based. 

The  description  of  the  persons  to  whom  the  lien 
is  given  is  '^hotelmen,  boarding-house  and  lodging- 
house  keepers,''  while  the  persons  who,  by  section 
1862,  may  enforce  the  lien  are  described  as  ''the 
keeper  of  any  hotel,  inn,  boarding-house,  or  lodging- 
house. '' 

The  lien,  by  section  1861,  is  given  on  ''the  bag- 
gage and  other  property  of  value  of  their  guests,  or 
boarders,  or  lodgers,  brought  into  such  hotel,  inn,  or 
boarding  or  lodging  house,  by  such  guests,  or  board- 
ers, or  lodgers, ' '  while,  by  section  1862,  it  may  be  en- 
forced against  "any  trunk,  carpet-bag,  valise,  box, 
bundle,  or  other  baggage  ....  come  into  the  posses- 
sion of  the  keeper  of  any  hotel,''  etc. 

It  might  be  questioned  whether  these  phrases  are 
equivalent  one  to  the  other. 
(713) 


714  innkeeper's  lien.  §  469 

upon  the  baggage  and  other  property  of  value  of 
his  guests  or  boarders  or  lodgers,  brought  into 
such  hotel,  inn,  or  boarding  or  lodging  house  by 
such  guests,  or  boarders,  or  lodgers,  for  the 
proper  charges  due  from  such  guests,  or  boarders, 
or  lodgers,  for  their  accommodation,  board  and 
lodging,  and  room  rent,  and  such  extras  as  are 
furnished  at  their  request.^ 

470.  Sale  of  Liened  Property  cannot  be  Made 

Before   Expiration   of  Certain   Time. 

Whenever  any  trunk,  carpet-bag,  valise,  box, 
bundle,  or  other  baggage  comes  into  the  posses- 
sion of  the  keeper  of  any  hotel,  inn,  boarding,  or 
lodging  house,  as  such,  and  remains  unclaimed 
for  the  period  of  six  months,  such  keeper  may 
proceed  to  sell  the  same  at  public  auction  after 
the  expiration  of  four  weeks  from  the  first  publi- 
cation of  the  notice  of  sale  hereinafter  required 
to  be  given.^ 

471.  Notice  of  Sale  must  be  Given. 

The  keeper  must  publish  once  a  week  for  four 
successive   weeks   in   some  newspaper,   daily   or 

2  Civil  Code,  section  1861,  except  the  last  clause, 
a  new  section,  in  effect  April  1,  1876,  so  provides, 
with  slight  verbal  changes,  and  omitting  the  phrase, 
'^dependent  on  possession. '' 

An  innkeeper  has  a  lien  at  common  law:  See  Lewis 
V.  Taylor,  23  Cal.  364. 

3  Civil  Code,  section  1862,  first  sentence,  first 
clause,  with  verbal  changes.  New  section  in  effect 
April  1,  1876. 


§  471  innkeeper's  lien.  715 

weekly,  of  general  circulation,  published  in  or 
nearest  the  city,  town,  village,  or  place  in  which 
the  hotel,  inn,  boarding  or  lodging  house  is  situ- 
ated, a  notice  of  sale  containing 

(1)  a  description  of  each  trunk,  carpet-bag,  va- 
lise,  box,  bundle,  or  other  baggage,  as  near  as 
may  be, 

(2)  the  name  of  the  owner  of  each,  if  known, 

(3)  the  name  of  the  keeper,  and 

(4)  the  time  and  place  of  sale.'* 

472.  Expense  of  Advertising  Becomes  Lien  Rat- 

ably. 

The  expenses  incurred  for  advertising  consti- 
tute a  lien  against  each  such  trunk,  carpet-bag, 
valise,  box,  bundle,  or  other  baggage,  in  a  ratable 
proportion,  according  to  the  value  of  such  piece 
of  property,  or  thing,  or  article  sold.^ 

473.  Distribution  of  Proceeds  of  Sale. 

Out  of  the  proceeds  of  such  sale  the  keeper  may 
retain  the  charges  for  storage,  if  any,  and  the  ex- 
pense of  advertising  and  sale  thereof.^ 

4  Civil  Code,  section  1862,  last  clause  of  first 
sentence,  and  first  clause  of  second  sentence,  consoli- 
dated. 

5  Civil  Code,  section  1862,  second  sentence,  sec- 
ond portion,  with  verbal  change. 

6  Civil  Code,  section  1862,  first  sentence,  last  part 
of  first  clause.  It  is  noticeable  that  there  is  no 
express  provision  giving  the  keeper  the  right  to  col- 
lect the  amount   due  him  for  board  and  lodging  out 


716  innkeeper's  lien.  *        §  474 

474.     Disposition  of  Surplus. 

In  case  any  balance  arising  from  such  sale  is  not 
claimed  by  the  rightful  owner  within  one  week 
from  the  day  of  such  sale^  the  same  shall  be  paid 
into  the  treasury  of  the  county  in  which  such  sale 
took  place ;  and  if  the  same  is  not  claimed  by  the 
owner  thereof^  or  his  legal  representatives^  within 
one  year  thereafter,  the  same  shall  be  paid  into 
the  general  fund  of  such  county.''' 

of   the   piroceeds   of   such    sale,   notwithstanding   that 
that  is  the  object  for  which  the  lien  is  given. 

7  Civil  Code,  section  1862,  last  clause,  with  ver- 
bal changes. 


CHAPTER   12. 
LIEN  OF  CAEEIEE  OP  PASSENGEES. 

475.     Lien  and  enforcement. 

475.     Lien  and  Enforcement.^ 

A  common  carrier  has  a  lien  upon  the  luggage 
of  a  passenger  for  the  payment  of  such  fare  as  he 
is  entitled  to  from  him.  This  lien  is  regulated 
by  the  general  •  provisions  of  law  applicable  to 
liens. ^ 

1  Civil  Code,  section  2191,  as  enacted  1872. 

3  Regulated  by  General  Law  of  Liens.— The  code 
language  is:  *'by  the  title  on  liens.  ^'  This  title  of 
the  code  concerns  most  of  the  subjects  treated  in  sec- 
tions 1-22,  81-89,  186-384,  and  434-476  of  this  book. 

A  similar  provision  was  interpret ed  in  Stewart  v. 
Naud,  125  Cal.  596,  599,  600,  58  Pac.  186  (see  section 
466,  above),  to  mean  that  the  sale  must  be  conducted 
as  in  case  of  a  sale  of  pledged  property.  But,  as  in 
case  of  the  lien  of  a  carrier  on  the  luggage  of  his 
passenger,  the  passenger  may  be  wholly  unknown  to 
the  lienor,  the  provision  that  actual  notice  must  be 
given  to  the  owner  of  the  pledged  property  before 
the  sale  can  be  made  would  be  inapplicable. 
(717) 


CHAPTER    13. 

SHERIFFS  LIElSr. 
476.     Who    lienor. 

476.     Who  Lienor. 

An  officer  who  levies  an  attachment  or  execu- 
tion upon  movable  property  acquires  a  special 
lien,  dependent  on  possession,  upon  such  prop- 
erty, which  authorizes  him  to  hold  it  until  the 
process  is  discharged  or  satisfied,  or  a  judicial 
sale  of  the  property  is  had.^ 

1  See  Civil  Code,  section  3057,  as  enacted  1872. 
(718) 


CHAPTER    14. 

LIENS     AGAINST     TEESPASSING     ANI^ 
MALS.i 

Merely  an  Outline  of  the  Statutes  Creating  These  Liens 
is  Presented  in  This  Chapter. 

477.  Alpine,  Colusa,  El  Dorado   (part),  Glenn,  Hum- 

boldt, Los  Angeles,  Merced,  Orange,  Eiver- 
side  (part),  Sacramento,  San  Bernardino 
(part),  San  Joaquin,  San  Luis  Obispo,  Santa 
Barbara,    Solano,    Tehama    (part). 

478.  Yolo. 

479.  Stanislaus. 

480.  Eiverside   (part),  San  Diego. 

481.  San   Bernardino    (part),   Yuba    (part). 

1  Political  Code,  section  19:  "Nothing  in  either 
of  the  four  codes  affects  any  of  the  provi- 
sions of  the  following  statutes,  but  such  statutes  are 
recognized  as  continuing  in  force,  notwithstanding 
the  provisions  of  the  codes,  except  so  far  as  they  have 
been  repealed  or  affected  by  subsequent  laws:  .... 
23.  All  acts  in  relation  to  lawful  fences,  estrays,  and 
the  trespassing  of  animals  upon  private  property.'' 

In  1901  the  legislature  passed  ''an  act  relating  to 
estrays,  providing  for  taking  them  up,  and  giving  a 
lien  on  them  for  all  damages,  costs,  and  expenses  in- 
curred by  reason  of  taking  them  up,  and  repealing 
all  other  acts  and  parts  of  acts  now  in  force  relating 
to  estrays'':  Stats.  1901,  p.  603,  c.  197.  Sections  9 
and  10  provided  that  all  acts  and  parts  of  acts  relat- 
(719) 


720  TRESPASSING     ANIMALS. 

482.  Marin,   Mono    (part). 

483.  Fresno,   Inyo,   Kern,   Kings,   Madera,   Monterey, 

Napa,   San  Benito,   Tulare,   Ventura. 

484.  Butte   (part),  Calaveras   (part). 

485.  Alameda,  Contra  Costa,  Placer  (part),  San  Fran- 

cisco,  San  Mateo. 

486.  Santa   Clara,    Santa   Cruz. 

487.  Placer    (part),    Shasta,    Tehama    (part),    Yuba 

(part)— inclosed  lands. 

488.  Hog   lien. 

489.  Goat  lien  in   Tuolumne. 

490.  Turkey    lien. 

491.  Distraint  of  estrays. 

ing  to  estrays,  except  as  to  poundkeepers,  were  re- 
pealed by  it.  This  law  might  at  first  sight  seem  to 
repeal  the  laws  as  to  trespassing  animals,  but  such 
probably  is  not  its  effect,  because  from  the  earliest 
times  the  legislature  has  distinguished  between  laws 
concerning  estrays  and  laws  concerning  trespassing 
animals,  or  ''the  protection  of  agriculture, ' '  as  they 
have  often  been  termed.  Thus,  in  Statutes  of  1863, 
page  '590,  chapter  396,  relating  to  estrays  in  Napa 
county,  it  was  expressly  provided  by  section  10  that 
nothing  therein  contained  should  be  held  to  affect  the 
operation  of  the  act  conferring  a  lien  against  tres- 
passing hogs:  See  section  488,  below.  Moreover,  the 
terms  ''trespassing  animaP'  and  "estray''  are  by  no 
means  synonymous;  for  an  estray  is  an  animal  (1) 
wandering  at  large  uncontrolled,  (2)  during  a  consid- 
erable space  of  time,  (3)  whose  owner  is  unknown, 
while  a  trespassing  animal  may  merely  have  tempo- 
rarily escaped  from  a  known  owner,  or  been  purposely 
driven  upon  the  land  where  it  was  distrained.  Thus 
the  laws  concerning  trespassing  animals  and  the  pro- 
tection of  agriculture  doubtless  are  not  repealed  by 
the  above  act. 

Rule  of  Construction.— In  Trumpler  v.  Bemerly,  39 
Cal.  490,  the  court  says,  referring  to  Statutes  of  1863, 
page  697,  chapter  425:  "This  statute,  as  all  other  pre- 


§    477  TRESPASSING    ANIMALS.  721 

477.  Alpine,  Colusa,  El  Dorado  (part),  Glenn, 
Humboldt,  Los  Angeles,  Merced,  Orange, 
Riverside  (part),  Sacramento,  San  Ber- 
nardino (part),  San  Joaquin,  San  Luis 
Obispo,  Santa  Barbara,  Solano,  Tehama 
(part)  2 

Stats.  1877-78,  p.  176,  c.  136,  in  effect  March  7, 
1878.  Stats.  1877-78,  p.  878,  c.  556,  in  effect  Marcn 
30,  1878. 

The  owner  or  person  lawfully  in  possession  of 

land  may  take  up  and  safely  keep  for  two  days, 

at  the  expense  of  the  owner,  any  animal  found 

scribing  modes  by  which  a  party  may  be  devested  of 
his  property  without  his  consent,  must  be  strictly  con- 
strued; and  a  party  claiming  to  have  acquired  a  right 
and  title  to  property  by  virtue  of  its  provisions  as 
against  the  original  owner,  must  affirmatively  allege 
and  prove  that  the  mode  prescribed  by  the  statuto 
for  the  acquisition  of  such  title  has,  in  every  particu- 
lar, been  strictly  followed.'' 

As,  however,  the  chief  object  of  this  statute  is 
remedial,  it  seems  that  under  section  4  of  the  codes 
this  rule  would  be  changed,  and  that  these  statutes 
should  receive  a  liberal  construction  '^with  a  view 
to  effect  [their]  objects  and  to  promote  justice." 

2  Former  enactments  which  have  been  superseded: 

Alpine.— Hog  act  as  applying  to  that  portion  of 
Alpine  county  formed  out  of  El  Dorado  county  (see 
section  488,  below). 

Colusa,  Glenn.— Stats.  1871-72,  p.  685,  c.  458, 
amended  1873-74,  p.  760,  c.  525,  except  as  to  turkeys 
(section  490,  below);  Stats.  1859,  p.  279,  c.  266,  sec. 
2,  relating  to  the  distraint  of  certain  animals  when 
breaking  into  inclosures.  Hog  act,  section  488,  be- 
low. 

El  Dorado  (part).— Stats.  1875-76,  p.  356,  c.  269, 
relating  to  the  distraint  of  trespassing  animals  in  a 
Liens— 46 


722  TRESPASSING    ANIMALS.  §    477 

trespassing  thereon,^  and  has  a  lien  against 
every  such  animal  which  expires  upon  the  lapse 
of  two  days^  after  the  distraint  for  the  reasonable 
cost  of  keeping  the  same  and  its  pro  rata  of  the 

portion  of  El  Dorado  county,  was  repealed  by  Stats. 
1877-78,  p.  557,  c.  371,  in  effect  March  26,  1878. 
Stats.  1873-74,  p.  859,  c.  615,  in  effect  April  29,  1874, 
relating  to  Mud  Springs  township.  Hog  act,  section 
488   below. 

Humboldt.— Hog   act,   section   488,   below. 

lios  Angeles,  Orange.— Stats.  1877-78,  p.  164,  c.  129, 
in  effect  March  4,  1878;  Stats.  1871-72,  p.  99,  c.  107, 
as  amended  1871-72,  p.  241,  c.  201,  in  effect,  February, 
14,  1872.     Hog  act,  section  488,  below. 

Merced.— Stats.  1871-V2,  p.  563,  c.  407,  in  effect 
March  27,  1872.     Hog  act,  section  488,  below. 

Eiverside  (part),  San  Bernardino  (part).— Stats. 
1871-72,  p.  99,  c.  107,  as  amended  1871-72,  p.  510,  c. 
356,  in  effect  March  23,  1872  repealed  Stats.  1873-74, 
p.  190,  c.  149,  in  effect  February  28,  1874,  saving,  how- 
ever, to  a  majority  of  the  taxpayers  of  any  township 
the  right  by  their  affirmative  vote  to  cause  such  act 
to  become  applicable  to  such  township.  Stats.  1875- 
76,  p.  307,  c.  233,  relating  to  a  portion  of  San  Bernar- 
dino county  (see  section  481,  below).  Stats.  1859, 
p.  279,  c.  266,  sec.  2,  relating  to  the  distraint  of  cer- 
tain animals  when  breaking  into  inclosures.  Hog  act, 
section  488,  below. 

San  Joaquin.— Stats.  1871-72,  p.  563,  c.  407,  in  ef- 
fect March  27,  1872.     Hog  act,  section  488,  below. 

Sacramento.— Stats.  1865-66,  p.  440,  c.  361,  as  amend- 
ed Stats.  1875-76,  p.  5,  c.  7,  in  effect  January  7,  1876; 
Stats.  1863-64,  p.  170,  c.  176,  as  amended  Stats.  1863- 
64,  p.  532,  c.  472,  in  effect  April  1,  1874,  relating  to 
the  distraint  of  trespassing  animals  in  Sacramento 
county,  except  that  portion  south  of  the  Cosumnea 
river,  repealed  by  Stats.  1865-66,  p.  440,  c.  361,  sec. 
10,  and  Stats.  1865-66,  p.  443,  c.  362,  in  effect  March 
26,  1866.     Hog  act,  section  488,  below. 


§    477  TRESPASSING   ANIMALS.  723 

San  Luis  Obispo.— Stats.  1873-74,  p.  50,  c.  54,  fully 
effective  June  25,  1874;  Stats.  1871-72,  p.  749,  c.  509, 
in  effect  April  1,  1872,  relating  merely  to  a  portion 
of  San  Luis  Obispo  county.  Hog  act,  section  488,  be- 
low. 

Santa  Barbara.— Stats.  1873-74,  p.  50,  c.  54,  fully 
effective  June  25,  1874;  Stats.  1871-72,  p.  749,  c.  509, 
in  effect  April  1,  1872,  relating  merely  to  a  portion  of 
Santa  Barbara  county.     Hog  act,  section  488,  below. 

Solano.— Stats.  1871-72,  p.  563,  c.  407,  in  effect 
March  27,  1872;  Stats.  1865-66,  p.  440,  c.  361,  as 
amended  1875-76,  p.  5,  c.  7,  in  effect  January  7,  1876; 
Stats.  1863-64,  p.  170,  c.  176,  in  effect  March  15,  1864, 
repealed  by  Stats.  1865-66,  p.  440,  c.  361,  sec.  10,  in  ef- 
feet  May  1,  1866.     Hog  act,  section  488,  below. 

Tehama  (part).— Stats.  1873-74,  p.  853,  c.  609,  as 
amended  1875-76,  p.  643,  c.  447,  in  effect  September 
1,  1876,  except  as  to  turkeys  (see  section  490,  below). 
Stats.  1859,  p.  279,  c.  266,  sec.  2,  relating  to  the  dis- 
traint of  certain  animals  when  breaking  into  inclos- 
ures.     Hog  act,  section  488,  below. 

3  Stats.     1877-78,  p.  176,  c.  136,  sec.  13. 

4  **The  obvious  purpose  of  the  act  is  to  af- 
ford the  owner  of  land  trespassed  upon  a  speedy  and 
somewhat  summary  remedy  by  giving  an  action  both 
against  the  owner,  if  known,  and  against  the  animals 
if  he  is  not  known,  and  the  attachment  against  the 
property  may  be  given  in  both  cases  (sees.  3  and  10). 
....  The  right  to  distrain  is  an  option  given  to  the 
land  owner,  which  he  may  exercise  for  two  days  with- 
out instituting  any  legal  proceedings  whatever,  the 
declared  purpose  being  to  enable  the  land  owner,  dur- 
ing that  period,  to  ascertain  the  owner  of  the  animals 
and  determine  which  remedy  given  by  the  act  the 
land  owner  will  resort  to. 

*'We  cannot  find  any  authority  in  the  act  for  dis- 
training the  animals  beyond  the  two  days;  nor  can  we 
find  any  lien  given  upon  the  animals  by  the  distraint 
to  secure  any  claim  of  damage  except  as  given  in  sec- 
tion 15,  under  the  pirovisions  of  which  *  reasonable 
compensation  for  care  and  feed'  may  be  recovered 
'whenever    any   animal    is    lawfully    distrained    under 


724  TRESPASSING     ANIMALS.  §    477 

damages^  sustained  by  reason  of  the  trespass.** 
At  any  time  during  the  continuance  of  the  lien, 
the  owner  may,  upon   (1)   tendering  the  lienor 

section  13  ...  .  during  the  time  of  such  lawful  dis- 
trainment.^ This  lawful  distrainment,  we  think,  is 
confined  to  two  days.  It  seems  to  us  that  if  the  leg- 
islature had  intended  to  give  the  land  owner  author- 
ity to  hold  under  the  distraint  for  an  indefinite  time 
and  until  he  could  obtain  judgment  in  his  action,  there 
would  have  been  no  occasion  for  introducing  the  at- 
tachment feature  of  the  act,  and  the  limit  of  two 
days  would  seem  to  exclude  the  idea  that  any  greater 
time  was  to  be  given  for  distraining  the  animals. 

*^The  purpose  of  the  attachment  was  to  give  the 
'plaintiff  a  better  security  for  the  payment  of  any 
judgment  he  may  recover  in  actions  brought  under 
the  first  two  sections  of  this  act';  and  we  must  pre- 
sume that  the  same  intention  was  in  the  minds  of  the 
legislature  in  enacting  section  10,  and  that  the  attach- 
ment in  actions  in  rem  was  to  better  secure  any  judg- 
ment obtained  upder  section  '5  et  seq.  It  may  not  al- 
ways be  convenient  for  the  land  owner  to  take  unto 
himself  the  custody  of  the  animals  pending  suit  in 
personam  or  in  rem;  and  the  statute  would  seem  to 
afford  him  the  opportunity  in  both  forms  of  action 
to  relieve  himself  of  that  responsibility  by  resorting 
to  attachment,  in  which  case  the  animals  would  then 
pass  into  the  custody  of  the  law  [pp.  149,  150] 

'*If  the  plaintiff  continues  his  possession  of  the  an- 
imals after  the  statutory  two  days,  it  must  be  as 
keeper  for  the  sheriff,  who  has  served  the  writ  and 
has  taken  the  property*'  (p.  152):Wigmore  v.  Buell^ 
122  Cal.  144,  54  Pac.  600. 

5  Has  Lien  for  Pro  Rata  of  Damages.— In  Wigmore 
V.  Buell,  the  court  says:  "Nor  can  we  find  any  lien 
given  upon  the  animals  by  the  distraint  to  secure 
any  claim  of  damages.''  But  as  a  prerequisite  to  the 
reclamation  of  the  animals  from  the  distrainor,  the 
owner  is  compelled  to  pay  the  damages  sustained,  as 
well  as  the  cost  of  keeping  (sec.  15).  How,  then, 
can  it  be  said  that  there  is  no  lien  for  damages? 


§    477  TRESPASSIXG    ANIMALS.  725 

the  amoiml  of  his  lien^  or  (2)  giving  an  adequate 
undertaking  as  security  therefor^  recover  back  his 
animals.^  At  any  time  after  any  trespass  the 
person  whose  land  was  trespassed  upon  may  com- 
mence an  action  for  the  recovery  of  the  damage?? 
sustained  by  reason  of  the  trespass,  or,  where  the 
animals  are  distrained,  for  the  amount  of  his  lien, 
together  with  costs  of  suit  in  either  case — the 
action  to  be  commenced  personally  against  the 
owner  if  known/  otherwise  directly  against  the 
trespassing  animals.^  In  either  type  of  action 
the  plaintiff  may  cause  the  animals  to  be  at- 
tached ;^  and  no  animal  is  for  any  reason  exempt 
from  such  attachment.^^  In  case  of  a  sale  of  the 
animals,  any  surplus  proceeds  must  be  paid  into 
court  for  the  benefit  of  the  party  in  good  con- 
science entitled  thereto.*^ 

This  act  applies  in  Alpine,^^  Colusa,^  ^ 
Glenn,^2, 11  Humboldt,^^  Los  Angeles/^  Mer- 
ced,^^    Orange,*^'  ^^    Sacramento,^^    San    Joa- 

6  stats.  1877-78,  p.  176,  c.  136,  sec.  15. 

7  Stats.  1877-78,  p.  176,  c.  136,  sees.  2-4. 

8  Stats.  1877-78,  p.  176,  c.  136,  sees.  5-11. 

9  Stats;  1877-78,  p.  176,  c.  136,  sees.  3,  10. 

10  Stats.  1877-78,  p.  176,  c.  136,  sec.  4. 

11  Stats.  1877-78,  p.  878,  c.  556. 

.  IS  Glenn  county  was  formed  out  of  the  northern 
part  of  Colusa  county,  by  Stats.  1891,  p.  98,  c.  94,  in 
effect  March  11,   1891. 

13  Orange  county  was  formed  out  of  the  southeast- 
ern part  of  Los  Angeles  county,  by  Stats.  1889,  p.  123, 
rC.  110,  in  effect    March  11,  1889. 


726  TRESPASSING     ANIM.VLS.  §    477 

quin/^  San  Luis  Obispo/^  Santa  Barbara/^  and 
Solano^^  counties;  to  White  Oak  and  Mud 
Springs  townships,  and  that  portion  of  Salmon 
Falls  township  south  of  the  South  Fork  of  the 
American  river,  in  El  Dorado^^  county;  to  that 
portion  of  Eiverside^^'  ^^  county  formed  out  of 
the  southwestern  part  of  San  Bernardino  county; 
to  that  part  of  San  Bernardino^^  county  lying 
south  of  a  line  drawn  due  east  and  west  from 
the  Colorado  river  to  the  western  boundary  line 
of  said  county,  on  the  township  line  between 
townships  2  and  3  north,  San  Bernardino  base 
line;  and  to  that  part  of  Tehama^^  county  lying 
west  of  the  Sacramento  river  and  south  of  Eed 
Bank  creek. 

14  Riverside  county  was  formed  out  of  parts 
of  San  Bernardino  and  San  Diego  counties,  by  Stats. 
1893,  p.   158,   c.   142,   in  effect    March   11,   1893. 

478.     Yolo.i 

Stats.   1877-78,  p.   360,   c.   290    in   effect,   March   20, 

1878. 

"The  owner  or  possessor  of  lands^^  in  Yolo 
county^^  whether  inclosed  or  not,  may  take  up 

1  Former  enactments  as  to  Yolo  county,  which 
have  been  superseded:  Stats.  1873-74,  p.  343,  c.  24.1 
in  effect  March  11,  1874;  Stats.  1871-72,  pi.  563,  c.  407, 
in  effect  March  27,  1872;  Stats.  1863-64,  p.  170,  c.  176. 
in  effect  March  15,  1864,  repealed  Stats.  1865-66,  p. 
440,  c.  361,  sec.  10,  in  effect  May  1,  1866.  Hog  act 
section  488,  below. 
.    2  Stats.   1877-78,  p.  360,   c.   290,  sec.   12. 


§    478  TRESPASSING   ANIMALS.  727 

and  safely  keep^^  at  the  expense  of  the  owner,"*^ 
any  horse,  mare,  mule,  jack,  jenny^  hog,  sheep, 
goat,  or  head  of  neat  cattle  found  trespassing 
thereon;^  and  has  a  lien  dependent  on  possession 
thereagainst  for  the  cost  of  keeping  any  such 
animals  and  the  damages  sustained  by  reason  of 
the  trespass.^  The  cost  of  keeping  is  deemed  as 
follows:  For  each  horse,  mare,  mule,  jack,  jenny, 
or  head  of  neat  cattle,  twenty-five  cents  per  day ; 
for  each  hog  or  goat,  ten  cents  per  day;  for  each 
sheep,  ^Ye  cents  per  day.^  Within  three  days 
after  the  distraint,  the  lienor  must,  if  the  owner 
or  person  in  control  is  known  or  can  be  ascer- 
tained, notify  him  of  the  distraint.^  At  any 
time  before  the  animals  are  sold  in  satisfaction 
of  the  lien,  the  owner  may,  upon  discharging  the 
lien,  recover  back  his  animals.^  Within  ten  days 
after  the  distraint,  the  lienor  must  commence  an 
action  to  foreclose  his  lien^ — against  the  owner 
or  person  in  control,  if  the  same  is  known  or  can 
be  ascertained,  otherwise  directly  against  the  ani- 
malsJ  In  case  of  a  foreclosure  judgment,  any 
surplus  proceeds  from  the  sale  of  the  animals 
must,  if  not  claimed  by  the  owner,  be  held  by 
the  clerk  of  the  district  court  for  the  use  of  the 

3  stats.  1877-78,  p.  360,  c.  290,  sec.  2. 

4  Stats.  1877-78,  p.  360,  c.  290,  sec.  7. 

5  Stats.  1877-78,  p.  360,  c.  290,  sec.  1. 

6  Stats.  1877-78,  p.  360,  c.  290,  sec.  4. 

7  Stats.  1877-78,.  p.  360,  c.  290,  sec.  3. 


728  TRESPASSING     ANIMAl  S.  §    478 

owner    for    one    year,    and    thereupon,    if    not 
claimed,  paid  into  the  county  school  fund.^ 

This  act  does  not  "prohibit  persons  who  may 
be  driving  stock  from  one  place  to  another  from 
driving  the  same  across  uncultivated  lands  not 
inclosed,  nor  from  watering  such  stock  at  nat- 
ural watering-places  on  such  lands/^^ 

8  Stats.  1877-78,  p.  360,  c.  290,  sec.  6. 

9  Stats.    1877-78,   p.    360,    c.    290,    sec.    9. 

479.     Stanislaus.^ 

stats.  1877-78,  p.  164,  c.  129,  in  effect  March  4, 
1878;  Stats.  1877-78,  p.  878,  c.  556,  sec.  2,  in  effect 
March  30,  1878. 

The  owner  or  occupant  of  any  land  in  Stanis- 
laus^ county  may  take  up  and  safely  keep  at.  the 
expense  of  the  owner  any  animal  found  trespass- 
ing thereon;^  and  has  a  lien  on  every  such  ani- 
mal for  the  expense  of  keeping  it  and  the  dam- 
ages sustained  by  reason  of  the  trespass.'*  The 
cost  of  keeping  is  deemed  as  follows:  For  horses, 
mares,  jacks,  mules,  jennets,  and  horned  cattle, 
twenty  cents  per  day  per  head;  for  hogs,  ten 
cents  per  day  per  head ;  for  sheep  and  goats,  five 

1  Superseded  as  to  Los  Angeles  county,  by  Stats. 
1877-78,   p.   878,   c.   556,   sec.   2. 

Former  enactment  as  to  Stanislaus,  which  has  been 
superseded.     Hog   act,   section   408,   below. 

2  Stats.  1877-78,  p.  164,  c.  129,  s^c.  15. 

3  Stats.    1877-78,   p.    164,   c.    129,   sec.   1. 

4  Stats.  1877-78,  p.  164,  c.  129,  sees.  7,  11. 


§    479  TKESPASSING   ANIMALS.  729 

cents  per  day  per  head.^  Within  three  days  al- 
ter the  distraint^  the  lienor  mnst  cause  the  dam- 
age to  be  assessed  by  two  disinterested  residents 
of  the  connty.''  The  lienor  must  notify  the 
owner  of  the  distraint  if  he  is  known — person- 
ally^ if  residing  within  six  miles,  otherwise  by 
post.^  The  lienor  must  also  within  five  days  af- 
ter the  distraint  give  a  verified  statement  to  a 
justice  of  the  peace  of  the  township,  setting 
forth  (1)  a  description  of  the  animals  and  of 
their  marks  and  brands,  (2)  the  place  and  time 
of  distraint,  (3)  the  place  of  detention,  (4)  the 
amount  of  damages  assessed  by  the  viewers,  and 
(5)  whether  the  owner  is  known  or  unknown  to 
the  distrainor.^  The  justice  must  post  a  notice 
in  two  designated  places  containing  a  copy  of 
the  lienor's  statement,  and  also  a  statement  that 
^unless  the  animals  are  reclaimed  within  seven 
days  thereafter,  they  will  be  sold  the  second  day 
following.^^  The  justice  must  order  them  sold 
at  the  appointed  time  by  a  constable,  if  not  re- 
claimed.^^ Where  the  owner  is  unknown,  the 
lien  may  be  foreclosed  by  judicial  sale.^^     At  any 

6  stats.  1877-78,  p.  164,  c.  129,  sec.  2. 
r  stats.  1877-78,  p.  164,  c.  129,  sec.  3 
8  Stats.   1877-78,  p.   164,   c.   129,  sec.  4. 
»  Stats.  1877-78,  p.  164,  c.  129,  sec.  5. 

10  Stats.  1877-78,  p.  164,  c.  129,  sec.  6. 

11  Stats.  1877-78,  p.  164.  c.  129,  sec.  8.' 

12  Stats.   1877-78,  p.   164,   c.   129,   sec.   12. 


e 


730  TRESPASSING    ANIMALS.  §    479 

time  before  the  sale  the  owner  may  pay  to  the 
justice  an  amount  snlfieient  to  satisfy  the  lien 
and  costs  accrued,  or  file  an  undertaking  with 
him  to  be  approved  by  him  as  security  for  such 
payment,  whereupon  the  lien  is  discharged  and 
the  owner  entitled  to  receive  back  his  animals.^ 
The  proceeds  of  the  sale  must  be  applied  (1)  to 
the  costs  of  sale,  (2)  to  the  lien,  and  (3)  any 
surplus  must  be  paid  to  the  county  treasurer  to 
be  held  for  the  owner  for  one  year,  and  there- 
after paid  into  the  county  school  fund.^^  At 
any  time  within  two  months  after  the  sale, 
the  owner  may  redeem  the  animals  upon  paying 
to  the  purchaser,  or  the  justice  for  him,  the 
amount  of  his  purchase  money,  together  with  ten 
per  cent  thereon  and  the  expense  of  keeping  the 
animals  since  the  sale,  estimated  as  above,  in  ad- 
dition.*^ 

13  stats.  1877-78,  p.  164,  c.  129,  sees.  10,  11,  14. 

14  Stats.  1877-78,  p.  164,  c.  129,  sec.  9. 

480.     Riverside  (part),  San  Diego.* 

1876;  Stats.  1877-78,  p.  245,  c.  199,  in  effect  March  14, 
1878. 

^^Any  oT^oier  or  occupant  of  any  land  or  pos- 
sessory claim"  in  San  Diego  county  and  that  part 
of  -"Riverside  county  formed  out  of  the  northern 

1  Former  Enactments  Which  Have  Been  Super- 
seded: Stats.  1871-72,  p.  99,  c.  107,  as  amended  1871- 
72,  p.  241,  c.  201,  in  effect  May  15,  1872. 


§    480  TRESPASSING    ANIMALS.  731 

part  of  San  Diego  county,^  whether  inclosed  or 
not;,  may  take  up  and  safely  keep^  at  the  expense 
of  the  owner,  any  horse,  mare,  colt,  mule,  jack, 
jennet,  hog,  goat,  sheep,  or  horned  cattle  fonnd 
trespassing  thereon;^  and  has  a  lien  on  every 
such  animal  for  its  pro  rata  of  ^*damages,  charges, 
and  fees'^  arisiiig  by  reason  of  the  trespass.'*  The 
cost  of  keeping  is  deemed  as  follows:  For  each 
horse,  mare,  colt,  mule,  jack,  jenny,  or  head  of 
horned  cattle,  twenty  cents  per  day;  for  each 
hog,  ten  cents  per  day;  for  each  sheep  or  goat, 
five  cents  per  day.^  The  lienor  must  notify  the 
owner,  if  known,  personally  or  by  post,  of  the 
detention  and  the  reason  therefor;  or,  if  not 
known,  must  post  conspicuously  in  three  public 
places  in  the  township  a  notice  ^^containing  a  de- 
scription of  the  animals,  their  marks  and  btands 
as  near  as  can  be  reasonably  ascertained,  and 
stating  the  cause  of  detention.^^  ^  At  any  time 
before  the  animals  are  sold  in  satisfaction  of  the 
lien,  the  owner  of  any  animal  may,  upon 
(1)  proving  his  property  and  (2)  discharging 
the  lien  thereon,^  or  giving  security  for  the  pay- 
ment of  any  amount  which  may  accrue  against 
him,^  recover  back  his  animals.     Within  ten  days 

3  Riverside  county  was  formed  out  of  parts 
of  San  Bernardino  and  San  Diego  counties  by  Stats. 
1893,  p.  158,  c.  142,  in  effect  March  11,  1893. 

3  Stats.    1875-76,   p.   458,    c.    330,    sec.    1. 

4  Stats.   1875-76,  p.  458,   c.   330,  sec.  5. 

5  Stats.  -1877-78,  p.  245,  c.  199,  sec.  1. 


732  TRESPASSING     ANIMAI-S.  §    480 

after  the  distraint^  the  lienor  must  cause  the 
damage  to  be  viewed  and  estimated  by  two  resi- 
dents of  the  county,  competent  to  be  witnesses 
on  the  trial  of  the  matter.^  Within  the  same 
time,^  the  lienor  must  commence  an  action  for 
the  foreclosure  of  his  lien — personally  against 
the  owner,  if  known,  otherwise  directly  against 
the  animals.'''  ^  In  case  of  a  foreclosure  judg- 
ment, any  surplus  proceeds  must  be  paid  to  the 
owners  if  demanded  within  three  months;  and 
after  the  expiration  thereof  into  the  county 
school  fund.''  At  any  time  within  three  months 
after  the  sale,  the  owner,  upon  proving  his  prop- 
erty and  paying  the  purchaser  his  purchase 
mone}^,  together  with  ten  per  cent  thereon  and 
the  expense  of  keeping  from  the  date  of  the  pur- 
chase at  a  specified  rate,  may  redeem  his  ani- 
mals.** 

«  Stats.  1877-78,  p.  245,  c.  199,  sec.  6. 

7  Stats.  3877-78,  p.  24'5,  c.  199,  sec.  2. 

8  Stats.  1877-78,  p.  245,  c.  199,  sec.  3. 

9  Stats.  1870-76,  p.  458,  c.  330,  sec.  5. 

481.     San  Bernardino    (part),  Yuba    (part).^ 

San  Bernardino:  Stats.  1875-76,  p.  307,  c.  233,  in 
effect  March  16,  1876.2 

Yuba:  Stats.  1875-76,  p.  210,  c.  187,  in  effect  March 
11  1876.3 

"Any  owner  or  occupant  of  any  land  or  pos- 
sessory claim,^^  whether  inclosed  or  not,  may  take 

1  Former  Enactments  Which  Have  Been  Superseded: 


§    481  TRESPASSING    ANIMALS.  733 

up  and  safely  keep  at  the  expense  of  the  owner 
any  trespassing  animal  found  thereon  as  fol- 
lows.'*' ^  In  San  Bernardino  comity  any  horse, 
mare,  colt^  nmle,  jack,  j^^^J?  goat^  or  head  of 
horned  cattle  found  trespassing  on  any  portion 
of  the  land  or  possessory  claim  cultivated  in  good 
faith,  or  whereon  there  are  growing  crops,  or 
hay  being  made,  may  be  distrained.^'  ^  In  Yuba 
county,  any  horse,  mare,  mule,  jack,  jenny, 
sheep,  goat,  hog,  head  of  horned  cattle,  or  tur- 
key found  trespassing  on  the  land  or  possessory 
claim  may  be  distrained.^  The  distrainor  has  a 
lien  on  every  such  animal  for  its  pro  rata  of 
^^damages,  charges,  and  fees^^  arising  by  reason 
of  the  trespass.''  The  cost  of  keeping  is  deemed 
as  follows:  In  San  Bernardino  county,  for  each 
horse,  mare,  colt,  mule,  jack,  jenny,  or  head  of 
horned  cattle,  twenty  cents  per  day;  for  each 
goat,  five  cents  per  day;  provided  that  the 
amount  claimed  must  not  exceed  ten  dollars  per 
day  for  any  number  of  goats.^     In  Yuba  county, 

San  Bernardino:  See  section  477,  note  2,  above. 

Yuba:  Stats.  1859,  p.  279,  c.  266,  sec.  2,  made  ap- 
plicable thereto  by  Stats.  1863,  p.  357,  c.  274.  (See 
section  487,  below.) 

2  Stats.   1875-76,  p.   307,  c.  233,   sec.  11. 

13  Stats.  1875-76,  p.  210,  c.  187,  sec.  12 
4  Stats.  1875-76,  p.  307,  c.  233,  sec.  1. 
5  Stats.  1875-76,  p.  210,  c.  187,  sec.  1. 
6  Stats.  1875-76,  p.  307,  c.  233,  sec  8.  ' 
7  Stats.  1875-76,  p.  307,  c.  233,  sec,  5;  Stats.  1875- 
76,  p.  210,  c.  187,  sec.  5. 
I 


734  TRESPASSING    ANIMALS.  §    481 

for  each  horse^  mare,  mule,  jack,  jenny,  or  head 
of  horned  cattle,  twenty-five  cents  per  day;  for 
each  hog,  sheep,  or  goat,  ten  cents  per  day;  pro- 
vided that  the  amount  claimed  must  not  exceed 
ten  dollars  per  day  for  any  number  of  sheep  or 
goats ;^  and  for  each  turkey,  three  cents  per  day.^ 
The  lienor  must  notify  the  owner,  if  known,  of 
the  detention  and  the  cause  therefor — personally 
or  by  a  written  notice  left  at  his  usual  residence 
when  residing  in  or  near  the  township,  and  when 
residing  at  a  greater  distance  by  post;  or  if  the 
owner  is  not  known,  must  post  conspicuously  in 
three  public  places  in  the  township  a  notice  "con- 
taining a  description  of  the  animals,  their 
marks  and  brands  as  nearly  as  can  be  reasonably 
ascertained,  and  stating  the  cause  of  deten- 
tion^^ ;^»  ^^  and  in  San  Bernardino  county  must 
also  deliver  a  copy  of  the  notice  to  the  justice 
of  the  peace.^  At  any  time  before  the  animals 
are  sold  in  satisfaction  of  the  lien,  the  owner  of 
any  animal  may,  (1)  upon  proving  his  property 
and  discharging  the  lien  thereon,'^  or  (2)  in  San 
Bernardino  county  only,  upon  giving  security  for 
the  payment  of  any  amount  which  may  accrue 
against  him  by  reason  of  the  trespass,^  recover 
back  his  animals.     Upon  the  expiration  of  ten 

8  stats.  1870-76,  p.  210,  c.  187,  sec.  8. 

9  Stats.  1875-76,  p.  307,  c.  233,  sec.  2. 

10  Stats.  1875-76,  p.  210,  c.  187,  sec.  2 


§    481  TRESPASSING    ANIMALS.  735 

days  after  the  distraint,  the  lienor  must  eom- 
inenee  an  action  for  the  foreclosure  of  his  lien — 
personally  against  the  owner,  if  known/^  other- 
wise directly  against  the  animals,  the  monition 
to  be  served  therein  by  posting  in  three  specified 
places  for  a  specified  time.^^  In  case  of  a  fore- 
closure judgment,  any  surplus  proceeds  must  be 
paid  to  the  owners  if  demanded  within  three 
months ;  and  after  the  expiration  thereof  into  the 
county  school  fund.^^  At  any  time  within  three 
months  after  the  sale,  the  owner,  upon  proving 
his  property  and  paying  the  purchaser  his  pur- 
chase money  with  ten  per  cent  thereon,  and  the 
expense  of  keeping  from  the  date  of  the  purchase 
at  the  rate,  in  San  Bernardino  county,  of  two 
dollars  per  month  per  head,  and  in  Yuba  county 
of  three  dollars  per  month  per  head,  may  redeem 
his  animals.'' 

This  act  applies  in  that  portion  of  San  Ber- 
nardino county  lying  north  of  a  line  drawn  due 
east  and  west  from  the  Colorado  river  to  the 
western  boundary  line  of  said  county  on  the 
township  line  between  townships  2  and  3  north, 
San  Bernardino  base,  excepting,  however,  that 
portion  thereof  lying  due  north  of  a  line  com- 
mencing at  the  northeast  corner  of  township  4 
north,  range  2  west,  San    Bernardino    base  and 

11  Stats.  1875-76,  p.  307,  c.  233,  sec.  3;  Stats.  1875- 
76,  p.  210,  c.  187,  sec.  3. 

12  Stats.  1875-76,  p.  307,  c.  233,  sec.  4;  Stats.  1875- 
76,  p.  210,  c.  187,  sec.  4. 


736  TRESPASSING     ANIMALS.  §    481 

meridian,  and  running  due  west  to  the  western 
boundary  line  of  said  county  ;^^  and  in  Marys- 
ville  and  Long  Bar  townships,  Yuba  county.^^ 

13  stats.  1875-76,  p.  307,  c.  233,  sec.  9.     See,  also, 
the  provision   of   section  477,   above,   applicable   to   a 
part  of  San  Bernardino  county. 
•    14  Stats.  1875-76,  p.  210,  c.  187,  sec.  12. 

482.     Marin,  Mono   (part).^ 

Stats-  1865-66,  p.  440,  c.  361,  in  effect  May  1,  1866 ;2 
Stats.  1867-68,  p.  456,  c.  369,  in  effect  April  7,  1868 
Stats.  1869-70,  p.  410,  c.  311,  in  effect  March  26,  1870 
Stats.  1871-72,  p.  412,  c.  304,  in  effect  March  16,  1872 
Stats.  1871-72,  p.  940,  c.  631,  in  effect  April  1,  1872 
Stats.  1873-74,  p.  391,  c.  283,  in  effect  March  16,  1874 
Stats.  1873-74,  p.  845,  c.  602,  in  effect  March  30,  1874 
Stats.  1875-76,  p.  5,  c.  7,  in  effect  Jan.  7,  1876 
Stats.  1877-78,  p.  176,  c.  136,  sec.  17,  in  effect  March 
7,  1878. 

*^^Any  owner  or  occupant  of  any  land  or  posses- 
sory claim^\  in  Marin^  county  and  in  the  first 
supervisor  district  in  Mono^  county,  whether  in- 
closed or  not,  "may  take  up  and  safely  keep," 
at  the  expense  of  the  owner,  any    horse,  mare, 

1  This  act  was  superseded  as  to  Sacramento  and 
Solano  counties  by  Stats.  1877-78,  p.  176,  c.  136,  sec. 
17,  in  effect  March  7,  1878. 

Former  enactments  which  have  been  superseded: 
Marin.— Stats.  1871-72,  p.  563,  c.  407,  in  effect  March 
27,  1872;  Stats.  1863-64,  p.  170,  c.  176,  in  effect  March 
15,  1864,  repealed  1865-66,  p.  440,  c.  361,  sec.  10,  in 
effect  May  1,  1866.     Hog  act,  section  488,  below. 

2  Stats.  1865-66,  p.  440,  c.  361,  sec.  12. 

3  Stats.  1875-76,  p.  5,  c.  7. 


§    482  TRESPASSING    ANIMALS.  737 

mule,  jack,  jenny,  horned  cattle,^  hog,^  or  goat,^ 
found  trespassing  thereon;  and  has  a  lien  upon 
every  such  animal  for  its  pro  rata  of  "fees, 
charges,  and  damages^^  arising  by  reason  of  the 
trespass.^  The  expense  of  keeping  is  deemed  as 
follows:  For  each  hog  or  goat,  five  cents  per 
day;^  for  each  other  animal,  twenty  cents  per 
day.^  The  lienor  must  forthwith  notify  the 
owner  of  the  detention  if  he  is  known  or  "can 
be  ascertained  by  a  search  of  the  records  and 
brands  in  the  office  of  the  justice  of  the  peace 
of  the  township^^ — personally  if  he  resides  in  or 
near  the  township,  or  if  at  a  greater  distance  by 
post;  or,  if  the  owner  cannot  be  ascertained, 
must  immediately  post  conspicuously  in  three 
"  conspicuous  public  places  a  notice  contain- 
ing a  description  of  the  animals,  their 
marks  and  brands,  ^nd  stating  the  cause 
of  their  detention,  and  must  deliver  a 
copy  thereof  to  the  justice  of  the  peace 
of  the  township.''  At  any  time  before  the  prop- 
erty is  sold  in  satisfaction  of  the  lien,  the  owner 
of  any  animal  may,  upon  proving  his  property 
and  discharging  the  lien,  receive  back  his  prop- 
erty.^    If    the  lienor  and    owner  cannot    agree 

4  stats.  1865-66,  p.   440,   c.   361,   sec.   1. 

5  Stats.  1873-74,  p.  845,  c.  602. 

6  Stats.  1865-66,  p.  440,   c.  361,  sec.  5. 

7  Stats.  1865-66,  p.  440,   c.   361,   sec.   2  ' 

Liens— 47 


738  TRESPASSIXG     ANIMAL.S.  §    482 

upon  the  amount  of  the  lien,  it  is  to  be  fixed  by 
three  arbitrators  mutually  chosen.^  Within  ten 
days  after  the  distraint,  the  lienor  must  com- 
mence an  action  for  the  foreclosure  of  his  lien — 
personally  against  the  owner  if  known,  otherwise 
directly  against  the  animals.^'  ^  In  case  of  a 
foreclosure  judgment  and  sale,  at  any  time  within 
three  months  after  the  sale,  the  owner  may,  upon 
proving  his  property  and  paying  the  purchaser 
his  purchase  money,  together  with  one  per  cent 
per  month  thereon  in  addition  from  the  date  of 
the  purchase,  redeem  his  animals. ^^ 

8  stats  1865-66,  p.  440,  c.  361,  sec.  3. 

0  Stats.  1865-66,  p.  440,  c.  361,  sec.  4. 
10  Stats.  1865-66,  p.  440,  c.  361,  sec.  5. 

483.  Fresno,  Inyo,  Kern,  Kings,  Madera,  Mon- 
terey, Napa,  San  Benito,  Tulare,  Ven- 
tura.^ 

Stats,  1873-74,  p.  50,  c.  54;  Stats.  1873-74,  p.  179,  c. 
139;  Stats.  1873-74,  p.  705,  c.  471,  fully  effective  June 
25,  1874;  Stats.  1877-78,  p^  176,  c.  136,  sec.  17,  in  effect 
March  7,  1878;  Stats.  1873-74,  p.  474,  c.  326,  in  effect 
March  18,  1874;  Stats.  1873-74,  p.  824,  c.  583,  in  effect 
April  15,  1875. 

"Any  owner  or  occupant  of  any  land  or  pos- 
sessory claim'^  in  Fresno,  Inyo,^  Kern,  Kings,^ 

1  This  act  was  repealed  as  to  San  Luis  Obispo 
and  Santa  Barbara  counties  by  Stats.  1877-78, 
p.  176,  c.  136,  sec.  17,  in  effect  March  7,  1878.  (See 
Hanley  v.  Sixteen  Horses  and  Thirteen  Head  of  Cattle, 
97  Cal.  182,  32  Pac.  10.) 

Former    enactments   which    have   been    superseded; 


§   483  TRESPASSING   ANIMALS.  739 

Madera,^  Monterey,  ^N'apa,^'  San  Benito,^  Tulare, 
and  Ventura  counties,  whether  inclosed  or  not, 
may  take  up  and  safely  keep  at  the  expense  of 
the  owner  any  horse,  mare,  colt,  mule,  jack, 
jenny,  horned  cattle,  hog,  sheep,  or  goat  found 
trespassing  thereon;^  and  has  a  lien  for  the  cost 
of  keeping  any  such  animals  and  the  damages 
sustained  by  reason  of  the  trespass.  The  cost 
of  keeping  is  deemed  as  follows:  For  each  horse, 
mare,  colt,  mule,  jack,  jenny,  or  head  of  horned 
cattle,  twenty  cents  per  day ;  for  each  hog,  sheep, 
or  goat,  five  cents  per  dayJ  The  lienor  must 
immediately,  if  the  owner  or  his  agent  is  known 
and  is  living  within  six  miles  of  the  place  of  tak- 
ing up,  notify  him  ^^of  the  time  and  place  of  tak- 

Kern.— Hog  Act,  section  488,  below. 

Monterey.— Stats.  1871-72^  p:  99,  c.  107,  as  amended 
1871-72,  p.  241,  c.  201,  repealed  1871-72,  p.  563,  c.  407, 
sec.  20.     Hog  act,  section  488,  below. 

Napa.— Stats.  1871-72,  p.  563,  c.  407,  in  effect  March 
27,  1872.     Hog  act,  section  488,  below. 

Ventura.— Stats.  1871-72,  p.  749,  c.  509,  in  effect 
April  1,  1872,  Ventura  county  then  being  a  part  of 
Santa  Barbara  county.     Hog  act,  section  488,  below. 

2  Stats.  1873-74,  p.  824,  c.  583. 

3  Kings  county  was  formed  out  of  the  western 
part  of  Tulare  county,  by  Stats.  1893,  p>.  176,  c.  150. 

4  Madera  county  was  formed  out  of  the  north- 
ern part  of  Fresno  countv,  by  Stats.  1893,  p.  168,  c. 
143. 

5  Stats.   1873-74,   p.   705,   c.   471,   sec.   1. 

6  Stats.  1873-74,  p.  474,  c.  326. 

7  Stats.  1873-74,  p.  50,  c.  54,  sec.  1. 


740  TRESPASSING     ANIMALS.  §    483 

ing  up,  together  with  the  number,  character,  and 
description  thereof;  also  as  nearly  as  he  can,  the 
marks  and  brands,  if  any,  of  each  animal/^^  At 
any  time  before  the  animals  are  sold  in  satisfac- 
tion of  the  lien,  the  owner  may,  upon  (1)  prov- 
ing his  property,  and  (2)  tendering  the  amount 
of  the  lien,  or  giving  an  undertaking  for  the  pay- 
ment thereof  to  be  approved  by  the  judge  try- 
ing the  ease,  recover  back  his  animals.^  The 
lienor  must,  within  two  days  [after  giving  no- 
tice], unless  the  animals  have  been  sooner  re- 
claimed, commence  a  direct  action  against  the 
distrained  animals  for  the  foreclosure  of  his 
lien.®  The  complaint  must  set  forth  the  facts, 
nature,  location,  and  amount  of  damages  claimed, 
a  description  of  all  animals  so  taken  up,  the  num- 
ber, marks  and  brands,  if  any,  the  supposed  value 
of  each  animal  or  the  supposed  aggregate  value 
of  such  animals,  and  the  time  and  place  of  dis- 
traint.® Upon  filing  the  complaint,  a  summons 
made  returnable  not  less  than  fifteen  nor  more 
than  twenty  days  after  the  issuance  must  be  is- 
sued, and  must  forthwith  be  served  by  posting 
one  copy  in  the  courtroom  for  ten  days  and  fil- 
ing another  in  the  county  recorder's  office.®  The 
recorder  must  compare  the  marks  and  brands,  if 
any,  with  the  record  of  marks  and  brands  in  his 

S  stats.   1873-74,  p.   50,  c.  54,   sec.  2. 
9  Stats.  1873-74,  p.  50,  c.  54,  sec.  3. 


§    483  TRESPASSING    ANIMALS.  741 

office,  and  if  the  owner  can  thus  be  determined 
notify  him  of  the  pendency  of  the  action,  and 
when  the  distrained  property  is  worth  fifty  dol- 
lars or  more,  must  publish  notice  in  a  designated 
paper.^  In  case  of  a  foreclosure  sale,  any  sur- 
plus proceeds  must  be  held  for  the  owner  for  six 
months  by  the  court,  and  if  not  demanded  before 
the  expiration  of  such  time  must  thereupon  be 
paid  into  the  county  school  fund.  At  any  time 
within  sixty  days  after  the  sale,  the  owner  may, 
upon  proving  his  property  and  paying  the  pur- 
chaser his  purchase  money  in  gold  coin,  together 
with  interest  thereon  at  two  per  cent  per  month 
in  addition,  may  redeem  his  property.^^ 

The  lien  herein  provided  is  an  additional  and 
cumulative  security,  and  does  not  impair  the 
right  to  resort  to  a  personal  remedy.^^ 

This  act  does  not  prevent  the  free  use  for  graz- 
ing purposes  of  all  unoccupied  lands  not  taxed, 
saving  certain  rights  to  actual  settlers.*^ 

10  stats.  1873-74,  p.  '50,  c.  54,  sec.  4. 

11  Triscony  v.  Brandenstein,  66  Gal.  514,  516,  6  Ji'ac. 
384. 

12  Stats.  1873-74,  p.  50,  c.  54,  sec.  9. 

484.     Butte  (part),  Calaveras  (part).^ 

Butte.— Stats.  1873-74,  p.  310,  c.  213,  in  effect  March 

1  Former  enactments  as  to  Butte  county:  Stats. 
1863-64,  p.  170,  c.  176,  in  effect  March  15,  1864, 
relating  to  the  distraint  of  trespassing  animals  in 
Butte,    Marin,    Solano,    and    Yolo    counties,    repealed 


742  TEESPASSIXG    ANIMALS.  §    484 

10,  1874;  Stats.  1875-76,  p.  314,  c,  244,  in  effect  March 
X6,    1876. 

Calaveras.— Stats.  1873-74,  p.  597,  c.  405,  in  effect 
March  24,  1874;  Stats.  1875-76,  p.  901,  c.  603,  in  effect 
^pril  3,  1876. 

"^^Any  owner  or  occupant  of  cultivated  land,-' 
whether  inclosed  or  not,  may  take  up  and  safely 
keep  at  the  expense  of  the  owner  any  animal 
found  trespassing  thereon  to  the  injury  of  the 
cultivation  ;^  and  has  a  lien  on  every  such  animal 
for  its  pro  rata  of  the  "charges,  fees,  and  dam- 
ages^^  arising  by  reason  of  the  trespass.^  The 
lienor  must  forthwith  notify  the  owner  of  the 
distraint — ^by  written  notice  delivered  to  the  own- 
er personally  or  by  post,  if  known  ;^  if  un- 
known, by  written  notices  posted  in  three  of  the 
most  public  places  in  the  township  containing  a 
full  description  of  the  animals  with  marks  and 
brands,  and  stating  the  cause  of  detention  and 
the  time  of  distraint.*^  Certain  costs  are  allowed 
the  distrainor.®  At  any  time  before  the  aul- 
as to  Butte  county  by  Stats.  1865-66,  p.  311,  c.  280, 
in  effect  March  20,   1866. 

a  Stats.  1873-74,  p.  310,  c.  213,  sec.  1:  Stats.  1873- 
74,  pi.  579,  c.  405,  sec:  1. 

3  Stats.  1873-74,  p.  310,  c.  213,  sec.  8;  Stats.  1873- 
74,  p.  579,  c.  405,  sec.  8. 

4  Stats.  1873-74,  p.  310,  c.  213,  sec.  2;  Stats.  1873- 
74,  p.   579,   c.  405,   sec.  2. 

5  Stats.  1873-74,  p.  310,  c.  213,  sec.  3;  Stats.  1873- 
74,  p.  579,  c.  405,  sec.  3. 

•    6  Stats.  1873-74,  p..  310,  c.  213,  sec.  4;  Stats.  1873- 
74,  p.  579,  c.  405,  sec.  4. 


§    484  TRESPASSING    x\NIMALS.  743 

mals  are  sold  in  satisfaction  of  the  lien,  the  owner 
of  any  of  them  may,  upon  proving  his  property 
and  discharging  the  lien,  recover  back  his  prop- 
erty.^ The  amount  of  the  lien  is,  in  case  of  a 
disagreement  between  the  parties,  to  be  deter- 
mined by  three  arbitrators  mutually  chosen.'' 
At  any  time  after  the  expiration  of  ten  days  af- 
ter the  distraint,  the  lienor  may  commence  an 
action  for  the  foreclosure  of  his  lien.®  In  case 
of  a  foreclosure  judgment,  any  surplus  proceeds 
from  the  sale  of  the  animals  must,  if  not  claimed 
by  the  owner,  be  held  for  his  use  for  six  months, 
and  thereupon,  if  remaining  unclaimed,  must  be 
paid  into  the  county  school  fund.^  At  any  time 
within  six  months  after  the  sale,  the  owner,  upon 
proving  his  property  and  paying  the  purchaser 
his  purchase  money,  together  with  one  per  cent 
thereon  and  the  reasonable  cost  of  keeping  the 
animals  since  the  sale  in  addition  thereto,  may 
redeem  his  animals.^ 

This  act  applies  in  that  portion  of  Butte*^ 
county  ^%ing  west  of  Feather  river  and  the 
main  north  fork  of  same,^^  and  in  that  portion 
of  Calaveras**  county  bounded  as  follows:  Com- 
mencing at  a  point  on  the  Stanislaus  river  where 

7  stats.  1873-74,  p.  310,  c.  213,  see.  5;  Stats.  1873- 
74,  p.  579,  c.  405,  sec.  5. 

8  Stats.  1873-74,  p.  310,  c.  213,  sec.  7;  Stats.  1873- 
74,  p.  579,  c.  405,  sec.  7. 

9  Stats.  1873-74,  p.  310,  c.  213,  sec.  9;  Stats. 
1873-74,  p.  579,  c.  405,  sec.  9. 


744  TRESPASSIXG     ANIMALS.  §    484 

it  crosses  the  Stanislaus  county  line;  thence  up 
the  river  to  a  point  opposite  the  main  summit  of 
Bear  mountain,  thence  along  the  summit  to  the 
Calaveras  river;  thence  down  said  river  to  a  point 
due  east  of  Willett^s  ranch;  thence  due  west  to 
the  Mokelumne  river;  thence  down  said  river  to 
the  San  Joaquin  county  line;  thence  along  the 
line  between  Calaveras  county  and  San  Joaquin 
and  Stanislaus  counties  to  the  point  of  beginning. 

10  stats.  1875-76,  p.  314,  c.  244. 

11  Stats.  1873-74,  p.  579,  c.  405,  sec.  1?. 

By  Stats.  1875-76,  p>.  901,  c.  603,  the  question 
whether  the  electors  of  Calaveras  county  desired  this 
law  to  be  extended  to  the  whole  county  or  repealed 
was  to  be  submitted  to  the  electors  for  the  informa- 
tion of  the  legislature. 

485.     Alameda,  Contra  Costa,  Placer  (part),  San 
Francisco,    San    Mateo.^ 

Two  principal  statutes: 

First.— Stats.  1871-72,  p.  563,  c.  407,  in  effect  March 
27,  1872;  Stats.  1875-76,  p.  5,  c.  7,  in  effect  January  7, 
1876;  Stats.  1875-76,  p.  173,  c.  171,  sec.  4,  in  effect 
May  1,  1876;  Stats.  1877-78,  p.  176,  c.  136,  sec.  17,  in 
effect  March  7,  1878;  Stats.  1877-78,  p.  360,  c.  290, 
sec.  11,  in  effect  March  20,  1878;  Stats.  1873-74,  p. 
705,  c.  471,  sec.  2,  fully  effective  June  25,  1874;  Stats. 
1873-74,  p.  343,  c.  243,  in  effect  March  11,  1874.3 

Second.— Stats.  1875-76,  p.  542,  c.  394,  in  effect 
September  1,  1876.2 

1  This  section  is  founded  on  two  statutes,  Stats. 
1871-72,  p.  563,  c.  407,  and  Stats.  1875-76,  p.  542,  c. 
394. 

Stats.  1871-72,  p.  563,  c.  407,  originally  applicable 
in  Alameda,  Contra  Costa,  Marin,  Merced,  Napa,  San 


§    485  TRESPASSING    ANIMALS.  745 

^^Any  owner  or  occupant  of  any  land  or  pos- 
sessory claim^'  in  Alameda,^  Contra  Costa,^  and 
San  Francisco^  connties,  in  Judicial  townships 
N'os.  1  and  10  in  Placer  county ^^  and  in  San  Ma- 
teo^ county  subject  to  the  qualification  that  any 

Francisco,  San  Joaquin,  San  Mateo,  Solano,  and  Yolo 
counties,  was  superseded  as  to  Marin  county,  by 
Stats.  1875-76,  p.  5,  c.  7;  as  to  Merced  and  San 
Joaquin  counties  by  Stats.  1877-78,  p.  176,  c.  136,  sec. 
17;  as  to  Napa  county  by  Stats.  1873-74,  p.  705,  c. 
471,  sec.  2;  as  to  Solano  county  by  Stats.  1875-76, 
p.  5,  c.  7,  and  Stats.  1877-78,  p.  176,  c.  136;  and  as  to 
Yolo  county  by  Stats.  1873-74,  p.  343,  c.  243,  and 
Stats.  1877-78,  p.  360,  c.  290. 

Stats.  1871-72,  p.  563  c.  407,  sees.  jl6-18,  provided 
that  (except  in  certain  counties  enumerated  in  section 
16),  upon  petition  of  one  hundred  qualified  electors 
of  any  county  other  than  those  in  which  the  legis- 
lature had  made  it  applicable,  the  supervisors  must 
submit  it  to  the  electors,  and  upon  a  majority  vote  in 
its  favor,  the  act  was  to  immediately  become  effective 
in  such  county.  Barring  counties  for  which  other 
provision  was  subsequently  made,  this  statute  might 
be  thus  adopted  in  Lake,  Lassen,  Modoc,  Plumas, 
Sierra,  Sutter,  and  Tuolumne  counties,  in  Mono 
county,  except  as  provided  in  section  482,  and  in  San 
Bernardino  county,  except  as  provided  in  sections 
477  and  481.  Whether  it  has  been  so  adopted  in  any 
of  these  counties,  I  do  not  know. 

Stats.  1875-76,  p.  542,  c.  394,  closely  resembles  the 
statute  of  1871-72,  above,  and  applies  to  a  ptortion  of 
Placer  county  only.  It  superseded  section  487,  below, 
as  to  a  part  of  Placer  county. 

This  act  superseded  section  488,  below,  in  Alameda, 
Contra  Costa,  Placer,  San  Francisco,  and  San  Mateo 
counties. 

2  Stats.  1875-76,  p.  542,  c.  394,  sec.  16." 

3  Stats.  1871-72,  p.  563,  c.  407,  sec.  19. 

4  Stats.   1875-76,   p  542,   c.    394,   sec:    1. 


k 


746  '      .  TRESPASSING    ANIMALS.  §    485 

owner  or  occupant  who  fails  or  refuses  after  due 
notice  to  repair  or  erect  his  proportion  of  any 
partition  fence,  cannot  distrain  any  trespassing 
animal  belonging  to  the  party  giving  such  no- 
tice,^ whether  inclosed  or  not,  ^^may  take  up  and 
safely  keep'^  at  the  expense  of  the  owner  any 
"horse,  mare,  mule,  jack,  jennet,  horned  cattle, 
sheep,  goat,  or  hog,^^  found  trespassing  there- 
on;^' ^  and  has  a  lien  on  every  such  animal  for  its 
pro  rata  of  costs,  charges,  and  damages  arising 
by  reason  of  the  trespass. ''» ^  The  expense  of 
keeping  is  deemed  as  follows:  For  each 
horse,  mare,  jack,  jennet,  or  head  of 
horned  cattle,  twenty  cents  per  day;  for 
.each  hog  or  goat,  ten  cents  per  day; 
for  each  sheep,  five  cents  per  day;  provided  that 
the  aggregate  cost  of  keeping  any  number  of 
sheep  or  goats  m_ust  not  exceed  ^Ye  dollars  per 
day.^'  ^  The  lienor  must  notify  the  owner  of 
each  such  animal  of  the  detention  and  the  rea- 
son therefor,  if  such  owner  is  known  or  can  be 
ascertained  by  an  examination  of  the  marks  and 
brands  in  the  records  of  the  county — ^personally 
if  residing  in  or  near  the  township,  or  if  at  a 
greater  distance,  in  Placer  county   in  excess  of 

5  stats.  ]  875-76,  p.  173,  c.  171,  sec.  4. 

6  Stats.  1871-72,  p.  563,  c.  407,  sec.  1. 

7  Stats.  1871-72,  p.  563,  c.  407,  sec.  3;  Stats  1875- 
76,  p.  542,  c.  394,  sec.  3. 

S  Stats.  1871-72,  p.  563,  c.  407,  sec.  8;  Stats.  1875- 
70,  p.  542,  c.  394,  sec.  8. 


§    485  TRESPASSING    ANIMALS.  747 

ten  miles^  by  post;  or  if  such  owner  cannot  be 
ascertained,  must  in  Placer  county  post  con- 
spicuously for  twenty  days  in  three  public  places 
in  the  township  a  notice  containing  a  complete 
description  of  the  animals  and  stating  the  cause 
of  detention,  and  must  in  all  other  counties,  if 
a  newspaper  is  published  therein,  publish  for 
thirty  days  in  such  paper  a  like  notice,  or  if  not 
so  published  conspicuously  post  in  three  public 
places, in  the  township  such  notice,  and  deliver  a 
copy  thereof  to  the  justice  of  the  peace  of  each 
township  of  the  county.^  At  any  time  before  the 
animals  are  sold  in  satisfaction  of  the  lien,  the 
owner  of  any  of  them  may,  upon  proving  his 
property  and  discharging  the  lien  thereon,  re- 
cover back  his  animals.'''  *^  If  the  lienor  and 
owner  cannot  agree  upon  the  amount  of  the  lien, 
it  is  to  be  fixed  by  three  arbitrators  mutually 
chosen.^^  If  the  owner  fails  to  come  forward 
within  ten  days,  the  lienor  must  "immediately 
notify  a  constable  of  the  township  wherein  the 
trespass  has  been  committed. ^^^^  The  constable 
must  sell  after  ten  days'  notice  by  notices  posted 
in  three  public  places  in  the  township.^^'  ^^  The 
purchaser  at  the  sale  must  not  remove  the  ani- 

9  Stats.  1871-72,  p.  563,  c.  407,  sec.  2;  Stats.  1875- 
76,  p.  542,  c.  394,  sec.  2. 

10  Stats.  1871-72,  p.  563,  c.  407,  sec.  4;  Stat«. 
1875-76,  p.  542,  c.  394,  sec.  4. 

11  Stats.    1871-72,    p.    563,    c.    407,    sec.    5;    Stats. 
1875-76,   p.   542,   c.    394,   sec.   5. 

12  A    failure    on    the    part    of    the    constable    to 


748  TRESPASSING     ANIMALS.  §    485 

irials  from  the  county  until  after  the  expiration 
of  the  period  of  redemption.*^  The  constable 
must  immediately  pay  over  the  proceeds  of  the 
sale  to  the  justice  of  the  peace  of  the  township.** 
The  proceeds  must  be  applied  to  the  satisfaction 
of  the  lien/^  the  amount  of  which  is  to  be  de- 
termined by  two  disinterested  persons  chosen  by 
the  justice^  and  they  may  choose  a  third.**  The 
justice  must  hold  any  surplus  for  the  benefit  of 
the  owner  for  twenty  days,  and  thereafter  it  must 
be  paid  to  and  held  by  the  county  treasurer  for 
his  benefit  for  one  year,  after  the  expiration  of 
which  time  it  must  be  paid  into  the  county  school 
fund.*^  At  any  time  within  three  months  after 
the  sale,  the  owner  of  any  of  the  animals,  upon 
proving  his  property  and  paying  the  purchaser 
his  purchase  money,  together  with  three  per  cent 
per  month  thereon, '  and,  in  Placer  county,  the 
reasonable  expense  of  keeping  from  the  date  of 
the  purchase  in  addition,  may  redeem  his  ani- 
mals.® 

This  act  does  not  "prohibit  persons  from  driv- 
ing stock  along  the  public  highway,  nor  from 
watering  stock  at  the  natural  watering-places. ^^*'^ 

give  the  notice  of  sale  as  required,  renders  the  sale 
void:    Chase   v.    Putnam,    117    Cal.    364,    49   Pac.    204. 

13  Stats.  1871-72,  p.  563,  c.  407,  sec.  15;  1875-76, 
p.   542,  c.   394,  sec.   15. 

14  Stats.  1871-72,  p.  563,  c.  407,  sec.  6;  Stats, 
1875-76,  p.  542,  c.  394,  sec.  6. 

15  Stats.  1875-76,  p.  542,  c.  394,  sec.  11;  compare 
1871-72,  p.   563,   c.  407,   sec.   11. 


§   486  TRESPASSING   ANIMALS.  749 

486.     Santa   Clara,    Santa   Cruz.^4^£gi^ii>^ 

Santa  Clara.— Stats.  1863,  p.  581,  c.  393,  in  effect 
April  27,  1863;  Stats.  1863-64,  p.  98,  c.  102,  in  effect 
February  20,  1864;  Stats.  1871-72,  p.  580,  c.  411,  in 
effect  March  27,  1872. 

Santa  Cruz.— Stats.  1869-70,  p.  860,  c.  561,  in  effect 
April  4,  1870. 

Any  person  may  take  up  and  safely 
keep  any  horse,  mare,  mule,  jack,  jenny, 
head  of  cattle,  sheep,  hog,  or  goat  found 
trespassing  on  his  farm  or  other  prem- 
ises^ situate  in  Santa  Clara  or  Santa 
Cruz  counties,  whether  inclosed  or  not  ;^'  ^  and 
has  a  lien  on  every  such  animal  for  its  pro  rata 
of  the  costs  and  damages  arising  by  reason  of 
the  trespass.^' ^  The  following  amounts  are  re- 
spectively deemed  the  damages  caused  by  the 
trespass  of  each  animal:  In  Santa  Clara  county, 
one  dollar  for  each  sheep,  two  dollars  for  each 

1  In  Santa  Clara  county,  by  Stats.  1871-72,  p.  580, 
c.  411,  sec.  1,  as  modified  by  Stats.  1873-74,  pp.  453, 
464,  c.  320,  sec.  37,  and  Stats.  1875-76,  pp.  606,  608,  c. 
431,  sec.  4,  the  roadmaster  is  required  to  take  up  like 
animals  when  running  at  large  upon  any  public  thor- 
oughfare and  proceed  with  them  the  same  as  in  case 
of  a  distraint.  The  act  is  not,  however,  intended  to 
prevent  a  herder  from  driving  any  such  animals  along 
a  public  highway:  Thompson  v.  Corpstein,  52  Cal.  653. 

2  Whether  Inclosed  or  not.— This  is  necessarily  im- 
plied in  Hahn  v.  Garratt,  69  Cal.  146,  10  Pac.  329. 

3  Stats.  1871-72,  p.  580,  c.  411,  sec.  1;  Stats.  1869- 
~  70,  p.  860,  c.  561,  sec.  1. 

4  Stats.  1863,  p.  581,  c.  393,  sec.  3;  Stats.  1869-70, 
p.  860,  c.  561,  sec.  3. 


750  TRESPASSING    ANIMALS.  §    486 

hog  or  goat^  and  four  dollars  for  each  other  ani- 
mal above  named  ;^  and  in  Santa  Cruz  county, 
one-half  the  above  amounts,^  provided  also,  in 
Santa  Cruz  county,  that  where  more  than  ten 
animals  belonging  to  the  same  person  are  dis- 
trained at  once,  the  damages  are  deemed  one- 
quarter  the  above  amounts.''  The  lienor  must 
post  notices  containing  a  description  of  the  ani- 
mals, with  the  marks  and  brands,  if  any,  and 
stating  the  places  of  distraint  and  detention — 
one  to  be  posted  at  the  door  of  the  schoolhouse 
of  the  school  district  of  the  distraint  and  one  at 
the  door  of  the  nearest  postoffice,  and  must  file 
a  similar  notice  with  the  county  recorder.^'  ^ 
The  lienor  must  pay  the  recorder  certain  speci- 
fied fees,  and  the  recorder  must  thereupon,  if 
the  mark  or  brand  is  recorded  in  his  office,  with- 
in two  days  in  Santa  Clara^  county,  and  in  Santa 
Cruz^  county  within  three  days  notify  the  owner 
by  post  of  the  distraint.  In  Santa  Clara  county, 
the  giving  of  these  notices  by  the  lienor  and  re- 
corder is  declared  directory,  and  a  sale  is  not  in- 
validated by  any  irregularity  therein.^*  ®  At  any 
time  before  the  animals  are  sold  in  satisfaction 
of  the  lien,  the  owner  of  any  of  them  upon  dis- 

5  stats.  1871-72,  p.  580,  c.  411,  sec.  2. 

6  Stats.  1869-70,  p.  860,  c.  561,  sec.  2. 

7  Stats.  1869-70,  p.  860,  c.  561,  sec.  7. 

8  This  provision  was  doubtless  inserted  to  avoid  the 
strict  rule  of  construction  laid  down  in  Trumpler  v. 
Bemerly,  34  Cal.  490. 


§   486  TRESPASSING   ANIMALS.  751 

charging  the  lien  thereon  may  recover  back  his 
animals.^  If  the  owner  fails  to  come  for- 
ward within  ten  days  in  Santa  Clara^ 
county^,  or  in  Santa  Cruz^  county  with- 
in twenty  days^  the  lienor  must  immedi- 
ately notify  a  constable.  The  constable  must 
sell  as  such  property  is  sold  on  execution.'*  The 
constable  must,  if  the  owner  is  present  at  the 
sale  and  demands  the  same,  pay  any  surplus  of 
proceeds  after  the  satisfaction  of  the  lien  and 
accrued  costs  to  the  owner  upon  proof  of  his 
right  thereto ;  and  if  the  owner  is  not  so  present, 
must  pay  the  surplus  to  the  county  treasurer.^ 
The  treasurer  must  hold  the  surplus  for  the  use 
of  the  owner  subject  to  the  order  of  the  board  of 
supervisors  for  one  year ,  after  the  expiration  of 
which  it  must  be  paid  into  the  county  school 
fund.^  At  any  time  within  six  months  after  the 
sale,  the  owner  of  any  of  the  animals,  upon  prov- 
ing his  property  and  paying  the  purchaser  his 
purchase  money,  together  with  five  per  cent 
thereon  in  Santa  Clara  county  and  in  Santa  Cruz 
county  fifteen  per  cent  thereon,  and  the  reason- 
able cost  of  keeping  his  animals  since  the  sale  in 
addition,  may  redeem  his  animals.^^ 

9  Stats.  1863,  p.  581,  c.  393,  sec.  5;  Stats.  1869-70,  p. 
860,  c.  561,  sec.  5. 

10  Stats.  1863,  p.  581,  c.  393,  sec.  3;  Stats.  1869-70, 
p.  860,  c.  561,  sec.  3. 


752  TRESPASSING    ANIMALS.  §    487 

487.     Placer     (part),    Shasta,    Tehama    (part), 
Yuba    (part) — Inclosed   Lands.^ 

Stats.  1859,  p.  279,  c.  266,  sec.  2;  Stats.  1863,  p.  357, 
G.   274. 

The  owner  of  any  premises  inclosed  by  a  law- 
ful f  ence^  in  Shasta,  county^  in  Placer  county  ex- 
cept in  judicial  townships  ISTos.  1  and  10  thereof,^ 
in  Tehama  county  excepting  that  portion  there- 
of lying  west  of  the  Sacramento  river  and  south 
of  Eed  Bank  creek,^  and  in  Yuba  county  except 
in  Marysville  and  Long  Bar  townships  thereof,^ 
may  take  upon  and  safely  keep,  at  the  expense 
of  the  owner  thereof,  any  horse,  mule,  jack, 
jenny,'  hog,  sheep,  goat,  or  any  head  of  neat 
cattle  found  trespassing  thereon,  and  has  a  lien 
against  the  distrained  animals  for  the  damages 
sustained  by  reason  of  the  trespass,  or  in  case  of 
a  second  or  subsequent  trespass  for  double  such 
damages,  and  all  expenses  of  pasturing,  keeping 

1  This  act  was  superseded  as  to  Colusa  and  Glenn 
counties  and  a  part  of  Riverside  county  by  section 
477  above;  and  as  to  San  Bernardino  county  by  sec- 
tions 477  and  481,  above. 

It  was  extended  to  Yuba  county  bv  Stats.  1863,  p. 
357,  c.  274. 

3  This  act  was  superseded  as  to  a  part  of  Placer 
county  by  section  485,  above. 

3  This  act  was  superseded  as  to  a  part  of  Tehama 
county  by  section  477,  above. 

4  This  act  was  superseded  as  to  a  part  of  Yuba 
county  by  section  481,  above. 


§    487  TRESPASSING    ANIMALS.  753 

and  disposing  of  the  animals.  If  the  animals 
are  not  applied  for  and  the  lien  discharged  with- 
in ten  days  after  the  distraint,  the  animals  may 
be  posted  and  disposed  of  under  the  estray  law  of 
the  state. 

488.     Hog  Lien.i 

Three  principal  statutes  with  numerous  affiliated 
acts.2 

First.— Stats.  1856,  p.  229,  c.  1^,  in  effect  April  21, 
1856;  Stats.  1857,  p.  54,  c.  56,  in  effect  March  4,  1857 
Stats.  1858,  p.  17,  c.  17,  February  9,  1858;  Stats.  1859. 
p.  176,  c.  171,  in  effect  April  8,  1859;  Stats.  1859,  p. 
337,  c.  312,  in  effect  April  18,  1859;  Stats.  1861,  p.  4b5, 
c.  404,  in  effect  May  17,  1861;  Stats.  1862,  p.  39,  c.  49 
in  effect  March  13,  1862;  Stats.  1862,  p.  330,  c.  288, 
in  effect  April  24,  1862;  Stats.  1863,  p.  57,  c.  62,  in 
effect  March  16,  1863;  Stats.  1863,  p.  580,  c.  389,  in 
effect  April  25,  1863;  Stats.  1863-64,  p.  227,  c.  228,  in 
effect  March  24,  1864;  Stats.  1863-64,  p.  290,  c.  278,  in 
effect  April  1,  1864;  Stats.  1865-66,  p.  323,  c.  290,  in 
effect  March  20,  1866;  Stats.  1865-66,  p.  567,  c.  445,  in 
effect  March  31,  1866;  Stats.  1867-68,  p.  430,  c.  360,  in 
effect  March  28,  1868;  Stats.  1869-70,  p.  305,  c.  203,  in 
effect  March  14,  1870;  Stats.  1875-76,  p.  797,  c.  526,  in 
effect  April  1,  1876;  Stats.  1877-78,  p.  184,  c.  145,  in  ef'- 
feet  March  8,  1878;  Stats.  1877-78,  p.  640,  c.  435,  in 
effect  March  29,  1878. 

Second.— Stats.  1857,  p.  106,  c.  102,  in  effect  March 
26,  1857;  Stats.  1858,  p.  79,  c.  96,  in  effect  March  20, 
1858;  Stats.  1861,  p.  271,  c.  271,  in  effect  May  2,  1861; 
Stats.  1862,  p.  85,  c.  90,  in  effect  March  25,  1862;  Stats. 
1862,  p.  214,  c.  199,  in  effect  April  10,  1862;  Stats.  1863, 

1  Constitutionality  Affirmed.— In  Eood  v.  McCargar, 
49  Cal.  117,  the  constitutionality  of  the  statute  of 
1857,  so  far  as  creating  a  lien,  was  affirmed,  while  no 
opinion  was  expressed  as  to  the  constitutionality  of  the 
procedure  provided  for  its  enforcement. 

2  The  body  of  these  statutes  is  practically  identical. 

Liens — 48, 


754  TRESPASSING    ANIMALS.  §    488 

p.  774,  c.  534,  in  effect  April  27,  1863;  Stats.  1863-64,  p. 
448,  c.  393,  in  effect  April  4,1864;  Stats.  1873-74,  p.  517, 
c.  355,  sec.  4,  in  effect  March  23,  1874;  Stats.  1877-78, 
p.  Ill,  c.  99,  in  effect  February  25,  1878. 

Third.— Stats.  1867-68,  p.  235,  c.  234,  in  effect  March 
23,  1868. 

The  owner  or  proprietor  of  any  premises,** 
whether  inclosed  or  not^  "may  take  up  and  safely 
keep^^  at  the  expense  of  the  owner''  any  hog  5 
fonnd  trespassing  thereon;  and  has  a  lien* 
upon  the  hogs  for  "all  costs,  charges,  and  dam- 
ages sustained  by  reason  of  their  trespass- 
ing.^^^  Such  lienor  must  immediately  post  no- 
tices "in  three  of  the  most  public  places  in  the 
township^^  in  which  he  resides,  "containing  a  de- 
scription of  the  ear  and  other  marks^^  of  the  hogs 
"whereby    the    owner    may    identify    them.^^*^ 

6  In  Eood  V.  McCarger,  49  Cal.  117,  the  lien  was 
enforced  in  favor  of  a  person  *'in  actual  possession 
of  a  tract  of  land  in  Butte  county,  which  he  was  hold- 
ing and  cultivating  under  an  alleged  lease  from 
the  ^ '  owner  of  the  hogs  taken,  up. 

In  Monterey  and  San  Benito  counties  (until  the  act 
was  superseded)  the  occupant  of  any  premises  was 
likewise  entitled,  by  the  terms  of  the  statute,  to  take 
up  trespassing  hogs  (Stats.  1867-68,  p.  235,  sec.  1). 

T  Stats.  1856,  p.  229,  c.  148,  sec.  1;  Stats.  1857,  p. 
106,  c.  102,  sec.  1;  Stats.  1867-68,  p.  235,  c.  234,  sec. 
1. 

8  See   Rood   v.   McCargar,   49   Cal.    117,    120. 

9  Stats.  1856,  p.  229,  sec.  3;  Stats.  1857,  p.  106,  sec. 
3;  Stats.  1867-68,  p.  235,  sec.  3. 

10  Stats.  1856,  p.  229,  sec.  2;  Stats.  1857,  p.  106, 
sec.  2;  Stats.  1867-68,  p.  235,  sec.  2. 


§    488  TRESPASSING    ANIMALS.  "755 

At  an}^  time  before  the  property  is  sold  in  satis- 
faction of  the  lien,  the  owner  may,  upon  proving 
his  property  and  discharging  the  lien,  receive 
back  his  hogs.^^  If  the  lienor  and  owner  cannot 
agree  upon  the  amount  of  the  lien,  it  is  to  be 
fixed  by  three  arbitrators  mutually  chosen.*^ 
If  the  owner  fails  to  appear  within  five  days  after 
the  notices  are  posted,  the  lienor  ^^must  immedi- 
ately notify  a  constable  of  the  township  wherein 
the  trespass  has  been  committed/^^^  The  con- 
stable must  sell  the  hogs  after  five  days^  notice.^^ 
His  fee  is  prescribed.^^  The  proceeds  of  the  sale 
must  be  applied  to  the  payment  of  the  lien,** 
the  amount  of  which  is  to  be  determined  by 
three  disinterested  persons.*^  The  constable 
must  hold   any  surplus   for*^   fifteen   days   in*'' 

11  Stats.  1856,  p.  229,  sees.  3  and  4;  Stats.  1857,  p. 
106,  sees.  3  and  4;  Stats.  1867-68,  p.  235,  sees.  3  and 
4. 

12  Stats.  1856,  p.  229,  see.  5;  Stats.  1857,  p.  106, 
see.  5;  Stats.  1867-68,  p.  235,  see.  5. 

13  Stats.  1856,  p.  229,  sec.  4;  Stats.  1857,  p.  106, 
see.  4;  Stats.  1867-68,  p.  235,  see.  4. 

14  Stats.  1856,  p.  229,  see.  6;  Stats.  1857,  p.  106, 
see.  6;  Stats.  1867-68,  p.  235,  sec.  6. 

15  Stats.  1856,  p.  229,  e.  148,  see.  7. 

16  In  Monterey  and  San  Benito  counties  (until  the 
act  was  superseded)  the  time  was  twenty  days  (Stats. 
1867-68,  p.  235,  sec.  7). 

17  Fifteen  Days:  Stats.  1857,  p.  106,  see.  7. 

Until  superseded  by  section  477,  above,  in  Co- 
lusa, Glenn,  and  Solano  counties,  by  section  485, 
above,  in  Contra  Costa  county,  and  by  section  483, 
above,  in  Napa  county. 


756 


TRESPASSING    ANIMALS. 


§  488 


El  Dorado^^s  Lake^^'  ^o  Modoc.^i  and  Tehama^^ 
counties^  and  for  ten  days^*"*  in  other  counties^  for 
the  use  of  the  owner  of  the  hogs;  and  after  the 
expiration  of  that  time  must  pay  it  into  the 
school  fund  of  the  county.^^  If  the  constable 
does  not  so  dispose  of  the  surplus,  he  is  guilty  of 
a  misdemeanor  punishable  by  fine.^^ 

This  act  applies  in  Lassen,^'*  Plumas,^*  and  Tu- 
olumne^*'^  counties;  between  March  1st  and  Sep- 
tember 1st  each  year,  in  Lake^^  county;  from  No- 
vember 15th  each  year  to  August  15th  following 
in  Sutter^^  county:  in  Butte^''  and  Calaveras^'^ 
counties  except  as  provided  in  section  484  above; 
in  El  Dorado"^®  county  except  as  provided  in  sec- 

18  Stats.  1862,  p.  85,  c.  90. 

19  Stats.  1857,  p.  106,  c.  102,  sec.  7. 

20  Lake  county  was  formed  out  of  the  northern  part 
of  Napa  county  by  Stats.  1861,  p.  560,  c.  498,  in  effect 
May  20,  1861. 

21  Stats.  1873-74,  p.  517,  c.  355;  Stats.  1877-78,  p. 
311,  c.  99. 

22  Stats.  1856,  p.  229,  sees.  7  and  8;  Stats.  1857,  p. 
106,  sees.  7  and  8;  Stats.  1867-68,  p.  235,  sees.  7  and 
8. 

23  stats.  1856,  p.  229,  sec.  9;  Stats.  1857,  p.  106, 
sec.  9;  Stats.  1867-68,  p.  235,  sec.  9. 

24  stats.  1863-64,  p.  290,  c.  278;  Stats.  1875-76,  p. 
797;  Stats.  1877-78,  p.  640. 

25  Stats.  1857,  p.  54;  Stats.  1863-64,  p.  227. 

26  Stats.  1857,  p.  106,  sec.  1.     Also  note  20,  above. 

27  Stats.  1857,  p.  106,  sec.  1;  Stats.  1863,  p.  57. 

28  stats.  1869-70,  p.  305,  c.  203. 


§   488  TRESPASSING   ANIMALS.  757 

tion  477  above ;  in  Placer^^  eoimty  except  as  pro- 
vided in  section  485  above;  in  San  Bemardino^^ 
county  except  as  provided  in  sections  477  and  481 
above;  in  Sierra  township,  Sierra^^  county;  in 
Liberty  township,  Siskiyon^^  county;  with  certain 
limitations  in  Sonoma  and  Vallejo  townships,  So- 
noma^^  county ;  in  the  town  of  Weaverville,  Trin- 
ity^^  county;  in  Yuba^^  county  except  as  pro- 
vided  in  section  481  above;  from  May  1st  to  Oc- 
tober 1st  each  year  in  the  portions  of  Modoc 
county  which  have  been  surveyed  under  authority 
of  the  United  States,  except  Adin  township  ;^^ 
and  between  March  1st  and  September  1st  each 
year  in  Tehama^^  county,  except  as  provided  in 
section  477  above.^^ 

29  stats.  1865-66,  p.  567,  c.  445. 

30  stats.  1861,  p.  465,  c.  404;  Stats.  1869-70,  p.  305, 
c.  203;  by  Stats.  1873-74,  p.  755,  c.  520,  in  effect  March 
28,  1874,  the  territory  then  forming  Klamath  county 
was  annexed  to  Humboldt  and  Siskiyou  counties. 

31  Stats.  1857,  p.  106,  c.  102,  sec.  1;  Stats.  1858,  p. 
79,  c.  96;  Stats.  1859,  p.  176,  c.  171;  Stats.  1863,  p. 
580,  c.  389. 

32  Stats.  1859,  p.  179,  c.  171;  Stats.  1877-78,  p.  184, 
c.  145. 

33  Stats.  1856,  p.  229,  c.  148,  sees.  1  and  9;  Stats. 
1859,  p.  337,   c.  312. 

34  Stats.  1857,  p.  106,  c.  102,  sec.  1. 

35  This  act  formerly  applied  also  in  Alameda,  Sac- 
ramento, San  Francisco,  Santa  Clara,  and  Stanislaus 
counties  (Stats.  1856,  p.  229,  sec.  1);  in  Marin  county 
(Stats.  1856,  p.  229,  sees.  1,  9;  Stats.  1865-66,  p.  323)5 
in  Los  Angeles  county  (Stats.  1857,  p.  54) ;  in  Orange 
county    (the    territory    now   included    in   this    county 


'r58 


TRESPASSING     ANIMALS. 


488 


having  constituted  the  southeastern,  part  of  Los  An- 
geles county  until  Stats.  1889,  p.  123);  in  that  por- 
tion of  Kern  county  formed  out  of  Los  Angeles  county 
(the  territory  now  included  in  Kern  county  having 
constituted  parts  of  Los  Angeles  and  Tulare  counties 
until  Stats.  1865-66,  p.  796);  in  San  Joaquin,  San  Luis 
Ooispo,  San  Mateo,  Santa  Barbara,  Santa  Cruz,  an.l 
Yolo  counties  (Stats.  1857,  p.  54;  Stats.  1863-64,  p. 
227);  in  Ventura  county  (the  territory  now  included 
in  this  county  having  constituted  the  eastern  part  of 
Santa  Barbara  county  until  Stats.  1871-72,  p.  484); 
in  Merced  countv  (Stats.  1858,  p.  17);  in  Monterey 
county  (Stats.  1859,  p.  176;  Stats.  1861,  p.  271;  Stats. 
1867-68,  p.  235,  sec.  1);  in  San  Benito  county  (the  ter- 
ritory now  included  in  this  county  having  constituted 
the  eastern  part  of  Monterey  county  until  Stats.  1873- 
74,  p.  95);  in  Contra  Costa  county  (Stats.  1861,  p.  271; 
Stats.  1863,  p.  774) ;  between  March  1st  and  Septem- 
ber 1st  each  year  in  Colusa  and  Napa  counties  (Stats. 
1857,  p.  106,  sec.  1)  ;  and  in  Glenn  county  (the  terri- 
tory now  included  in  this  county  having  constitute! 
the  northern  part  of  Colusa  county  until  Stats.  1891, 
p.  98);  from  January  1st  to  August  15th  each  year 
in  Solano  county  (Stats.  1859,  p.  176;  Stats.  1862,  p. 
214;  Stats.  1863-64,  p.  448);  in  that  portion  of  Alpine 
county  formed  out  of  El  Dorado  county  (Stats.  1862, 
p.  85);  the  territory  now  included  in  Alpine  county 
having  constituted  portions  of  El  Dorado  and  three 
other  counties  until  Stats.  1863-64,  p.  178;  in  Hum- 
boldt county  excepting  Klamath  and  Orleans  town- 
ships and  Hoopa  Valley  Eeservation  (Stats.  1858,  p. 
17;  Stats.  1861,  p.  465;  Stats.  1869-70,  p.  305;  the  ex- 
cepted territory  having  constituted  a  portion  of 
Klamath  county  until  its  disorganization  by  Stats. 
1873-74,  p.  755);  and  in  that  portion  of  Eiverside 
county  formed  out  of  the  southwestern  part  of  San 
Bernardino  county  (the  territory  now. included  in  Eiv- 
erside county  having  constituted  parts  of  San  Bernar- 
dino and  San  Diego  counties  until  Stats.  1893,  p.  158); 
but  as  to  all  these  counties  this  act  has  been  super- 
seded by  the  various  provisions  of  sections  477-486, 
above.  As  to  a  portion  of  Amador  county  to  which 
it  once  applied  also  (Stats.  1862,  p.  39;  Stats.  3862,  p. 
330),  it  has  been  repealed  (Stats.  1867-68,  p.  430). 


§    489  TltESPASSIIS'G   ArsIMALS.  759 

489.  Goat  Lien  in  Tuolumne. 

stats.  1865-66,  p.  457,  c.  375,  in  effect  March  26, 1866. 

A  lien  in  all  respects  similar  to  that  given  upon 
trespassing  hogs  is  authorized  against  any  goat 
found  trespassing  within  an  inclosure  in  Tu- 
olumne. In  case  of  the  sale  of  any  goat  in  satis- 
faction of  the  lien^  the  constable  must  hold  the 
surplus  proceeds  for  the  use  of  the  owner  for  fif- 
teen days,  and  after  the  expiration  of  that  time 
must  pay  it  into  the  county  school  fund. 

490.  Turkey  Lien.^ 

Colusa.— stats.  1871-72,  p.685,  c.  458,  in  effect  April 

27,  1872;2  Stats.  1873-74,  p.  760,  c.  525,  in  effect  March 

28,  1874.3 

Tehama.— Stats.  1873-74,  p.  853,  c.  609,  in  effect  June 
1,  1874;4  Stats.  1875-76,  p.  643,  c.  447,  in  effect  Sep- 
tember 1,  1876.5 

"The  owner  or  occupant  of  any  land^^  in  Co- 
lusa^ county  and  in   that  portion  of  Tehama'' 

1  This  act  as  relates  to  Colusa  county  (Stats.  1871- 
72,  p.  685,  c.  458)  and  to  Tehama  county  (Stats.  1873- 
74,  p.  853,  c.  609),  originally  applied  to  all  kinds  of 
animals  as  well  as  turkeys.  It  was  superseded  by 
Stats.  1877-78,  p.  176,  c.  136,  and  1877-78,  p.  878,  c. 
556,  as  to  animals;  but  it  does  not  seem  to  be  neces- 
sarily repealed  as  regards  turkeys. 

^  2  Stats.  1871-72,  p.  685,  c.  458,  sec.  28. 

'  3  stats.  1873-74,  p.  760,  c.  525,  sec.  5. 

4  Stats.  1873-74,  p.  853,  c.  609,  sec.  27. 

5  Stats.  1875-76,  p.  643,  c.  447,  sec.  2. 

6  Stats.  1871-72,  p.  685,  c.  458,  sec.  27. 

7  Stats.  1875-76,  p.  643,  c.  447,  sec.  1. 


760  TRESPASSING     ANIMALS.  §    490 

county  lying  west  of  the  Sacramento  river  and 
south  of  Eed  Bank  creek,  whether  inclosed  or  not, 
"may  take  up  and  safely  keep^^  at  the  expense  of 
the  owner  any  turkey^  found  trespassing  thereon ; 
and  has  a  lien  payable  in  gold  coin  of  the  United 
States^  upon  every  such  turkey  for  its  propor- 
tionate amount  of  the  "fees,  charges  allowances, 
and  damages^^  accruing  by  reason  of  the  tres- 
pass.^^  The  cost  of  keeping  each  turkey  is 
deemed  to  be  five  cents  per  day.^»  ^^  In  Colusa 
county  the  lienor  must  forthwith  notify  the 
owners  of  the  distrained  turkeys  of  the  detention, 
so  far  as  such  owners  are  known  or  can  be  ascer- 
tained; and  if  the  owner  cannot  be  ascertained, 
must  post  for  at  least  ten  days  a  complete 
description  of  the  turkeys  stating  the  kind, 
color,  and  the  place  of  taking  *up,  (1) 
on  the  public  highway  nearest  the  place  of 
taking  up,  (2)  in  two  of  the  most  public  places 
in  the  township,  and  (3)  on  the  bulletin  board 
near  the  courthouse  door  of  the  county.*^  In 
Tehama  county  the  lienor  must  post  a  description 

8  stats.  1871-72,  p.  685,  c.  458,  sec.  24;  Stats.  1873- 
74,  p.  853,  c.  609,  sec.  22. 

9  Stats.  1871-72,  p.  685,  c.  458,  sec,  23;  Stats.  1873- 
74,  p.  853,  c.  609,  sec.  21. 

10  Stats.  1871-72,  p.  685,  c.  458,  sec.  15;  Stats.  1873- 
74,  p.  853,  c.  609,  sec.  13. 

11  Stats.  1873-74,  p.  760,  c.  525,  sec.  1;  Stats.  1873- 
74,  p.  853,  c.  609,  sec.  1. 

IS  Stats.  1873-74,  p.  760,  c.  525,  sec.  2. 


§    490  TRESPASSING   ANIMALS.  ,  761 

of  the  turkeys  upon  the  public  highway  nearest 
the  place  of  trespass^  and  file  a  copy  thereof  with 
the  justice  of  the  peace,  who  must  file  the  copy 
with  the  recorder.^^  At  any  time  before  the 
turkeys  are  sold  in  satisfaction  of  the  lien,  the 
owner  of  any  of  them,  upon  proving  his  property 
and  discharging  the  lien,  may  receive  back  his 
property.^^  He  may  also  release  the  property  by 
furnishing  an  adequate  bond.^^'  ^^  When  in  Co- 
lusa county  the  lienor  and  owner  cannot  agree 
upon  the  amount  of  the  lien,  it  is  to  be  fixed  by 
three  arbitrators  mutually  chosen  subject  to  an 
appeal  to  a  competent  court.*^  If  in  Colusa 
county,  after  the  expiration  of  ten  days  after  the 
distraint,  any  turkeys  remained  unredeemed,  the 
lienor  must  commence  an  action  in  rem  to  fore- 
close his  lien.*^  In  Tehama  county  the  lienor 
must  within  Rye  days  after  the  distraint,  com- 
mence an  action  to  foreclose  his  lien,  the  form 
and  mode  of  proceeding  being  prescribed.*^  In 
case  a  foreclosure  judgment  is  rendered  the  tur- 
keys must  be  sold  after  not  less  than  five  nor 
more  than  ten  successive  days^  notice.^'  ^'^     Any 

13  stats.  1873-74,  p.  853,  c.  609,  sec.  2. 

14  Stats.  1871-72,  p.  685,  c.  458,  sec.  16;  Stats.  1873- 
74,  p.  853,  c.  609,  sec.  14. 

15  Stats.  1873-74,  p.  760,  c.  525,  sec.  3. 

16  Stats.  1873-74,  p.  853,  c.  609,  sees.  2,  3,  5-7. 

17  Stats.  1871-72,  p.  685,  c.  458,  sec.  11;  Stats.  1873- 
74,  p.  853,  c.  609,  sec.  9. 


762  TRESPASSING    ANIMALS.  §    490 

surplus  remaining  after  the  satisfaction  of  the 
judgment  with  costs  must  be  paid  by  the  court  to 
the  owner  on  demand  at  any  time  within  six 
months  after  the  sale;  at  the  expiration  of  such 
time  it  must  be  paid  into  the  school  fund  of  the 
county.^® 

18  Stats.  1871-72,  p.  685,  c.  458,  sec.  14;  Htats.  1873- 
74,  p.  853,  c.  609,  sec.  12. 

491.    Distraint  of  Estrays.^ 

Stats.  1901,  p.  603,  c.  197,  in  effect  March  23,  1901. 

Any  person  may^take  up  and  safely  keep^»  ^  any 
estray  domestic  animal  found  upon  any  premises 
to  which  he  has  the  right  of  possession,  or  upon 
any  highway  adjacent  thereto;  and  has  a  lieyi 

1  Stats.  1851,  p.  299,  c.  33,  concerning  estrays  in 
certain  counties  was  repealed  by  Stats.  1856,  p.  186, 
c.  128,  sec.  17;  Stats.  1856,  p.  186,  c.  128,  as  amended 
by  Stats.  1859,  p!  147,  c.  146,  and  Stats.  1863-64,  p. 
386,  c.  343,  relating  to  estrays  in  certain  counties. 
Stats.  1863,  p.  590,  c.  396,  relating  to  estrays  in  Napa 
county,  Stats.  1863,  p.  697,  c.  425,  as  amended  1863-64, 
p.  29,  c.  30,  relating  to  estrays  in  certain  other  coun- 
ties, and  Stats.  1865-66,  p.  279,  c.  255,  relating  to 
estrays  in  Sutter  county,  were  repealed  by  Stats.  1897, 
p.  198,  c.  137,  sec.  10;" Stats.  1897,  p.  137,  relating  to 
estrays  in  the  whole  state  was  repealed  by  Stats.  1901, 
p.  603,  c.  197,  sec.  10. 

In  Trumpler  v.  Bemerly,  39  Cal.  490,  it  was  held 
that  the  act  of  1863,  p.  697,  c.  425,  must  be  strictly 
construed,  and  that  if  the  constable  was  notified  by  the 
lienor  before  the  expiration  of  the  statutory  time,  and 
made  a  sale  under  such  notification,  the  sale  was  void. 

2  Stats.  1901,  p.  603,  c.  197,  sec.  3. 

3  Stats.  1901,  p.  603,  c.  197,  sec.  2. 


§   491  TRESPASSING  ANIMALS.  763 

against  every  such  animal  for  the  cost  of  filing 
the  following  prescribed  notice  and  the  cost  of 
keeping.^'^  The  cost  of  keeping  is  deemed  a^ 
follows:  For  each  horse,  mule,  jenny,  ass,  cow, 
bull,  ox,  steer,  or  calf,  fifteen  cents  per  day;  and 
for  each  sheep,  goat,  hog,  or  other  animal  not 
hereinbefore  specified,  ^Ye  cents  per  day.^  With- 
in five  days  after  the  distraint  the  distrainor  must 
file  with  the  county  recorder  a  notice  describing 
the  animals,  with  the  marks  and  brands,  if  any, 
and  stating  the  probable  value  of  each  animal, 
and  the  places  of  distraint  and  detention.^  The 
fee  for  filing  such  notice  is  fifty  cents.^  At  any 
time  within  thirty  days  after  filing  such  notice, 
any  claimant  of  an  animal  may,  upon  satisfying 
the  lien  thereon,  recover  back  such  animal.^  In 
case  of  a  disagreement  as  to  the  amount  of  the 
lien,  the  claimant  must,  within  ten  days,  com- 
mence an  action  to  determine  it.^  At  the  ex- 
piration of  thirty  days  after  the  filing  without  a 
redemption,  the  lienor  must  notify  a  constable.^ 
The  constable  must  sell  as  on  execution,®  and 
must  apply  the  proceeds  of  the  sale  to  the  pay- 
ment of  the  constable^s  fees  and  then  to  the  satis- 
faction of  the  lien,  and  must  pay  any  surplus  to 

4  stats.  1901,  p.  603,  c.  197,  sec.  1. 

5  Stats.  1901,  p.  603,  c.  197,  sec.  4. 
«  Stats.  1901,  p.  603,  c.  197,  sec.  5. 


764  TRESPASSING    ANIMALS.  §    491 

the  county  treasurer.''  The  treasurer  must  hold 
such  amount  for  the  use  of  the  owner  subject  to 
the  order  of  the  board  of  supervisors  during  one 
year,  and  upon  the  expiration  thereof  must  pay 
it  into  the  county  school  fund.'' 

T  Stats.  1901,  p.  603,  c.  197,  sec.  6.  • 


TITLE  2. 

LIENS  INDEPENDENT  OF  POSSESSION: 
1.    AGAINST  MOVABLE  PEOPERTY. 

CHAPTER   1. 
LOGGEE'S  LIEN.i 

492.  Who   lien-claimant. 

493.  Lien  claim  must  be  filed. 

494.  Maximum  amount  of  liens. 

495.  Logger  ^s   lien   a   cumulative    security.. 

496.  Mode  of  enforcement. 

497.  Time   of   commencing  action. 

498.  Foreclosure   actions  against   the   same  property 

may  be  united. 

499.  Costs  and  counsel  fees  are  necessary  incidents 

of  foreclosure  judgment. 

492.    Who  Lien-Claimant.^ 

Every  person  who  labors  at  cutting,  hauling, 

1  This  chapter  is  founded  on  Stats.  1877-78,  p. 
747,  c.  484,  in  effect  March  30,  1878;  with  the  amend- 
ments thereto  of  Stats.  1880,  c.  49,  in  effect  April  12, 
1880,  and  Stats.  1887,  c.  42,  in  effect  March  8,  1887. 

3  See  Stats.  1877-78,  p.  747,  c.  484,  sec.  1,  in  part, 
as   amended  by   Stats.   1880,   p.   38,   c.   49,   and   Stats. 
1877-78,  p.  747,  c.  484,  sec.  9. 
(765) 


766  logger's  lien.  §  492 

rafting  or  driving  logs  or  timber,^  or  who  per- 
forms any  labor  in  or  about  a  logging  camp  nec- 
essary for  the  getting  out  or  transportation  of 
logs  or  timber,  has  a  lien-claim^  thereagainst  for 
the  amount  due  for  his  personal  services,  but 
which  continues  merely  so  long  as  the  logs  or 
timber  remain  within  the  county  in  which  they 
were  cut. 

493.     Lien  Claim  must  be  Filed. 

Within^  twenty  days  after  the  completion  of 
the  labor,  every  lien-claimant  must,  as  a  pre- 
requisite to  securing  a  lien,  file  for  record  in  the 
office  of  the  county  recorder  of  the  county  where 
the  labor  was  performed  a  verified  claim  setting 
forth 

(1)  the  claimant's  name,^ 

(2)  the  general  character  of  the  labor  performed 
by  claimant,'' 

3  The  phraseology  of  section  1  of  the  act,  as 
amended,  is  *'logs  or  lumber'^;  of  sections  6  and  8, 
**such  logs'';  of  sections  2,  4,  and  9,  **logs  or  timber"; 
and  of  section  6,  *'logs  and  timber.'' 

4  A  Lien-claim  is  the  individual  privilege  of  se- 
curing a  lien,  and  unassignable:  See  sections  550  and 
563,  below. 

5  First  paragraph  is  based  on  •  Stats.  1877-78, 
p.  747,  c.  484,  sec.  2. 

6  Claimant's  name  should  be  stated:  See  section 
568,  note  7,  below. 

7  Statutory  language:  ^^A  statement  of  his  de- 
mand, after  deducting  all  just  credits  and  offsets." 
This   expression  is  resolved   into   the   two   provisions 


§  493  logger's  LIEJS-.  767 

(3)  the  amount  claimed  to  be  due  after  deduct- 
ing all  just  credits  and  offsets/ 

(4)  the  time  within  which  the  labor  was  done, 

(5)  the  name  of  every  person  for  whom  the  labor 
was  done, 

(6)  the  place  where  the  logs  or  timber  upon 
which  the  lien  is  claimed  are  believed  to  be 
situated,  and  the  marks  thereon, 

(7)  the  name  of  the  owner  or  reputed  owner 
thereof,^  and 

(8)  the  name  of  the  owner  or  reputed  owner  of 
the  land  from  which  the  logs  or  timber  were 
cut  and  hauled.^ 

The  recorder  must  record  this  claim  in  a  book 
kept  by  him  for  that  purpose,  which  record  must 
be  indexed  as  deeds  and  other  conveyances  are 
required  by  law  to  be  indexed,  and  for  which  he 
may  receive  the  same  fees  as  are  allowed  by  law 
for  recording  deeds  and  other  instruments,^^ 

494.     Maximum  Amount  of  Liens. 

The  aggregate  amount  recoverable  upon  all 
liens    enforced   against   logs    or   timber  by  lien 

stated  in  the  text  in  the  cases*  cited  in  section  568, 
note  8,  below. 

8  Statutory  language:  *'The  reputed  owner  there- 
of.'' 

»  Statutory  language;  ^'The  reputed  owner  of  the 
land  from  which  the  same  were  cut  and  hauled.'' 

10  Second  paragraph:  See  Stats.  1877-78,  c.  484, 
sec.  7;  Code  Civ.  Proc,  sec.  1189. 


768  logger's  lien.  §  494 

claimants  furnishing  personal  services  to  a  person 
in  contractual  relations  with  the  owner  of  the 
logs  or  timber  cannot  exceed  the  amount  unpaid 
such  contractor  by  the  owner  at  the  time  when 
the  lien-claims  were  filed  for  record.^^ 

495.  Logger's  Lien  a  Cumulative  Security. 

A  logger's  lien  is  an  additional  and  cumulative 
security  which  may  be  availed  of  by  those  author- 
ized to  obtain  it  without  impairing  or  affecting 
any  right  of  action  otherwise  available;  nor  is  it 
waived  by  recourse  to  other  remedies.^^ 

496.  Mode   of  Enforcement. 

A  logger's  lien  may  be  enforced  by  a  fore: 
closure  action.^^ 

11  See  section   591  and  notes  below. 
Averment.— A  foreclosure  complaint  filed  by  a   laborer 

employed  by  a  person  contracting  with  the  owner  of 
logs  which  does  not  aver  that  the  lien  in  controversy 
Yv^as  filed  before  the  payment  by  the  owner  of  his 
contractor  in  full  does  not  state  a  cause  of  action: 
Wilson  V.  Barnard,  67  Cal.  422,  7  Pac.  845.  See  Shuf- 
fleton  V.  Hill,  62  Cal.  483. 

12  Stats.  1877-78,  c.  484,  sec.  7;  Code  Civ.  Proc, 
sec.  1195;  section  600,  and  notes  below. 

13  The  statute,  S*ats.  1877-78,  c.  484,  sees.  4, 
5,  and  6,  provides  that  the  lienor  may  cause  the  logs 
or  timber  upon  which  his  lien  is  claimed  to  be  at- 
tached in  the  foreclosure  action,  and  prescribes  a  form 
of  affidavit  to  be  used  in  the  event  of  an  attachment, 
which  affirms,  instead  of  the  usual  statement,  that  th© 
demand  is  not  secured  by  mortgage,  pledge,  or  lien, 
that  it  is  secured  by  a  logger's  lien.  The  attachment 
may  be  discharged  by  filing  an  adequate  undertaking, 


§  497  logger's  lien.  769 

497.  Time  of  Commencing  Action. 

Every  action  to  foreclose  any  logger's  lien 
must  be  commenced  within  twenty-five  days  after 
the  claim  of  lien  is  filed  for  record>^ 

498.  Foreclosure    Actions    Against    the    Same 
Property  may  be  United. 

Any  number  of  lienors  against  the  same  logs  or 
timber  may  join  in  one  action  to  foreclose  their 
liens  thereon;  and  when  separate  actions  are 
commenced  the  conrt  may  consolidate  them  into 
a  single  action.  The  various  parties  in  the  con- 
solidated action  become  actors  against  one  an- 
other as  well  as  against  the  owner  of  the  logs  or 
timber.^^ 

499.  Costs  and  Counsel  Fees  are  Necessary  In- 
cidents of  Foreclosure  Judgment. 

The  money  paid  for  filing  and  recording  the 
lien  claim  and  liabilities  actually  incurred  for 
counsel  fees  in  the  superior  and  supreme  courts 

the  filing  of  which  also  releases  the  property  from  the 
lien. 

The  foreclosure  proceeding,  however,  seems  to  be 
independent  of  the  attachment  proceedings.  Compare 
section  513,  note  1,  last  paragraph,  and  section  519, 
note  10,  below. 

14  See  Stats.  1877-78,  p.  747,  c.  484,  sec.  3,  i^s 
amended  by  Stats.  1880,  p.  38,  c.  49. 

15  Stats.  1877-78,  p.  747,  c.  484,  sec.  7,  as  amended 
1887,  p.  53,  c.  42;  Code  Civ.  Proc,  sec.  1195,  section 
603,  and  notes,  below 

Liens — 49 


770  logger's  lien.  §  499 

are  necessary  incidents  of  a  judgment  foreclosing 
a  logger's  lien,  which  must  in  every  case  be  al- 
lowed by  the  superior  court  to  each  lienor  whoso 
lien  is  established.^^ 

16  stats.  1877-78,  p.  747,  c.  484,  sec.  7,  as  amended 
1887,  c.  42;  Code  Civ.  Proc,  sec.  1195;  section  604, 
and  notes,  below. 


CHAPTER  2. 
THKESHER^S  LIEN> 

500.  Who   lienor. 

501.  Lien  assignable. 

502.  Time  of  commencing  action. 

503.  Lienors    entitled    to    pro    rata    distribution    of 

fund. 

500.     Who  Lienor.2 

Every  person  performing  any  labor  in,  with, 
about,  or  upon  any  threshing  machine,  or  the  en- 
gine, horse-power,  wagons,  or  other  appurtenance 
thereof,  while  engaged  in  threshing,  at  the  in- 
stance of  anyone  lawfully  in  possession  thereof 
with  the  right  to  operate  it,^  has  a  lien  there- 
against  to  the  extent  of  the  value  of  his  services. 

1  This  chapter  is  founded  on  Stats.  1885,  p.  109,  c. 
125,  in  effect  March  18,  1885. 

2  See  Stats.  1885,  p.  109,  c.  125,  sec.  1. 

Upon  the  cessation  of  work  there  results  by  opera- 
tion of  law  a  perfected  and  established  lien  which 
subsists  for  a  period  of  ten  days  without  the  filing 
of  notice  or  other  affirmative  action  by  the  laborer: 
Duncan  v.  Hawn,  104  Cal.  10,  37  Pac.  626. 

3  The  actual  ownership  of  the  property  is  an  im- 
material circumstance:  Church  v.  Garrison,  75  Cal. 
199,  16  Pac.  885;  Lambert  v.  Davis,  116  Cal.  292,  48 
Pac.  123. 

(771) 


L 


772  thresher's  lien.  §  501 

501.  Lien  Assignable. 

A  thresher's  lien  is  assignable.'* 

502.  Time  of  Commencing  Action. 

Every  action  to  foreclose  any  thresher's  lien 
mnst  be  commenced  in  a  proper  court  within  ten 
days  after  the  termination  of  labor  by  the  lienor.^ 

503.  Lienors  Entitled  to  Pro  Rata  Distribution 

of  Fund. 
Should  the  proceeds  of  the  sale  of  the  property 
subject  to  the  lien  be  insufficient  to  satisfy  all 
established  claims,  such  proceeds  must  be  dis- 
tributed pro  rata*  among  the  lienors  whose  claims 
are  established.® 

4  **The  object  of  the  statute  giving  the  lien  is 
to  make  certain  the  payment  for  the  labor,  and  it 
would  detract  much  from  the  benefit  designed  to  be 
conferred  to  hold  that  the  laborer  must  necessarily  in- 
cur all  the  delay  and  expense  that  not  infrequentl;/ 
arise  from  the  tedious  litigation  which  follows  an  ef- 
fort to  enforce  a  lien  of  this  sort,  at  the  peril  of  los- 
ing the  lien  altogether":  Duncan  v.  Hawn,  104  Cal. 
10,  12,  13,  37  Pac.  626. 

5  Stats.  1885,  p.  109,  c.  125,  sees.  2  and  4.  Upon 
failure  to  bring  such  action  within  ten  days  the  lien 
is  lost:  Blackburn  v.  Bell,  125  Cal.  171,  57  Pac.  775. 

6  Stats.  1885,  p.  109,  c.  125,  sec.  3. 


CHAPTER   3. 
lie:^  m  FAVOE  op  owner  of  peopa- 

GATING  AOTMAL.i 

504.  Who  lien  claimant  and  what  lienable. 

505.  Notice  of  lien  claim  must  be  filed. 

506.  Lien    valid    against    third    parties    during    one 

year. 

507.  Mode  of  enforcement. 

504.     Who  Lien-Claimant  and  What  Lienable.^ 

Every  owner  or  person  in  charge  of  any 
stallion,  jack,  or  bnll,  nsed  for  propagating  pur- 
poses has  a  lien-claim  for  the  agreed  price  of 
its  service  against  any  mare  or  cow  served  by  such 
propagating  animal,  and  against  the  offspring  of 
such  service.;  but  the  right  to  claim  a  lien  is  for- 
feited by  any  willfully  false  representations  con- 
cerning the  breeding  or  pedigree  of  such  stallion, 
jack,  or  bull  made  or  published  by  the  owner  or 
person  in  charge  thereof,  or  by  any  other  person 
at  the  request  or  instigation  of  such  owner  or  per- 
son in  charge. 

1  This  chapter  is  founded  on  Stats.  1891,  p.  90,  c. 
«6,  in  effect  March  11,  1891. 

2  See  Stats.  1891,  p.  90,  c.  86,  sec.  1,  first  and  last 
clauses. 

(773) 


774  OWNER'S    LIEN.  §    505 

505.  Notice  of   Lien-Claim  must  be  Filed.^ 

Within  ninety  days  after  snch  service,  every 
lien-claimant  must,  as  a  prerequisite  to  securing 
a  lien,  file  for  i;ecord  in  the  office  of  the  county 
recorder  of  the  county  where  the  mare  or  cow 
affected  by  the  lien  was  served  or  is  kept,  a  veri- 
fied claim  setting  forth 

( 1 )  a  particular  description  of  such  mare  or  cow, 

(2)  the  date  and  place  of  service, 

(3)  the  name  of  the  owner  or  reputed  owner  of 
such  mare  or  cow, 

(4)  a  proper  description,  by  name  or  otherwise, 
of  the  stallion,  jack,  or  bull  performing  such 
service, 

(5)  the  claimant's  name,  and 

(6)  the  amount  claimed  to  be  due. 

The^  recorder  must  record  the  claim  in  a  book 
kept  for  that  purpose,  which  record  .must  be  in- 
dexed as  deeds  and  other  conveyances  are  re- 
quired by  law  to  be  indexed,  and  for  which  he 
may  receive  the  same  fees  as  are  allowed  by  law 
for  recording  deeds  and  other  instruments. 

506.  Lien  Valid  Against  Third  Parties  During 

One  Year. 

The  notice  of  lien  claim  operates  as  notice  to 

3  First  paragraph  is  based  on  Stats.  1891,  p.  90^ 
c.  86,  sec.  1,  second  clause. 

4  Second  paragraph  is  based  on  Stats.  1891,  p.  90, 
c.  86,  sec.  5;  Code  Civ.  Proc,  sec.  1189. 


§    506  PROPAGATING    ANIMAL.  775 

subsequent  purchasers  and  encumbrancers  of  the 
mare  or  cow  during  one  year  after  such  filing.^ 

507.     Mode  of  Enforcement. 

A  lien  in  favor  of  an  owner  of  a  propagating 
animal  may  be  enforced  by  a  foreclosure  action, 
which  may  be  commenced  in  any  county  in  which 
the  mare,  or  cow,  or  offspring  is  f  ound.^ 

5  See  Stats.  1891,  p.  90,  c.  86,  sec.  1,  in  part. 

6  See  Stats.  1891,  'c.  86,  sec.  2,  first  clause. 

Sections  2,  3  and  4  of  the  statute  permit  an  attach- 
ment to  issue  in  the  foreclosure  action,  similar  to  that 
permitted  in  case  of  the  foreclosure  of  a  logger  ^s  lien. 
See  section  496,  and  note,  above. 


CHAPTER   4. 

LIENS  ESTABLISHED  AGAUSTST  VESSELS 
BY  STATE  LAW. 

AETICLE  1. 

J^^EDEEAL  AND  STATE  CONTEOL  OVEE  LIENS 
AGAINST  VESSELS. 

508.  Admiralty  jurisdiction  concerns  navigation   and 

navigable  waters. 

509.  Federal    government   possesses    admiralty   juris- 

diction. 

510.  Liens  may  be  created  to  secure  obligations  per- 

taining   to    admiralty    jurisdiction. 

511.  Maritime    liens    enforceable    solely    in    federal 

courts. 

512.  Nonmaritime  liens   enforceable  in   state   courts. 

508.     Admiralty  Jurisdiction   Concerns  Naviga- 
tion and  Navigable  Waters.^ 
The  principal  subjects  of  admiralty  jurisdiction 
are 

1  Admiralty  jurisdiction  concerns  navigation  and 
navigable  waters:  The  Belfast,  7  Wall.  (74  U.  S.)  624, 
637,  19  Law  ed.  266;  In  re  Garnett,  141  U.  S.  1,  15,  11 
Sup.  Ct.  Eep.  840,  35  Law  ed.  631. 

Admiralty  jurisdiction  *^does  not  extend  to  ships 
merely  because  they  are  ships,  but  to  commerce  and 
navigation,  and  to  ships  only  because  they  are,  and 
(776) 


I    508  LIENS  AGAINST  VESSELS.  777 

(1)  contracts^  claims^  or  service,  purely  mari- 
time^ and  touching  rights  and  duties  appertain- 
ing to  commerce  and  navigation,^ 

while  they  are,  used  in  commerce  and  navigation.  A 
ship  while  building  is  not  an  instrument  of  commerce, 
nor  is  she  while  out  of  commission,  and  being  cared 
for  to  preserve  her  for  possible  future  use.  A  ship 
injured  by  use,  and  only  temporarily  laid  up  for  re- 
pairs, or  being  refitted  that  she  may  resume  her  voy- 
age, is  considered  still  engaged  in  commerce' ':  Olsen 
V.  Birch,  133  Cal.  479,  483,  85  Am.  St.  Eep.  215,  65 
Pac.  1032. 

^^This  law  [admiralty]  is  commercial  in  its  char- 
acter, and  applies  to  all  navigable  waters,  except  to  a 
commerce  exclusively  within  a  state.  Many  of  our 
leading  rivers  are  sometimes  unnavigable;  but  this 
cannot  affect  their  navigability  at  other  times.  A 
commerce  carried  on  between  two  states  is  subject  to 
the  laws  and  regulations  of  Congress,  and  to  the  ad- 
miralty jurisdiction '^ :  Nelson  v.  Leland,  22  How.  (63 
U.  S.)  48,  56,  16  Law  ed.  269. 

The  jurisdiction  in  admiralty  depends,  not  upon  the 
ebb  and  flow  of  the  tide,  but  upon  the  navigable  char- 
acter of  the  water;  if  the  water  is  navigable,  it  is 
deemed  to  be  public,  and  if  public,  it  is  regarded  as 
within  the  legitimate  scope  of  the  admiralty  jurisdic- 
tion conferred  by  Congress:  The  Belfast,  7  Wall.  1^74 
U.  S.)  624,  639,  19  Law  ed.  266. 

3  What  Contracts  Maritime. — ''Maritime  contracts 
have  reference  to  navigation  upon  the  sea,  and  in 
some  way  to  vessels  actually  being  used  in  commerce, 
or  at  least  in  navigation '' :  Olsen  v.  Birch,  133  Cal. 
479,  481,  482,  85  Am.  St.  Eep.  215,  65  Pac.  1032. 

''The  expression  'maritime  character'  or  'nature'  is 
held  to  mean  any  act  which  contributes  to  the  naviga- 
tion of  the  vessel,  presently  or  prospectively ''  (p. 
228).  "Merely  keeping  a  vessel  in  safe  custody,  pro- 
tecting it  from  the  depredation  of  thieves  or  the  dan- 
ger of  fire,  or  preserving  her  machinery  from  unneces- 


778  LIENS    AGAINST    VESSELS.  "    §    508 

(2)  torts   or   injuries    committed   on   navigable 
waters^  of  a  civil  nature,  including  captures 
jure  belli,  and  seizures  on  water  for  municipal 
and  revenue  forfeitures.^ 
Jurisdiction  in  the  former  case  depends  upon 

the  nature  of  the  contract,  in  the  latter  entirely 

upon  locality. 

509.     Federal   Government   Possesses   Admiralty 
Jurisdiction. 

The  judicial  power  of  the  federal  government 
extends  to  all  matters  of  admiralty  jurisdiction/* 
whether  the  cause  of  action  arises  on  tide  waters 
or  on  nontidal^  navigable^  waterways,  natural  or 

sary  decay  and  deterioration,  does  not,  of  itself,  con- 
stitute a  maritime  service''  (p.  229):  The  Sirius,  65 
Fed.  (D.  C.)  226. 

3  Tort  must  be  Committed  on  Navigable  Waters.— 
So  a  cause  of  action  for  an  injury  done  by  a  steam  tug 
to  a  building  upon  land  is  not  a  maritime  tort:  The 
Glide,  167  U.  S.  606,  621,  17  Sup.  Ct.  Eep.  970,  42  Law 
ed.   296. 

The  jurisdiction  of  courts  of  admiralty,  in  matters 
of  contract,  depends  upon  the  nature  and  cha.racter  of 
the  contract,  but  in  torts  entirely  upon  locality:  Phil- 
adelphia etc.  E.  E.  Co.  V.  Philadelphia  etc.  Towboat 
Co.,  23  How.  (64  TJ.  S.)  209,  215,  16  Law  ed.  433. 

Locality  is  the  test  in  cases  of  tort  by  which  to  de- 
termine the  question  whether  the  wrongful  act  is  one 
of  admiralty  cognizance:  Commercial  Trans.  Co.  v. 
Fitzhugh,  1  Black  (66  U.  S.),  574,  579,  17  Law  ed.  107. 

4  Const.  IT.  S.,  art.  3,  sec.  2 :  1.  ^ '  The  judicial  power 
shall  extend  ....  to  all  cases  of  admiralty  and  mari- 
time  jurisdiction. ' ' 

5  Whether  Tidal  or  Nontidal.— The  admiralty  juris- 
diction is  not  limited  to  tide  waters,  but  extends  to 


§    509  LIENS  AGAINST  VESSELS.  779 

all  public  navigable  lakes  and  rivers:  In  re  Garnett, 
141  U.  S.  1,  15,  11  Sup.  Ct.  Eep.  840,  35  Law  ed.  631. 

The  reason  of  the  English  rule  that  the  limit  of  the 
admiralty  jurisdiction  is  the  ebb  and  flow  of  the  tide 
was  ^^that  the  limit  of  the  tide  in  all  the  waters  of 
England  was  at  the  same  time  the  limit  of  practical 
navigation,  and  that  as  there  could  be  no  use  for  an 
admiralty  jurisdiction  where  there  could  be  no  naviga- 
tion, this  test  of  the  navigability  of  those  waters  be- 
came substituted  as  the  rule,  instead  of  the  navigabil- 
ity itself.  Such  a  rule  ....  could  have  no  perti- 
jiency  to  the  rivers  and  lakes  of  this  country,  for  here 
no  such  test  existed.  Many  of  our  rivers  could  be 
navigated  as  successfully  and  as  profitably  for  a  thou- 
sand miles  above  tide  water  as  they  could  below; 
hence  the  absurdity  of  adopting  as  the  test  of  ad- 
miralty jurisdiction  in  this  country  an  artificial  rule, 
which  was  founded  on  a  reason  in  England  that  did 
not  exist  here.  The  true  rule  in  both  countries  was 
the  navigable  capacity  of  the  stream;  and  as  this  was 
ascertained  in  England  by  a  test  which  was  wholly 
inapplicable  here,  we  could  not  be  governed  bv  if: 
The  Ad.  Hine  v.  Trevor,  4  Wall.  (71  U.  S.)  555,  565, 
18  Law  ed.  451;  The  Propeller  Genesee  Chief  v.  Fitz- 
hugh,  12  How.  (53  U.  S.)  443,  451-460,  13  Law  ed. 
1058;  Fretz  v.  Bull,  12  How.  466,  468,  13  Law  ed.  1068; 
Jackson  v.  The  Magnolia,  20  How.  (61  U.  S.)  296,  301, 
302,  15  Law  ed.  909;  The  Belfast,  7  Wall.  (74  U.  S.) 
624,  639,  640,  19  Law  ed.  266;  Commercial  Trans.  Co. 
V.  Fitzhugh,  1  Black.  (66  XL  S.),  574,  580,  17  Law  ed. 
107. 

6  Test  of  Navigability.— ''The  true  test  of  the 
navigability  of  a  stream  does  not  depend  upon  the 
mode  by  which  commerce  is,  or  may  be,  conducted,  nor 

the   difficulties   attending   navigation It   would 

be  a  narrow  view  to  hold  that  in  this  country,  unless 
a  river  was  capable  of  being  navigated  by  steam  or 
sail  vessels,  it  could  not  be  treated  as  a  public  high- 
way. The  capability  of  use  by  the  public  for  pur- 
poses of  transportation  and  commerce  affords  the  true 
criterion  of  the  navigability  of  a  river,  rather  than 
the  extent  and  manner  of  that  use 


780  LIENS    AGAINST    VESSELS.  §    509 

artificial/  and  whether  the  voyage  or  contract,  if 
maritime  in  character,  is  to  be  performed  wholly 
within  a  state  or  concerns  interstate  or  foreign 
commerce. 

510.  Liens  may  be  Created  to  Secure  Obliga- 
tions Pertaining  to  Admiralty  Jurisdic- 
tion. 

The  performance  of  obligations  pertaining  to 
the  admiralty  jurisdiction  is  often  secured  by 
liens  against  vessels,  these  being  the  instruments 
of  commerce  and  navigation.     Certain  maritime 

''The  vital  and  essential  point  is  whether  the  nat- 
ural navigation  of  the  river  is  such  that  it  affords 
a  channel  for  useful  commerce.  If  this  be  so  the 
river  is  navigable  in  fact,  although  its  navigation  may- 
be encompassed  with  difficulties  by  reason  of  natural 
barriers,  such  as  rapids  and  sandbars' ':  The  Montello, 
20  Wall.  (87  TJ.  S.)  430,  441,  443,  22  Law  ed.  391. 

7  Whether  a  Natural  or  Artificial  Waterway.— A 
canal  used  as  a  highway  for  commerce  between  ports 
and  places  in  different  states,  by  canal  boats,  ''is  pub- 
lic water  of  the  United  States,  and  within  the  legiti- 
mate scope  of  the  admiralty  jurisdiction  conferred 
by  the  constitution  and  statutes  of  the  United  States, 
even  though  the  canal  is  wholly  artificial,  and  is  wholly 
within  the  body  of  a  state,  and  subject  to  its  owner- 
ship and  control;  and  it  makes  no  difference  as  to  the 
jurisdiction  of  the  district  court  that  one  or  the  other 
of  the  vessels  was  at  the  time  of  the  collision  on  a 
voyage  from  one  place  in  the  state  of  Illinois  to  an- 
other place  in  that  state. 

"This  case  does  not  raise  the  question  whether  the 
admiralty  jurisdiction  of  the  district  court  extends 
to  waters  wholly  within  the  body  of  a  state,  and  from 
which  vessels  cannot  so  pass  as  to  carry  on  commerce 
between  places  in  such  state  and  places  in  another 


§    510  LIENS  AGAINST  VESSELS.  781 

liens  are  recognized  by  the  general  maritime  law 
as  adopted  by  the  United  States  courts;^  and  in 
the  absence  of  positive  enactment  by  Congress, 
maritime  liens  may  be  established  by  the  statutes 
of  the  several  states  against  vessels  within  their 
several  territorial  jurisdictions  as  security  for  the 
performance  of  obligations  arising  from  matters 
occurring  within  such  limits.^ 

state  or  in  a  foreign  country;  and  no  opinion  is  in- 
tended to  be  intimated  as  to  jurisdiction  in  such  a 
case'^  Ex  parte  Boyer,  109  TJ. .  S.  629,  632,  3  Sup. 
Ct.  Eep.  434,  27  Law  ed.  1056;  In  re  Garnett,  141  U.  S. 
1,  17,  11  Sup.  Ct.  Eep.  840,  35  Law  ed.  631. 

8  A  Particularly  full  discussion  of  maritime 
liens,  their  origin,  history  and  present  status  in  the 
United  States  is  found  in  The  Underwriter,  119  Fed. 
(D.  0.)  713,  the  present  United  States  admiralty  law 
being  stated  at  pages  750  through  759. 

9  In  Absence  of  Legislation  by  Congres?,  Liens 
may  be  Created  by  State  Law.  ^ '  So  long  as  Congress 
does  not  interpose  to  regulate  the  subject,  the  rights 
of  materialmen  furnishing  necessaries  to  a  vessel  in 
her  home  port  may  be  regulated  in  each  state  by  state 
legislation.  ....  The  district  court  of  the  United 
States,  having  jurisdiction  of  the  contract  as  a  mari- 
time one,  may  enforce  liens  given  for  its  security, 
even  where  created  bv  state  laws'':  The  Lottawanna, 
21  Wall.  (88  U.  S.)  558,  580  (also  pp.  579-582),  22  Law 
ed.  654;  The  J.  E.  Eumbell,  148  U.  S.  1,  13,  13  Sup. 
Ct.  Eep.  498,  37  Law  ed.  345;  The  Glide,  167  U.  S. 
606,  620,  17  Sup.  Ct.  Eep.  930,  42  Law  ed.  296;  Pey- 

•  roux  V.  Howard  (The  Planter),  7  Pet.  (32  U.  S.)  324, 
341,  8  Law  ed.  700;  The  St.  Lawrence,  1  Black  (66 
U.  S.),  52^,  529,  530,  17  Law  ed.  180. 

The  states  may  ^'create  such  liens  as  their  legisla- 
tures may  deem  just  and  expedient,  not  amounting  to 
a  regulation  of  commerce'':  The  Belfast,  7  Wall.  (74 
U.  S.),  624,  645,  646,  19  Law  ed.  266. 


782  LIENS    AGAINST    VESSELS.  §    511 

511.     Maritime  Liens  Enforceable  Solely  in  Fed- 
eral Courts.^*^ 

Whenever  a  controversy  concerns  rights  and 
duties  pertaining  to  the  admiralty  jurisdiction, 
original  jurisdiction  in  any  action  which  may  be 

But  a  lien  arising  under  a  contract  of  carriage  where 
the  bill  of  lading  was  signed  at  San  Francisco  and  the 
goods  shipped  from  there  to  be  delivered  at  San  Diego 
after  carriage  on  the  high  seas,  is  subject  to  the  pro- 
visions of  the  general  maritime  law  and  not  of  sec. 
813  of  the  Cal  Code  of  Civil  Procedure;  Pacific  Coast 
Steamship  Co.  v.  Bancroft-Whitney  Co.,  94  Fed.  180, 
188,  36  C.  C.  A.  135,  9th  Cir. 

lO  Revised  Statutes  of  the  United  States,  sec- 
tion 563:  ^^The  district  courts  shall  have  jurisdiction 
....  Eighth.  Of  all  civil  causes  of  admiralty  and 
maritime  jurisdiction,  saving  to  suitors  in  all  cases 
the  right  to  a  common-law  remedy,  where  the  com- 
mon law  is  competent  to  give  it And  such  ju- 
risdiction shall  be  exclusive. ''  Act  of  September  24, 
1789,  c.  20,  sec.  8. 

Kevised  Statutes  of  the  United  States,  section  711: 
'^The  jurisdiction  vested  in  the  courts  of  the  United 
States  in  the  cases  hereinafter  mentioned  shall  be  ex- 
clusive of  the  courts  of  the  several  states Third. 

Of  all  civil  causes  of  admiralty  and  maritime  ju- 
risdiction, saving  to  suitors  in  all  cases  the  right  of 
a  common-law  remedy,  where  the  common  law  is  com- 
petent to  give  it.'' 

^'The  judicial  power  of  the  United  States  is  in  some 
cases  unavoidably  exclusive  of  all  state  authority, 
and  ....  in  all  others  it  may  be  made  so  at  the 
election  of  Congress'':  The  Moses  Taylor,  4  WaU.  (71 
U.  S.)  411,  429,  18  Law  ed.  397;  The  Ad.  Hine  v. 
Trevor,  4  WaD.  (71  U.  S.)  555,  568,  569,  18  Law  ed. 
451;  The  Belfast,  7  Wall.  (74  U.  S.),  624,  644,  19  Law 
ed.  266;  The  Lottawanna,  21  Wall.  (88  U.  S.)  558,  580, 
22  Law  ed.  654;  The  J.  E.  Kumbell,  148  U.  S.  1,  13 
Sup.  Ct.  Eep.  498,  37  Law  ed.  345. 


§  511  LIENS  AGAINST  VESSELS.  783 

brought  thereabouts  is  vested  in  the  United 
States  district  courts;  and  the  United  States 
courts  have  authority  exclusive  of  the  courts  of 
the  several  states  to  enforce  any  liens  whereby 
the  performance  of  such  obligations  are  secured, 
whether  the  liens  are  recognized  by  the  general 
maritime  law  or  established  by  act  of  Congress, 
or,  in  the  absence  of  congressional  regulation,  by 
the  statutes  of  the  several  states.^^  In  such  con- 
troversies the  courts  of  the  several  states  merely 
have  authority  to  administer  remedies  which 
operate  in  personam.^^ 

11  Jurisdiction  of  Federal  Courts  to  Enforce  Mari- 
time Lien  Established  by  State  Law  is  Exclusive. 

Thus  in  an  action  to  foreclose  a  lien  for  materials 
for  the  equipment  and  repair,  and  supplies  for  the  use 
of  a  bark,  the  cause  of  action  is  the  breach  of  the 
maritime  contract,  and  hence  exclusively  of  federal 
cognizance.  The  fact  that  the  action  is  upon  a  stat- 
utory lien  unknown  to  admiralty  does  not  make  it 
less  a  civil  cause  of  admiralty  and  maritime  jurisdic- 
tion. It  is  the  fact  that  it  is  a  maritime  contract 
which  gives  the  court  jurisdiction,  and  not  the  fact 
that  a  maritime  lien  is  to  be  enforced.  Hence  an  ac- 
tion to  foreclose  such  lien  cannot  be  maintained  in  the 
state  court:  Crawford  v.  Bark  Caroline  Reed,  42  Cal. 
469,  474. 

Historical,— The  early  cases  of  Averill  v.  Steamer 
Hartford,  2  Cal.  308,  and  Taylor  v.  Steamer  Columbia, 
5  Cal.  268,  holding  the  contrary,  were  overruled  in 
The  Moses  Taylor,  71  U.  S.  (4  WaU.)  411,  427,  18  Law 
ed.  397. 

12  Authority  of  State  Courts.— *  ^  That  clause  [in 
Rev.  Stats.,  sees.  563  and  711,  quoted  note  10,  above] 
only  saves  to  suitors  ^the  right  of  a  common-law  rem- 
edy, where  the  common  law  is  competent  to  give  it.' 


784  LIENS    AGAINST    VESSELS.  §    511 

It  is  not  a  remedy  in  the  common-law  courts,  which 
is  saved;  but  a  common-law  remedy.  A  proceeding 
in  rem,  as  used  in  the  admiralty  courts,  is  not  a  rem- 
edy afforded  by  the  common  law;  it  is  a  proceeding 
under  the  civil  law'^:  The  Moses  Taylor,  4  Wall.  (71 
U.  S.)411,  431,  18  Law  ed.  397;  The  Glide,  167  U.  S. 
606,  617,  17  Sup.  Ct.  Eep.  930,  42  Law  ed.  296;  Craw- 
iord  V.  Bark  Caroline  Eeed,  42  Cal.  469,  473. 

The  state  courts  have  jurisdiction  of  actions  for 
common-law  remedies  for  sums  due  from  the  owners 
of  vessels  for  supplies  furnished  them:  Crawford  v. 
Roberts,  50  Cal.  235,  241. 

Where  an  action  was  commenced  in  the  state  court 
to  foreclose  a  lien  for  materials  for  the  equipment  and 
repair,  and  supplies  for  the  use  of  a  bark,  the  court 
held  that  the  cause  of  action  is  the  breach  of  the 
maritime  contract,  and  hence  exclusively  of  federal 
cognizance.  The  fact  that  the  action  is  upon  a  stat- 
utory lien  unknown  to  admiralty  does  not  make  it 
less  a  civil  cause  of  admiralty  and  maritime  jurisdic- 
tion. It  is  the  fact  that  it  is  a  maritime  contract 
which  gives  the  court  jurisdiction,  and  not  the  fact 
that  a  maritime  lien  is  to  be  enforced:  Crawford  v. 
Bark  Caroline  Reed,  42  Cal.  469,  474. 

The  early  cases  of  Averill  v.  Steamer  Hartford,  2 
Cal.  308,  and  Taylor  v.  Steamer  Columbia,  holding 
the  contrary,  were  overruled  in  The  Moses  Taylor,  4 
Wall.  (71  U.  S.)    411,  427,  18  Law  ed.  397. 

Proceedings  in  Rem  Defined.— ^^In  a  strict  sense,  a 
proceeding  in  rem  is  one  taken  directly  against  the 
property,  and  has  for  its  object  the  disposition  of  the 
property,  without  reference  to  the  title  of  individual 
claimants;  but,  in  a  larger  and  more  general  sense, 
the  terms  are  applied  to  actions  between  parties,  where 
the  direct  object  of  the  action  is  to  reach  and  dispose 
of  property  owned  by  them  or  of  some  interest  there- 
in. Such  are  cases  commenced  by  attachment  against, 
the  property  of  debtors,  or  instituted  to  partition  real 
estate,  foreclose  a  mortgage,  or  enforce  a  lien.  So 
far  as  they  affect  property  in  the  state,  they  are  sub- 
stantially  proceedings   in    rem    in   the   broader    sense 


§    511  LIENS  AGAINST  VESSELS.  785 

which  we  have  mentioned'':  Pennoyer  v.  Neff,  95  IT. 
S.  714,  734,  24  Law  ed.  565. 

A  proceeding  by  attachment  is  a  common-law  pro- 
ceeding or  a  proceeding  in  rem  according  as  the  court 
has  or  has  not  jurisdiction  of  the  owner  of  the  at- 
tached property.  *  ^  If  the  defendant  appears,  the  cause 
becomes  mainly  a  suit  in  personam,  with  the  added 
incident  that  the  attached  property  remains  liable,  un- 
der the  control  of  the  court,  to  answer  any  demand 
which  may  be  established  against  the  defendant  by 
the  judgment  of  the  court.  But  if  there  is  no  ap- 
pearance of  the  defendant,  and  no  service  of  process 
on  him,  the  case  becomes  in  its  essential  nature  a  pro- 
ceeding in  rem,  the  only  effect  of  which  is  to  subject 
the  property  attached  to  the  payment  of  the  demand 
which  the  court  may  find  to  be  due  to  the  plaintiff: 
Cooper  V.  Reynolds,  10  "Wall.  (67  U.  S.)  308,  318, 
18  Law  ed.  931;  Pennoyer  v.  NefP,  95  U.  S.  714,  725, 
24  Law  ed.  565;  Freeman  v.  Alderson,  119  U.  S.  185, 
189,  7  Sup.  Ct.  Rep.  165,  30  Law  ed.  372. 

Where  jurisdiction  of  the  person  of  the  defendant 
has  been  obtained,  attachment  is  a  common-law  rem- 
edy. ^^  Liens  under  state  statutes,  enforceable  by  at- 
tachment, in  suits  in  personam,  are  of  every-day  oc- 
currence, and  may  even  extend  to  liens  on  vessels, 
when  the  proceedings  to  enforce  them  do  not  amount 
to  admiralty  proceedings  in  rem,  or  otherwise  con- 
flict with  the  constitution  of  the  United  States.  There 
is  no  more  valid  objection  to  the  attachment  suit  to 
enforce  the  lien  in  a  suit  in  personam,  by  holding  the 
vessel  by  mesne  process  to  be  subjected  to  execution 
on  the  p'ersonal  judgment  when  recovered,  than  there 
is  on  subjecting  her  to  seizure  on  the  execution.  Both 
are  incidents  of  a  common-law  remedy,  which  a  court 
of  common  law  is  competent  to  give'':  Johnson  v. 
Chicago  etc.  Elevator  Co.,  119  U.  S.  388,  399,  400,  7 
Sup.  Ct.  Rep.  254,  30  Law  ed.  447;  The  Glide,  167  U. 
S.  606,  621,  17  Sup.  Ct.  Rep.  930,  42  Law  ed.  296. 

Attachment  may  be  a  proceeding  in  rem,  but  exe- 
cution never.  Where  a  nonresident  has  property  with- 
in a  state,  it  is  argued  that  ^^it  is  immaterial  whether 
the  property  is  in  the  first  instance  brought  under  the 
Liens— 50 


786  LIEXS  AGAINST  VESSELS.  §  512 

512.     Nonmaritime  Liens  Enforceable  in   State 
Courts. 

Whenever  a  state  has  imposed  liens  against  a 
vessel  to  secure  obligations  of  a  nonmaritime 
character^  in  the  creation  of  which  the  vessel  is 
in  some  way  involved^  the  courts  of  the  state  have 
authority  to  enforce  such  liens  according  to  their 
own  rules  of  procedure.^^ 

control  of  the  court  by  attachment  or  some  other 
equivalent  act,  and  afterward  applied  by  its  judg- 
ment to  the  satisfaction  of  demands  against  its  own- 
er, or  such  demands  be  first  established  in  a  personal 
action,  and  the  property  of  the  nonresident  be  after- 
ward seized  and  sold  on  execution.  But  ....  the  ju- 
risdiction of  the  court  to  inquire  into  and  determine 
his  obligations  at  all  is  only  incidental  to  its  jurisdic- 
tion over  the  property.  Its  jurisdiction  in  that  re- 
spect cannot  be  made  to  depend  upon  facts  to  be  as- 
certained after  it  has  tried  the  cause  and  rendered 

the  judgment The  validity  of  every  judgment 

depends  upon  the  jurisdiction  of  the  court  before  it 
was  rendered,  not  upon  what  may  occur  subse- 
quently'': Pennoyer  v.  Neff,  9o  U.  S.  714,  727,  728, 
24  Law  ed.  565. 

13  '^To  give  a  court  of  admiralty  jurisdiction 
over  contracts,  the  subject  matter  must  be  maritime. 
It  is  not  enough  that  the  service  which  sprang  from 
the  contractual  relation  be  performed  on  water,  or 
even  that  it  be  done  on  board,  and  for  the  benefit  of 
a  vessel  which  is  afloat.  These  are  not  exclusive 
tests.  The  service  arising  from  the  contract  must 
be  of  a  maritime  character,  and,  I  might  add,  not 
nominally,  but  substantially  so'':  The  Sirius,  65  Fed, 
(D.  C.)     226,  228. 

A  process  in  rem  to  enforce  a  lien  given  by  a  state 
statute  for  building  a  ship  or  supplying  engines  and 
materials  in  the  course  of  its  construction,  is  within 


§    512  LIENS  AGAINST  VESSELS.  787 

the  jurisdiction  of  the  state  courts,  solely  because 
such  a  contract  is  not  a  maritime  contract:  Edwards 
V.  Elliott,  21  Wall.  (88  U.  S.)  532,  553-556,  22  Law  ed. 
487;  The  Glide,  1C7  U.  S.  606,  620,  17  Sup.  Ct.  Eep. 
930,  42  Law  ed.  296. 

Where  the  contract  is  not  maritime,  the  district 
court  has  no  jurisdiction:  People's  Ferry  Co.  v.  Beers, 
20  How.  (61  U.  S.)  393,  402,  15  Law  ed.  961;  Koach  v. 
Ohapman  (The  Capitol),  22  How.  (63  U.  S.)  129,  16 
Law  ed.  294. 


788  LIENS    AGAINST    VESSELS.  §    513 


ARTICLE  2. 

MAEITIME     LIENS     ESTABLISHED     BY     STATE 
LAW. 

513.  Maritime   liens    established   by    state   law. 

514.  "Have    same    priority    as    maritime    liens    recog- 

nized by  general  law. 

515.  Eelative    priorities. 

516.  Enforcement. 

513.  Maritime  Liens  Established  by  State  Law.^ 
Every  obligation  of  a  maritime  character  of  a 

1  Maritime  Liens  Established  "by  State  Law  in 
General.— Code  of  Civil  Procedure,  section  813:  ''All 
steamers,   vessels,   and  boats   are  liable: 

(1)  For  services  rendered  on  board  at  the  request 
of,  or  on  contract  with,  their  respective  owners, 
masters,   agents,   or   consignees; 

(2)  For  supplies  furnished  j-  73-4n  j-  in  this  state 
■{  n73-4-{  for  their  use,  at  the  request  of  their  re- 
spective  owners,  masters,   agents,   or   consignees; 

(3)  For  work  done  or  materials  furnished  \-  73-4n  j- 
in  this  state  ■{  n73-4^  for  their  construction,  re- 
pair, or  equipment; 

(4)  For  their  wharfage  and  anchorage  within  this 
state; 

(5)  [■  73-4n  \-  For  nonperformance,  or  malperf orm- 
ance,  of  any  contract  for  the  transportation  of 
persons  or  property  between  places  within  the 
state,  made  by  their  respective  owners,  masters, 
agents,   or   consignees    ■{  n73-4^  ; 

(6)  For  injuries  committed  by  them  to  persons  or 
property  [►73-4n|in  this  state -[  n73-4^  . 


§    513  MARITIME    LIENS.  789 

■{  73-4f  }■  Demands  for  these  several  causes 
■{  f73-4^  constitute  liens  upon  all  steamers,  vessels 
and  boats,  and  have  priority  in  the  order  herein 
enumerated,  and  have  preference  over  all  other  de- 
mands; but  such  liens  only  continue  in  force  for  the 
period  of  one  year  from  the  time  the  cause  of  action 
accrued.''  Enacted  1872;  amended,  in  effect  July 
1,    1874. 

Interpretation  of  Statute.— In  The  Columbus,  6  Fed. 
Cas.  (D.  C.)  184,  184B,  No.  3044,  the  court  states 
the  rule  of  interpretation  of  this  statute:  **The  state 
laws  may  prescribe  the  mode  in  which  the  lien  they 
create  may  be  acquired  or  perfected.  They  may  also 
limit  their  continuance  to  a  specified  period.  But, 
except  where  the  state  law  otherwise  in  terms  pro- 
vides, the  lien  is  to  be  regarded  as  maritime,  and 
to  be  subject,  as  to  its  origin  and  incidents,  to  the 
same  rules  by  which  liens  on  foreign  vessels  are  gov- 
erned.'' 

Interpreting  this  section  accordingly,  the  court  in 
a  number  of  cases  treats  the  lien  which  is  authorized 
by  the  code  as  arising  from  a  fictitious  implied  con- 
tract between  the  parties,  and  thus,  instead  of  deal- 
ing with  it  as  a  lien  which  the  law  has  in  every  case 
established  for  the  benefit  of  a  certain  class  of  per- 
sons, considers  it  as  the  result  of  a  supposed  con- 
tractual relation  the  existence  of  which  may  be  re- 
butted by  certain  circumstances.  (See  especially  notes 
8  and  9,  below.)  This  scheme  of  interpretation  may 
be  analogous  to  that  by  which  maritime  liens  con- 
ferred by  the  general  law  are  interpreted,  but  it  cer- 
tainly does  not  accord  with  the  intentions  of  the 
California  legislature. 

Historical.— 'PisiQtiee  Act,  sec.  317  (Cal.  Stats.  1851,  c. 
5,  sec.  317,  in  effect  July  1,  1851),  and  the  amendment 
thereto.  Stats.  1860,  c.  314,  sec.  25,  in  effect  April  28, 
1860,  contained  a  similar  specification  of  demands  for 
which  a  vessel  was  liable,  omitting  the  words  '  *  in  this 
state"  where  they  were  inserted  by  the  amendment 
of  1874,  and  also  the  phrase  in  the  fifth  subdivision 
*^ between  places  in  this  state."  See,  also,  a  cor- 
responding provision  in  Stats.  1850,  c.  75,  sec.  1,  in 
effect  April  10,  1850. 


790  LIENS    AGAINST    VESSELS.  §    513 

value  of  not  less  than  fifty  dollars^  arising 
(1)  for^  services  rendered  on  board^  any  vessel 
(except  the  services  of  the  master  compensated 
by  his  wages), ^  or  for  supplies  (reasonable  in 
quantity  and  kind)^  furnished  in  this  state  for 
the     use     of     such     vessel,     when     rendered 

Under  the  statute  of  1850  and  also  under  the  stat- 
ute of  1851,  before  the  amendment  of  1860,  these  de- 
mands were  not  declared  uy  the  statute  to  * '  constitute 
liens. '^  Construing  the  whole  chapter  on  actions 
against  vessels,  the  court,  in  Averill  v.  Steamboat 
Hartford,  2  Cal.  308,  and  Meiggs  v.  Scannell,  7  Cal. 
405,  held  that  it  was  not  the  intention  of  the  legisla- 
ture that  a  lien  should  only  be  obtained  by  resort  to 
the  attachment  proceedings  provided  for  in  the  chap- 
ter, as  that  would  virtually  deny  a  remedy  to  cred- 
itors for  small  sums,  as  they  would  not  be  able  to  put 
up  the  attachment  bond.  But  service  of  process  in  the 
manner  provided  for  by  the  statute  is  equivalent  to 
seizure  and  gives  a  lien  against  subsequent  purchasers. 
This  lien,  however,  attached  not  from  the  time  of  the 
accrual  of  the  cause  of  action,  but  from  that  of  ser- 
vice of  process  upon  a  person  standing  in  the  pre- 
scribed relation  to  the  vessel:  Fisher  v.  White,  8  Cal: 
418. 

2  Amounting  to  at  Least  Fifty  Dollars.— Civil  Code, 
section  3060,  provides:  ^' Debts  amounting  to  at  least 
fifty  dollars,  contracted  for  the  benefit  of  ships,  are 
liens  in  the  cases  provided  for  by  the  Code  of  Civil 
Procedure. ''     As  enacted  1872. 

In  Perry  v.  Washburn,  20  Cal.  318,  350,  it  is  said: 
*'A  debt  is  a  sum  of  money  due  by  contract,  express 
or  implied '';  in  Dunsmore  v.  Furstenfeldt,  88  Cal.  522. 
529,  22  Am.  St.  Kep.  331,  26  Pac.  518:  *^Any  kind  of 
obligation  of  one  man  to  pay  money  to  another  is  a 
debt.'' 


§    513  MARITIME    LIENS.  791 

3  This  subdivision  of  the  section  of  the  text 
is  founded  on  subdivisions  1  and  2  of  Code  of  Civil 
Procedure,  section  813  (see  note  1,  above). 

4  The  phrase  ^^  services  rendered  on  board  ^^ 
'^  would  not  include  the  services  of  musicians  hired 
for  the  master  ^s  amusement,  or  those  of  a  nurse  or 
physician  to  attend  his  child,  who  might  happen  to 
be  on  board '^  The  Columbus,  6  Fed.  Cas.  (D.  C.)  184, 
186A,  No.  3044. 

5  Except  Services  of  Master.— Civil  Code,  section 
3055,  provides:  ^^The  master  of  a  ship  has  a  general 
lien,  independent  of  possession,  upon  the  ship  and 
freightage,  for  advances  necessarily  made -or  liabili- 
ties necessarily  incurred  by  him  for  the  benefit  of 
the  ship,  but  has  no  lien  for  his  wages.  ^  ^ 

'^Section  813  contains  the  expression  of  the  general 
rule  upon  the  subject  of  liens  for  services  on  ship- 
board. Section  3055  contains  the  law  upon  the  sub- 
ject of  the  master's  lien  for  advances  and  wages, 
and,  so  far  as  his  lien  for  wages  is  concerned,  it  con- 
tains the  only  exception  to  the  general  rule  contained 
in  section  813 '':  The  Louis  Olsen,  57  Fed.  845,  6  C.  C. 
A.  608,  9th  Cir.,  overruling  the  opinion  of  the  dis- 
trict court  in  the  same  case  (52  Fed.  652). 

Historical. — Before  the  enactment  of  the  codes  and 
of  Civil  Code,  sec.  3055,  when  Practice  Act,  sec.  317, 
expressed  the  law  upon  this  subject,  the  master  had. a 
lien  for  his  wages:  Whitney  v.  The  Mary  Gratwick,  29 
Fed.  Cas.  (D.  C.)  1093,  No.  17,591,  affirmed  in  the 
circuit  court  without  a  written  opinion. 

«  Supplies  must  be  Reasonable  in  Quantity  and 
Kind. — '^It  will  not,  I  think,  be  disputed  that  the 
supplies  must  be  reasonable  in  quantity  and  kind,  and 
apparently,  at  least,  necessary  and  proper  for  the  ser^ 
vice  in  which  the  vessel  is  engaged '\-  The  Columbus, 
6  Fed.  Cas.  (D.  C.)    184,  186A,  No.  3044. 

Illustrations. — The  character  of  the  following  sup- 
plies and  labor  indicate  that  they  were  necessary  for 
the  vessel:  Utensils  for  use  in  the  galley;  materials 
and  labor  for  calking  and  painting  the  vessel;  repair 
of  sails;  board  of  crew   (furnished  to  them  on  land 


792  LIENS    AGAIXST    VESSELS.  §    513 

or  furnished  at  the  request  of  the  owner,'' 
or  of  the  master,  agent,  or  consignee, 
unless  the  master,  agent,  or  consignee 
is  forbidden  to  procure  services  or  supplies  on 
the  credit  of  the  vessel,  and  the  person  render- 
ing the  services  or  furnishing  the  supplies  has 
notice  of  such  limitation  of  authority,^  or  un- 

while  the  vessel  was  at  a  wharf) ;  meat  supplied  on 
board  the  vessel  for  the  crew:  The  Templar,  59  Fed. 
(D.  C.)    203,  205,  208. 

7  Maritime  liens  created  by  state  law  being 
of  the  same  maritime  character  as  those  established 
by  the  general  law,  and  subject  to  the  same  limitations 
and  enforced  by  the  same  rules  of  procedure,  the  same 
presumptions  arise  as  to  the  master's  authority  to  con- 
tract for  necessary  supplies  and  repairs,  and  the  same 
rule  would  obtain  as  to  the  authority  of  part  owners 
who  by  the  general  law  may  bind  the  whole  Vessel 
for  necessary  supplies  or  repairs  furnished,  except  in 
case  of  the  express  dissent  of  other  part  owners:  The 
Templar,  59  Fed.  (D.  C.)    205,  207. 

8  When  Master  Forbidden  to  Procure  Services  on 
Credit  of  Vessel  and  Notice  of  Such  Limitation  is 
Had,  Lien  cannot  Arise. 

Where  a  materialman  furnished  supplies  to  a  ves- 
sel in  her  home  port  at  the  request  of  the  master  with 
notice  that  the  vessel  had  been  let  to  the  master  to 
be  run  on  shares,  and  to  be  manned  and  victualed  by 
him,  and  that  any  supplies  furnished  must  be  fur- 
nished exclusively  on  the  personal  credit  of  the  mas- 
ter, no  lien  is  conferred  on  the  materialman. 

^^The  lien  conferred  by  the  statute  [subdivisions 
1  and  2]  ....  is  tc^  be  tested  by  the  same  principles 
as  those  which  apply  to  liens  for  supplies  furnished  to 
a  foreign  vessel,  and  ....  was  not  intended  to  confer 
upon  a  'master,  agent,  or  consignee^  an  irrevocable 
power  to  hypothecate  the  vessel  for  supplies  in  tho 
port  where  the  owner  resides,  contrary  to  his  instruc- 


§    513  MARITIME    LIENS.  793 

less  the  vessel  is  operated  by  a  charterer  and 
the  person  rendering  the  services  or  furnishing 
the  supplies  has  notice  thereof;^ 

tions,  and  in  spite  of  his  protest,  and  ....  the  mate- 
rialman who,  with  full  notice  of  the  circumstances, 
furnishes  supplies  to  the  master,  must  look  to  him 
personally,  and  not  to  the  owner  of  the  vessel  for  re- 
payment. 

'^It  is  suggested  that  the  establishment  of  a  fixed 
certain  and  inflexible  rule,  as  to  the  rights  of  mate; 
rialmen,  would  promote  the  interest  of  commerce. 
But  those  interests  have  not  been  found  to  require 
the  adoption  of  such  rule  in  the  case  of  supplies  fur- 
nished in  foreign  ports.  In  those  cases  good  faith  and 
reasonable  diligence  are  exacted  of  the  materialman, 
while  the  master  is  strictly  confined  within  the  limits 
of  his  actual  or  apparent  authority'':  The  Columbus, 
6  Fed.  Cas.  (D.  C.)    184,  186A,  No.  3044. 

9  When  Vessel  Operated  by  Charterer,  and  this 
Fact  Known,   Lien  cannot   Arise. 

One  who  intrusts  another  with  the  full  possession, 
control,  and  management  of  a  vessel  is  deemed  to  con- 
sent that  liens  for  necessary  supplies,  materials,  or  re- 
pairs may  be  created  against  it.  He  is  charged  with 
notice  that  they  may  accrue.  This  is  nothing  but  fair 
and  equitable  to  the  domestic  supply  or  materialman, 
who  may  know  nothing  of  the  real  relation  existing 
between  the  general  and  special  owner,  and  be  de- 
ceived by  taking  the  ostensible  owner  for  the  real 
owner.  But,  by  giving  notice  to  the  supply  or  ma- 
terialman of  the  fact  that  the  vessel  is  in  the  hands 
of  a  charterer,  the  general  owner  may  protect  his  prop- 
erty from  maritime  liens. 

Thus  if  a  supply  or  materialman  knows  of  the 
character  or  the  relation  in  which  the  ostensible  owner 
holds  the  vessel,  or  if  he  is  advised  of  the  real  status 
of  such  relatioQ  by  the  general  owner  or  the  charterer, 
or  is  placed  in  possession  of  such  facts  as  would  put 
or  ought  to  put,  a  reasonably  prudent  man  on  inquiry, 
the  piresamption  arises  that  the  supplies,  materials,  or 


794  LIENS    AGAINST    VESSELS.  §    513 

(2)   for  work  done  or  materials  furnished  in  this 
state  for  the  repair  or  equipment  thereof  ;^® 

repairs  were  furnished  upon  the  credit  of  the  char- 
terer himself,  and  there  is  no  lien.  And  the  onus  lies 
on  the  supply  or  materialman  to  remove  this  presump- 
tion: The  Alvira,  63  Fed.  (D.  C.)    144,  155,  156. 

Illustrations. — Where  supplies  and  materials  were 
furnished  to  the  charterer  of  a  vessel  navigating  the 
internal  waterways  of  California  on  the  credit  of  the 
vessel  (under  Code  Civ.  Proc,  sec.  813,  subds.  2  and  3), 
although  the  vessel  had  been  chartered  under  an  agree- 
ment that  the  charterers  ''would  surrender  and  de- 
liver the  possession  of  the  vessel  ....  absolutely  free 
and  clear  from  all  liens  and  encumbrances  accruing, 
etc.,  between  June  14,  1880,  and  the  time  of  such  de- 
livery,'/ but  the  lien  claimants  had  no  notice  of  such 
agreement,  the  vessel  is  affected  by  a  lien  for  the 
amounts  due  the  persons  who  furnished  the  supplies 
and  materials:  The  S.  M.  Whipple,  14  Fed.  (D.  C.)    354. 

Where  the  charterer  of  a  vessel  ran  it,  hired  the 
captain,  officers  and  crew,  paid  the  running  expenses, 
and  engaged  persons  to  make  the  necessary  repairs 
and  alterations,  there  is  nothing  which  would  tend  to 
put  a  reasonable  man  upon  inquiry,  and  the  owner  of 
the  vessel  cannot  avoid  liens  accruing  against  it: 
The  Alvira,  63  Fed.  (D.  C.)    144,  157. 

Likewise  where  in  New  York  the  statute  (Laws 
1862,  p.  956,  c.  482)  similarly  gives  a  lien  for  sup- 
plies, and  coal  was  furnished  for  the  use  of  a  chartered 
vessel,  the  United  States  supreme  court  said:  ''The 
statute  of  New  York,  reasonably  construed,  does  not 
assume  to  give  a  lien  where  supplies  are  furnished  to 
a  foreign  vessel  upon  the  order  of  the  charterer,  with 
knowledge  upon  the  part  of  the  person  or  corporation 
furnishing  them  that  the  charterer  does  not  represent 
the  owners,  but  by  contract  with  them  has  undertaken 
to  furnish  such  supplies  at  his  own  cost":  The  Kate, 
164  U.  S.  458,  471,  17  Sup.  Ct.  Eep.  135,  41  Law  Ed. 
512. 

10  This  subdivision  is  founded  on  subdivision  3  of 
the  Code  of  Civil  Procedure,  section  813.     The  code 


§    513  MARITIME    LIENS.  795 

(3)  for  wharfage  or  anchorage  in  this  state,  or 

(4)  for  damages  resulting  from  the  nonperform- 
ance of  any  contract  for  the  transportation  of 
persons  or  property  between  places  in  this 
state,  made  by  the  owner,  master,  agent  or  con- 
signee thereof ; 

constitutes  a  lien  against  snch  vessel  for  the 
period  of  one  year  after  the  accrual  of  the  cause 
of  action^^  upon  the  secured  obligation. 

provision  also  concerns  '^  work  done  or  materials  fur- 
nished in  this  state  for  their  construction/'  but  the 
construction  of  a  vessel  involves  matters  purely  non- 
maritime  and  thus  does  belong  in  this  portion  of  the 
text. 

^'The  preceding  subdivisions  of  the  same  section  [of 
the  code],  relating  to  'supplies'  and  'services/  gives 
a  lien  when  such  are  furnished  and  rendered  'at  the 
request  of  their  respective  owners,  masters,  agents,  or 
.  consignees, '  thus  specifying  the  persons  at  whose  in- 
stance debts  for  'supplies'  or  'services'  may  become 
liens.  The  subdivision  relating  to  'liens'  for  work 
done  or  materials  furnished  in  this  state  makes  no  such 

specifications The   effect   of   the   subdivision   is 

to  make  all  persons,  who  possess  the  authority,  com- 
petent to  contract  for  work  or  materials,  including,  of 
course,  charterers.  Therefore,  whatever  question  there 
may  be  whether,  under  the  peculiar  phraseology  of  the 
local  lien  law,  a  'charterer'  would  be  competent  to 
contract  for  'supplies'  or  'services'  for  which  a  lien 
would  attach  in  this  state,  there  would  seem  to  be  no 
doubt  that  such  a  person  may  contract  for  'repairs'^ 
or  'materials,'  and  that  a  lien  would  vest  therefor": 
The  Alvira,  63  Fed.  (D.  C.)    144,  159,  160. 

11  After  the  Accrual  of  the  Cause  of  Action.— So 
where  the  materials  for  the  construction  of  a  vessel 
were  furnished  on  a  six  months'  credit,  the.  cause  of 
action    does   not    accrue   until    the    expiration    of   the 


796  LIENS    AGAINST    VESSELS.  §    513 

Every  vessel  with  its  tackle,  apparel,  and  furni- 
ture is  liable  for  the  pilotage  fees  accruing  by 
law  for  the  services  of  pilots  in  respect  thereto.^^ 

514.  Have   Same   Priority   as   Maritime   Liens 
Recognized  by  General  Law. 

Maritime  liens  established  by  state  law  have 
the  same  preference  over  and  relation  to  non- 
maritime  liens  as  do  maritime  liens  recognized 
by  the  general  law.^^ 

515.  Relative  Priorities.^^ 

Different  maritime  liens  established  by  state 
law  have  priority  among  themselves  in  the  fol- 
lowing order: 

(1)  the  lien  of  the  mate  and  seamen  for  their 
wages/^ 

(2)  other  liens  for  services  rendered  on  board, 

credit,  and  the  action  to  foreclose  a  lien  therefor  may 
then  be  begun  at  any  time  within  one  year  thereaf- 
ter: Edgerly  v.  Schooner  San  Lorenzo,  29  Cal.  418. 
See    section   438,    above^ 

12  See  Political  Code,  section  2432,  which  sec- 
tion was  based  upon  Stats.  1870,  p.  349,  c.  243,  sec. 
22. 

13  So  a  maritime  lien  created  by  local  stat- 
ute has  like  preference  as  other  maritime  liens  over 
a  prior  mortgage:  The  J.  E.  Eumbell,  148  U.  S.  1,  19, 
13  Sup.  Ct.  Rep.  498,  37  Law  Ed.  345;  The  Glide,  167 
U.  S.  606,  622,  623,  17  Sup.  Ct.  Eep.  930,  42  Law  Ed. 
296. 

14  See  latter  part  of  Code  of  Civil  Procedure, 
section  813   as  quoted,   note   1,   section  513. 

15  Civil  Code,  section  3056,  provides:  *^The  mate 
and  seamen  of  a  ship  have  a  general  lien,  independent 


§    515  MARITIME    LIENS.  797 

(3)  liens  for  supplies, 

(4)  for  work  done  and  materials  furnished  for 
the  repair  or  equipment, 

(5)  for  wharfage  and  anchorage,  and 

(6)  for  damages  for  nonperformance  or  malper- 
f  ormance  of  contracts  of  carriage. 

516.     Enforcement. 

Such  liens  are  enforceable  exclusively  in  the 
United  States  district  courts  according  to  their 
own  rules  of  procedure.^^ 

of  possession,  upon  the  ship  *and  freightage,  for  their 
wages,  which  is  'superior  to  every  other  lien." 

16  Enforcement  of  Liens. 

'^When  a  right,  maritime  in  its  nature,  and  to  be 
enforced  by  process  in  the  nature  of  admiralty  pro- 
cess, has  been  given  by  the  statute  of  a  state,  the  ad- 
miralty courts  of  tiie  United  States  have  jurisdiction, 
and  exclusive  jurisdiction,  to  enforce  that  right  ac- 
cording to  their  own  rules  of  procedure":  The  J.  E. 
Kumbell,  148  U.  S.  1,  12,  13,  -13  Sup.  Ct.  Bep.  498,  37 
Law  ed.  345;  The  Lottawanna,  21  Wall.  (88  U.  S.) 
558,  579-582,  22  Law  ed.  654;  The  Glide,  167  U.  S. 
606,  617,  624,  17  Sup.  Ct.  Eep.  930,  42  Law  ed.  296. 

^^  While  the  courts  of  admiralty  are  held  to  have 
exclusive  jurisdiction  to  enforce  these  state  liens  upon 
vessels,  yet,  in  enfor<?ing  them,  they  do  not  adopt  and 
apply  these  statutes  in  all  their  terms;  Jthey  do  not 
necessarily  enforce  all  their  provisions,  nor  do  they 
follow  the  construction  placed  upon  them  by  the  state 
tribunals.  In  applying  and  enforcing  them  they  sub- 
ject them  to  the  general  principles  of  the  admiralty 
and  maritime  law,  or  rather  to  those  principles  of  the 
admiralty  law  which  obtain  and  apply  to  maritime 
liens.  In  other  words,  they  adopt  the  local  statutes  in 
so  far  as  they  create  a  lien  of  a  maritime  character'': 
The  Alvira,  63  Fed.  (D.  C.)  144,  149,  150. 


798  LIENS    AGAINST    VESSELS.  §    517 


AETICLE  3. 

NONMAEITIME  LIENS  ESTABLISHED  BY  STATE 
LAW. 

517.  What    nonmaritime    liens    established    by    state 

law. 

518.  Priorities. 

519.  Parties  defendant  in  foreclosure  action. 

520.  Complaint   must  be  verified. 

521.  Service  of  complaint  and  summons. 

522.  Sale   to  be   made  to   satisfy   Ijens. 

517.    What  Nonmaritime  Liens  Established  by 
State  Law> 
Every  obligation  of  a  nonmaritime  character 
amounting  to  at  least  fifty  dollars^  for 
(1)   services  rendered  on  board  any  vessel  at  the 
request  of  the  own'er,  master^^  agent,  or  con- 
signee thereof;^  or 

1  See  section  513,  note  1,  above. 

2  See  section  513,  note  2,  above. 

3  At  the  Request  of  the  Master.— '^ The  master's 
power  is  presumed,  in  the  absence  of  evidence  to  the 
contrary,  to  extend  to  making  contracts  for  supplies  in 
the  home  port  which  shall  bind  the  -  owners.  What- 
ever the  doctrine  of  the  maritime  law,  by  the  anal- 
ogies of  the  common  law,  the  duties  and  relations  of 
the  master  furnish  presumptive  evidence  of  his  au- 
thority to  purchase  supplies' ':  Crawford  v.  Eoberts, 
50  Cal.  235,  241. 

4  Illustrations.— Claims  for  services  rendered  on 
a  vessel  which   had  never  been  in  commission  or  in 


§    517  KONMAPvITIME     LIENS.  799 

(2)  supplies  furnished  in  this  state  for  the  use 
thereof  at  the  request  of  the  owner,  master, 
agent,  or  consignee  thereof;  or 

(3)  work  done  or  materials  furnished  in  this 
state  for  the  construction  or  repair  thereof  ;^  or 

(4)  wharfage  or  anchorage  in  this  state  ;^  or 

(5)  injuries  committed  thereby  to  persons  or 
property  in  this  state;'' 

active  use  in  navigation  do  not  arise  upon  a  maritime 
contract:  Olsen  v.  Birch,  133  Cal.  479,  481,  482,  85 
Am.  St.  Eep.  215,  65  Pac.  1032. 

A  mere  shipkeeper,  in  charge  of  a  vessel  in  her 
home  port,  out  of  commission,  and  laid  up,  not  en- 
gaged in  navigation,  and  having  no  voyage  in  con- 
templation, performs  services  of  a  nonmaritime  char- 
acter. Therefore,  he  has  no  maritime  lien  either  by 
the  general  admiralty  law  or  by  the  state  statute: 
The  Sirius,  65  Fed.    (D.   C.)   226,   235. 

5  **A  contract  to  build  a  ship,  being  a  contract 
made  on  land  and  to  be  performed  on  land,  is 
not  a  maritime  contract,  and  ....  a  lien  to  secure  it, 
given  by  a  local  statute,  is  not  a  maritime  lien,  and 
cannot,  therefore,  be  enforced  in  admiralty' ':  The  J. 
E.  Eumbell,  148  U.  S.  1,  11,  13  Sup.  Ct.  Eep.  498, 
37  Law  ed.  345. 

<>  An  action  for  wharfage,  when  the  fact  doe^ 
not  appear  in  the  pleadings  that  the  vessel  was 
engaged  in  navigating  the  high  seas,  does  not  fall 
within  the  admiralty  and  maritime  jurisdiction:  Peo- 
ple V.  Steamer  America,  34  Cal.  676,  679,  a  case  which 
was  decided  exclusively  on  the  pleadings. 

In  order  to  take  the  case  out  of  the  jurisdiction  of 
the  state  courts,  an  averment  that  the  vessel  was 
engaged  in  commerce  and  navigation  is  essential,  this 
being  a  fact  of  jurisdictional  consequence:  People  v. 
Steamer  America,  34  Cal.  676,  679. 

7  A  cause  of  action  for  an  injury  done  by  a 
steam  tug  to  a  building  on  land  is  not   a  maritime 


800  LIEXS    AGAINST    VESSELS.  §    517 

constitutes  a  lien  against  such  steamer,  vessel,  or 
boat  for  the  period  of  one  year  after  the  accrual 
of  the  cause  of  action  upon  the  secured  obliga- 
tion. 

518.  Priorities. 

Such  nonmaritime  liens  have  priority  among 
themselves  in  the  order  above  enumerated,  and 
have  preference  over  all  other  demands  against 
the  vessel.® 

519.  Parties  Defendant  in  Poreclosure  Action.^ 

An  action  to  foreclose  such  a  nonmaritime 
lien^^  must  be  brought  against  the  owner  of  the 
vessel    by  name,  if  known;  but  if  not  known, 

tort:  The  Glide,  167  U.  S.  606,  621,  17  Sup.  Ct.  Eep. 
930,  42  Law  ed.  296. 

8  See  Code  of  Civil  Procedure,  section  813,  last 
sentence,  quoted  under  section- 513,  note  1. 

9  See  Code  of  Civil  Procedure,  section  814,  as 
amended  in  eifect  July  1,  1874. 

Practice  Act,  sec.  318,  and  the  code  as  enacted  1872, 
in  effect  July  1,  1851,  to  July  1,  1874,  provided:  *' Ac- 
tions for  damages,  arising  upon  any  of  the  grounds 
specified  in  the  preceding  section,  may  be  brought  di- 
rectly against  such  steamers,  vessels,  or  boats."  Com- 
pare Stats.  1850,  c.  75,  sees.  2  and  3. 

10  Foreclosure  Action  may  be  Maintained.—**!  do 
not  think  that  it  was  the  intention  of  the  legislature 
to  provide  that  a  lien  should  only  be  acquired  by  at- 
tachment; this  would  virtually  be  denying  a  right  to 
creditors  for  small  sums.  It  would  be  almost  impos- 
sible for  a  mechanic  or  merchant  of  small  capital  or 
credit,  who  had  a  claim  of  a  few  hundred  dollars 
against  one  of  our  large  river  steamers,  or  some  sea- 


§    519  NON MARITIME     LIENS.  801 

that  fact  must  be  stated  in  the  complaint^  and 
the  defendants  be  designated  as  unknown  owners. 
Any  person  holding  a  lien  against  the  vessel  may 
be  made  a  defendant  in  such  action,  the  nature 
and  amount  of  his  lien  being  stated  in  the  com- 
plaint. 

520.  Complaint  must  be  Verified. 

The  complaint  must  designate  the  steamer, 
vessel,  or  boat  by  name,  and  must  be  verified  by 
the  oath  of  the  plaintiff,  or  someone  on  his  be- 
half.ii 

521.  Service  of  Complaint  and  Summons. 

The  summons  and  copy  of  the  complaint  must 
be  served  on  the  owners  if  they  can  be  found; 
otherwise,  they  may  be  served  on  the  master, 
mate,  or  person  having  charge  of  the  vessel.^^ 

going  vessel,  to  give  the  necessary  bonds  to  detain  her 
until  his  suit  could  be  determined,  and,  in  the  mean- 
time, she  might  be  run  off  and  sold  free  of  all  such 
debts  or  encumbrances  ^^  Meiggs  v.  Scannell,  7  Cal. 
405. 

11  Code  of  Civil  Procedure,  section  815,  as  enacted 
1872.  Practice  Act,  sec.  319,  is  the  same.  Compare 
Stats.  1850,  c.  75,  sec.  4. 

12  Code  of  Civil  Procedure,  section  816,  as  amended, 
in  effect  March  10,  1880. 

Practice  i^ct,  sec.  320,  and  Code  of  Civil  Procedure 
section  816,  as  enacted  1872  (with  amendment,  in  ef- 
fect July  1,  1874),  provided: ^^ The  summons,  attached 
to  a  certified  copy  of  the  complaint  }■  73-4n  \-  must  be 
served  on  the  owners,  if  they  can  be  found;  otherwise 
it  ■{  n73-4^  may  be  served  on  the  master,  mate,  or 
Liens— 51 


802  LIENS    AGAINST    VESSELS.  §    522 

522.     Sale  to  be  Made  to  Satisfy  Liens.^^ 

If  judgment  is  rendered  in  favor  of  any  lienor, 
the  sheriff  must,  after  ten  days'  publication  of  a 
notice  of  sale  containing  a  statement  of  the 
measurement  and  tonnage  of  the  steamer, 
vessel,  or  boat,  and  a  general  description 
of  her  condition,^^  sell  at  public  auction 
the  steamer,  vessel,  or  boat,  with  its  tackle,  ap- 
parel, and  furniture,  or  such  interest  therein  as 
may  be  necessary. 

person  having  charge  of  the  steamer,  vessel,  or  boat 
against  which  the  action  is  brought." 

13  Compare  Code  Civ.  Proc,  sec.  824,  Practice  Act, 
sec.  328. 

14  Code  of  Civil  Procedure,  section  827  (Prac- 
tice Act,  sec.  331):  ''The  notice  of  sale  published  bv 
the  sheriff  must  contain  a  statement  of  the  measure- 
ment and  tonnage  of  the  steamer,  vessel,  or  boat,  and 
a  general  description  of  her  condition." 


CHAPTER   5. 

LIEI^    OF    COEPOEATION    ON    ITS    OWN 
STOCK.* 

523.     Lien    conferred    for    assessments    levied. 

1  Corporation  does  not  Have  Seller's  Lien.— A  cor- 
poration, after  issuing  a  certificate  to  a  stockholder 
prior  to  full  payment  for  the  stock,  does  not  have  a 
seller's  lien  thereon,  as  the  certificate  'gives  the  stock- 
holder complete  possession  of  the  shares:  Anglo-Cali- 
fornian  Bank  v.  Grangers'  Bank,  63  Cal.  359,  364; 
Lankershim  Eanch  Land  etc.  Co.  v.  Herberger,  82 
Cal.  600,  603,  23  Pac.  134. 

Lien  Created  by  By-latc.—A  lien,  independent  of 
the  possession  of  the  certificate  of  stock  of  a  cor- 
poration, created  thereon  by  a  by-law  of  the  corpora- 
tion providing  that  the  stock  is  not  transferable  un- 
til after  the  satisfaction  of  any  demand  due  the 
corporation  from  the  person  in  whose  name  the  stock 
stands,  even  if  valid  at  all,  is  not  valid  as  against 
a  purchaser  of  the  stock  for  value  without  notice 
of  the  by-law:  Anglo-Calif ornian  Bank  v.  Grangers' 
Bank,  63  Cal.  359. 

Lien  Created  hy  Contract.— ^  ^  A.  lien  not  dependent 
upon  possession  of  the  certificate  of  stock  may,  by  a 
contract  between  a  corporation  and  its  stockholders, 
be  created  in  favor  of  the  corporation,  to  secure  the 
indebtedness  of  the  stockholders  to  the  corporation'': 
Lankershim  Eanch  Land  etc.  Co.  v.  Herberger,  82 
Cal.  600,  603,  23  Pac.  134;  Jennings  v.  Bank  of  Cali- 
fornia, 79  Cal.  323,  12  Am.  St.  Eep.  145,  21  Pac.  852. 

In  a  number  of  cases  it  has  been  held  that  under 
(803) 


804  LIEN    OF    CORPORATION. 

Civil  Code,  section  324,  and  former  statutes  which 
were  ^*  substantially  the  same  as  section  324 '^  (Win- 
ter V.  Belmont  Min.  Co.,  53  Cal.  428,  431),  that 
'transfers  of  stock  which  have  not  been  entered  in 
the  books  of  the  company,  as  provided  in  the  statute, 
are  nevertheless  valid  as  against  all  the  world,  ex- 
cept subsequent  purchasers  in  good  faith,  without 
notice '^  People  v.  Elmore,  35  Cal.  653;  Weston  v. 
Bear  Eiver  etc.  Min.  Co.,  6  Cal.  425;  Naglee  v.  Pacific 
Wharf  Co.,  20  Cal.  529;  Parrott  v.  Byers,  40  Cal.  614, 
625;  Winter  v.  Belmont  Min.  Co.,  53  Cal.  428,  431; 
Brown  v.  San  Francisco  Gas  Light  Co.,  58  Cal.  426. 

The  statement,  then,  in  the  Jennings  case,  that 
under  Civil  Code,  section  324,  the  assignee  of  stock 
before  the  transfer  thereof  on  the  books  of  the  cor- 
poration has  *^a  mere  equity '^  seems  to  rest  upon 
a  misconception  of  the  scope  of  the  section  of  the 
Civil  Code.  Si;ibject  to  a  single  limitation,  the  as- 
signee has  full  ownership  of  the  stock,  and  the  lien 
in  favor  of  the  corporation  should  not  have  been 
sustained.  Moreover  the  lien  sustained  in  the  Jen- 
nings case  seems  to  come  within  the  class  of  liens 
conclusively  deemed  to  be  fraudulent  under  Civil 
Code,  section  3440   (see  section  201,  above). 

Yet  until  the  transfer  is  entered  upon  the  books 
of  the  corporation  the  transferor  may  vote  the  stock: 
People  V.  Kobinson,  64  Cal.  373,  375,  1  Pac.  156  (in 
which  case  the  court  also  said  that  the  transfer 
until  entered  had  no  validity  outside  the  parties). 

The  acceptance,  without  objection,  of  a  certificate 
of  stock  with  the  condition  written  thereon,  that 
the  stock  is  not  transferable,  at  the  option  of  the  cor- 
poration, until  after  the  payment  of  all  indebtedness 
due  the  corporation  by  the  person  in  whose  name 
the  stock  stands  upon  the  books  of  the  corporation, 
coupled  with  the  subsequent  borrowing  of  money 
from  the  corporation  by  the  holder  of  such  certificate, 
without  anything  to  exclude  the  idea  that  the  condi- 
tion was  to  be  binding,  gives  rise  to  an  equitable 
lien  upon  the  stock,  valid  as  against  all  third  per- 
sons  for   the    amount    of    such    indebtedness,    on    the 


§    523  LIEN    OF    CORPORATION.  805 

523.     Lien   Conferred  for  Assessments  Levied.^ 
A  corporation  for  profit  has  a  lien  upon  each 
share^  of  its  subscribed  capital  stocky  independ- 
ent of  the  possession  of  the  certificate  thereof,'* 

ground  that  the  conduct  of  the  holder  of  the  cer- 
tificate amounts  to  an  assent  to  its  conditions  so  far 
as  the  particular  loan  was  concerned:  Jennings  v. 
Bank  of  California,  79  Cal.  323,  12  Am.  St.  Eep.  145, 
21  Pac.  852,  in  department  (the  court  saying  (p.  331) : 
*^The  case  of  the  Anglo-Calif ornian  Bank  v.  Grangers' 
Bank,  63  Cal.  [359]  362,  is  not  in  conflict  with  this'O; 
Ealston  v.  Bank  of  California,  112  Cal.  208,  214,  44 
Pac.  476. 

But  the  mere  acceptance  by  a  stockholder  of  a  cer- 
tificate of  stock  with  the  condition  written  thereon 
as  above  is  not  held  to  constitute  a  contract  for 
such  lien  in  the  absence  of  subsequent  dealings  with 
reference  thereto:  Jennings  v.  Bank  of  California,  79 
Cal.  323,  326,  12  Am.  St.  Eep.  145,  21  Pac.  852. 

2  The  only  lien  given  to  corporations  for  profit 
upon  their  subscribed  capital  stock,  and  which 
does  not  depend  upon  the  possession  of  the  certificate 
of  stock,  is  to  secure  the  payment  of  assessments 
levied  for  the  purpose  of  paying  expenses,  conduct- 
ing business,  and  paying  debts^':  Lankershim  Eanch 
Land  etc.  Co.  v.  Herberger,  82  Cal.  600,  603,  23  Pac. 
134. 

The  enforcement  of  this  lien,  as  regulated  by  Civil 
Code,  sections  331-349,  directly  concerns  the  law  of 
corporations,  and  hence  is  not  here  set  forth. 

3  The  lien  of  a  corporation  is  upon  the  shares,  and 
not  upon  the  certificate:  Craig  v.  Hesperia  Land  etc. 
Co.,  113  Cal.  7,  12,  54  Am.  St.  Eep.  316,  45  Pac.  10. 

4  "I  can  discover  no  difference  between  the  right 
of  a  corporation  to  collect  a  valid  assessment,  and 
its  right  to  collect  a  stipulated  part  of  a  subscrip- 
tion to  stock,  nor  how  the  nonpossession  of  the  cer- 
tificate affects  the  right  in  either  case'':  Craig  v. 
Hesperia  Land  etc.  Co.,  113  Cal.  7,  13,  54  Am.  St. 
Eep.    316,   45   Pac.   10. 


806  LIEN    OF    CORPORATION.  §    523 

valid  as  against  all  persons,^  to  secure  the  pay- 
ment of  any  valid  assessment  which  may  be  levied 
thereon.  Notwithstanding  the  existence  of  any 
such  lien^  the  corporation  must,  upon  demand, 
enter  a  transfer  upon  its  books  of  the  stock  af- 
fected by  the  lien.^ 

5  Valid  Against  All  Persons.— A  purtehaser  of  stock 
subject  to  a  lien  takes  it  subject  to  all  the  equities 
in  favor  of  the  corporation.  He  can  inform  himself 
from  the  stock-book  whether  the  shares  are  free  from 
liens  or  liabilities  in  favor  of  the  corporation:  Craig 
V.  Hesperia  Land  etc.  Co.,  113  Cal.  7,  12,  13,  54  Am. 
St.  Rep.  316,  45  Pac.  10. 

Whether  a  transferee  upon  the  books  would  take 
his  stock  discharged  of  any  lien  undisclosed  by  the 
corporation  at  the  time  of  the  transfer  and  the  issu- 
ance of  a  new  certificate  to  him— query:  Craig  v. 
Hesperia  Land  etc.  Co.,  113  Cal.  7,  13,  54  Am.  St.  Rep. 
316,    45    Pac.    10. 

6  Must  Transfer  Liened  Stock  upon  Demand.— As 
the  transfer  of  shares  upon  the  books  of  a  corpora- 
tion and  the  issuance  of  a  new  certificate  does  not 
affect  the  power  of  the  corporation  to  collect  a  de- 
linquent assessment  on  such  shares  by  the  sale  there- 
of, such  delinquency  does  not  justify  a  refusal  to 
make  a  transfer  (p.  I'd).  By  such  refusal  **the  holder 
of  stock  may  not  only  be  deprived  of  the  benefit  of 
an  advantageous  sale,  which  he  would  desire  to  make 
under  any  circumstances,  but  he  would  be  denied 
the  right  to  dispose  of  his  stock  to  avoid  personal 
liability  for  debts  about  to  be  incurred  which  he  did 
not  approve,  and  which  in  his  judgment  would  be 
ruinous  not  only  to  the  corporation,  but  to  himself 
as  a  stockholder ' '  (p.  14):  Craig  v.  Hesperia  Land 
etc.  Co.,  113  Cal.  7,  54  Am.  St.  Rep.  316,  45  Pac.  10. 

Thus  a  refusal  to  make  such  a  transfer  amounts  to 
a  conversion:  Craig  v.  Hesperia  Land  etc.  Co.,  113 
Cal.  7,  54  Am.  St.  Rep.  316,  45  Pac.  10. 


TITLE  3. 

LIENS  INDEPENDENT  OP  POSSESSION: 
2.  AGAINST  IMMOVABLE  PEOPEETY. 

CHAPTER   1. 

LIEN  OP  VENDOE  OP  IMMOVABLE  PEOP- 
EETY.i 

524.  Who    lienor. 

525.  Vendor's  lien   a  personal  privilege. 

526.  Lien    inures    to    personal    representatives. 

527.  Lien  extinguished  by  intention  not   to  look  to 

it. 

528.  Evidence  of  waiver  must  be  clear  and  convinc- 

ing. 

529.  Taking  additional  security  prima  facie  evidence 

of  waiver. 

530.  Sale    of    personal    obligation   of    vendee   waives 

lien  pro  tanto. 

531.  Vendor's  lien  an  additional  security. 

532.  Enforcement    of    vendor's    lien. 

1  Vendor's  Lien  Distinguished.— '  ^  There  is  a 
marked  distinction  between  the  lien  of  a  vendor  after 
absolute  conveyance  and  the  lien  of  a  vendor  where 
the  contract  of  sale  is  unexecuted.  In  the  latter  case 
the  vendor  holds  the  legal  title  as  security  for  the 
purchase  money.  He  can  assign  his  contract  with 
the  conveyance  of  the  title;  and  in  such  case  his  as- 
(807) 


808  vendor's  lien.  §  524 

524.     Who  Lienor  2 

When  upoii  the  conveyance^  of  immovable 
property  by  a  vendor  to  his  purchaser  -there  re- 
mains unpaid  upon  the  purchase  price  any  abso- 

signee  will  acquire  the  same  rights  and  be  subject 
to  the  same  liabilities  as  himself.  In  the  former  case, 
the  vendor  retains  a  mere  equity,  which  to  become 
of  any  force  or  effect  must  be  established  by  the 
decree  of  the  court ^':  Baum  v.  Grigsby,  21  Cal.  172. 
177,    178,   81   Am.   Dec.    153. 

2  See    Civil    Code,    section    3046:    ''One    who    sells 
real  property  has  a  vendor  ^s  lien  thereon,  independ- 
ent   of   possession,   for    so   much    of   the   price    as   re 
mains   unpaid   and   unsecured   otherwise  than  by   the^ 
personal   obligation   of   the   buyer.  ^' 

''This   section   is   but   a   repetition   of   the   common 

law When    it    uses    the    term    'vendor's    lien,' 

it  refers  to  the  same  vendor's  lien  proper  that  is: 
treated  of  in  the  text-books,  both  modern  and  an- 
cient": Claiborne  v.  Castle,  98  Cal.  30,  34,  32  Pac. 
807. 

See,  also,  Salmon  v.  Hoffman,  2  Cal.  138,  142,  143,. 
56  Am.  Dec.  322;  and  Cahoon  v.  Kobinson,  6  Cal.  225. 

"A  vendor's  lien  is  not  the  result  of  any  agree- 
ment or  any  intention  of  the  vendor  and  vendee,  but 
is  a  simple  equity  raised  by  the  courts  for  the  benefit 
of  the  vendor  of  real  estate":  Avery  v.  Clark,  87 
Cal.  619,  623,  22  Am.  St.  Eep.  272,  25  Pac.  919;  Baum 
V.  Grigsby,  21  Cal.  172,  176,  81  Am.  Dec.  153;  Will- 
iams V.  Young,  21  Cal.  227;  Woolley  v.  Wickerd,  97 
Cal.  70,  31  Pac.  733;  Claiborne  v.  Castle,  98  Cal.  30,. 
34,  32  Pac.  807.  It  is  not  repugnant  to  the  record- 
ing laws:   Cahoon  v.  Eobinson,  6  Cal.'  225. 

"The  lien  which  the  vendor  of  real  property  re- 
tains, after  an  actual  conveyance,  for  the  unpaid 
purchase  money,  is  not  a  specific  and  absolute  charge 
upon  the  land,  but  a  mere  equitable  right  to  resort 
to  it  upon  failure  of  payment  by  the  vendee":   Fit- 


I 


§    524  IMMOVABLE   PROPERTY.  809 

zell  V.  Leaky,  72  Cal.  477,  484,  14  Pac.  198;  Spark? 
V.  Hess,  15  Cal.  186,  193;  Baum  v.  Grigsby,  21  Cal. 
172,  176,  81  Am.  Dec.  153;  Longmaid  v.  Coulter,  123 
Cal.  208,  212,  55  Pac.  791.  See  Gessner  v.  Palmateer, 
89  Cal.  89,  92    (24  Pac.  608),  26  Pac.  789. 

A  vendor's  lien  ^'is  a  mere  hold  or  a  claim  to 
subject  the  property  to  sale— the  title  and  the  right 
of  possession  remaining  with  the  debtors  until  such 
sale'^  Williams  v.  Young,  17  Cal.  403. 

Rationale. — ^^The  principle  upon  which  this  lien 
has  been  established  by  courts  of  equity  is  that  the 
person  who  has  gotten  the  estate  of  another  ought 
not  in  conscience,  as  between  them,  be  allowed  to 
keep  it  and  not  pav  the  full  consideration  money'': 
Selna  v.  Selna,  125  Cal.  357,  360,  78  Am.  St.  Kep. 
47,  58  Pac.  16;  Bancroft  v.  Cosbv,  74  Cal.  583,  584, 
16  Pac.  504;  Burt  v.  Wilson,  28  Cal.  632,  638,  87  Am. 
Dec.  142. 

^*It  is  founded  on  the  natural  justice  of  allowing 
the  vendor  to  subject  the  property,  with  which  he  has 
parted,  to  the  satisfaction  of  the  debt  which  consti- 
tutes the  consideration  of  the  transfer":  Sparks  v. 
Hess,  15  Cal.  186,  193;  Baum  v.  Grigsby,  21  Cal.  172, 
176,  81  Am.  Dec.  153;  Williams  v.  Young,  21  Cal.  227. 

The  vendor's  lien  is  *  ^founded  upon  the  equitable 
presumption  that  where  the  vendor  has  parted  with 
his  title  and  taken  no  security  for  the  payment  of 
the  purchase  money,  the  parties  intended  that  the 
property  should  itself  remain  as  a  pledge  for  the 
payment  of  the  purchase  price  of  the  land":  Gess- 
ner V.  Palmateer,  89  Cal.  89,  92  (24  Pac.  608),  26 
-r^ac.   789. 

3  Title  must  Pass  in  Order  to  Cause  the  Lien  to 
Arise. — So  where  the  owner  of  certain  lands  con- 
veyed it  by  an  absolute  deed  intended  as  a  mort- 
gage>  and  the  grantee  subsequently  reconveyed  it  to 
the  grantor  without  the  debt  being  paid,  no  vendor's 
lien  arises  in  favor  of  the  first  grantee,  as  the  first 
transaction  was  in  effect  a  mortgage  and  no  title  ever 
vested  in  the  grantee:  Wenzel  v.  Schultz,  100  Cal. 
250,  34  Pac.  696. 


810  VENDOR'S    LIEN.  §    524 

lute  liquidated^  indebtedness  secured  solely  by 
the  personal  obligation  of  the  purchaser,  the 
vendor  has  a  lien  against  the  property,  independ- 
ent of  possession,  enforceable  against  every 
person  claiming  under  the  vendee  except  a  bona 
fide  purchaser  or  encumbrancer  for  value,^  as 
security  for  such  indebtedness. 

4  Indebtedness    must    be    Absolute,   Liquidated.— 

"The  grantor ^s  lien,  wherever  recognized,  is  only  per- 
mitted as  a  security  for  the  unpaid  purchase  price, 
and  not  for  any  other  indebtedness  or  liability.  There 
must  be  a  certain,  ascertained,  absolute  debt  owing 
for  the  purchase  price;  the  lien  does  not  exist  in 
behalf  of  any  uncertain,  contingent,  or  unliquidated 
demand'':  Gard  v.  Gard,  108  Cal.  19,  22,  23,  40  Pac. 
1059. 

So  an  agreement  to  pay  as  consideration  for  certain 
land  three-quarters  of  the  rent  thereof,  or  if  occu- 
pied in  person  fifteen  dollars  per  month,  in  either 
case  the  payments  to  extend  through  the  life  of  the 
grantor,  does  not  create  a  vendor's  lien  in  his  behalf: 
Gard  v.  Gard,  108  Cal.  19,  40  Pac.  1059. 

5  Lien  Enforceable  Against  All  Except  Bona  Fide 
Purchasers  for  Value.— Civil  Code,  section  3048  pro- 
vides: "The  liens  defined  in  sections  3046  and  3050 
are  valid  against  everyone  claiming  under  the  debtor, 
except  a  purchaser  or  encumbrancer  in  good  faith  and 
for    value. ' ' 

See  Kuschel  v.  Hunter,  50  Pac.  (Cal.)  397,  398 A; 
Burgess  v.  Fairbanks,  83  Cal.  215,  17  Am.  St.  Eep. 
230,   23  Pac.   292. 

Thus  the  lien  is  enforceable  against  the  personal 
representatives  and  heirs  of  the  vendee:  Cahon  v. 
Eobinson,  6  Cal.  225;  Burt  v.  Wilson,  28  Cal.  632,  638; 
87  Am.  Dec.  142:  Selna  v.  Selna,  125  Cal.  357,  361, 
73  Am.  St.  Eep.  47,  58  Pac.  16. 

Yet  ''the  fee  is  in  the  purchaser,  and  he  may  de- 
feat the  lien  by  a   conveyance  to  a  bona  fide  pur- 


§    525  IMMOVABLE    PROPERTY.  811 

525.     Vendor's  Lien  a  Personal  Privilege. 

.  A  vendor's  lien  is  a  purely  personal  privilege 
of  the  vendor^  available  to  him  alone,  and  the  as- 
signment of  an  obligation  secured  thereby  does 
not  carry  the  security.^ 

chaser  for  value  ^^  Gessner  v.  Palmateer,  89  Cal.  89, 
92  (24  Pac.  608),  26  Pac.  789;  Longmaid  v.  Coulter, 
323   Cal.   208,   212,   213,   55  Pac.   791. 

As  to  who  is  a  bona  fide  purchaser  or  encumbrancer 
for  value  see  section  281,  note  32,  above. 

6  Vendor's   Lien   a   Personal   Privilege. 

The  vendor's  lien  '^is  founded  upon  the  natural 
justice  of  allowing  a  party  to  reach  the  property, 
which  he  has  transferred,  to  satisfy  the  debt  which 
constitutes  the  consideration  of  the  transfer.  It  is, 
therefore,  the  personal  privilege  of  the  vendor.  The 
assignee  of  a  note  given  for  the  purchase  money 
stands  in  a  very  different  position  [from  the  vendor]. 
He  has  not  parted  with  the  property  which  he  seeks 
to  reach,  in  consideration  of  the  note  which  he  has 
received.  He  has  never  held  the  property,  and  has, 
therefore,  no  special  claims  upon  equity  to  subject 
it  to  a  sale  for  his  benefit.  The  particular  equity  of 
the  vendor  in  this  respect  cannot,  in  the  nature  of 
things,  be  asserted  by  another '':  Baum  v.  Grigsby, 
21  Cal.  172,  176,  81  Am.  Dec.  153;  Williams  v.  Young, 
21  Cal.  227. 

The  vendor's  lien  **is  in  its  nature  a  personal 
privilege,  unassignable,  which  the  vendor  can  assert 
only  in  a  suit  brought  for  the  purpose  of  having  it 
decreed  and  enforced'':  Fitzell  v.  Leaky,  72  Cal.  477, 
484,  14  Pac.  198;  Longmaid  v.  Coulter,  123  Cal.  208, 
212,   55  Pac.   791. 

The  vendor's  lien  '^is  personal  to  the  vendor,  and 
does  not  pass  by  a  transfer  of  his  claim  for  the  pur- 
chase money":  Gessner  v.  Palmateer,  89  Cal.  89,  92 
(24  Pac.   608),   26   Pac.   789. 

It  is  a  privilege  purely  personal,  and  cannot  exist 
in  favor  of  any  but  the  vendor It  is  not  as- 


812  vendor's  lien.  §  526 

526.     Lien  Inures  to  Personal  Representatives. 

The  lien  of  a  vendor  is  not  extinguished  by  his 
death,  but  passes  to  his  personal  representatives. ''' 

signable,  even  by  express  contract,  nor  does  it  pass 
to  the  assignee  of  the  vendee's  obligation  for  the 
purchase  money":  Avery  v.  Clark,  87  Cal.  619,  623, 
22   Am.   St.   Eep.   272,   25   Pac.   919. 

A  vendor's  lien  is  not  assignable:  Lewis  v.  Covil- 
laud,  21  Cal.  178,  189;  Boss  v.  Heintzen,  36  Cal.  313, 
321;  Bancroft  v.  Cosby,  74  Cal.  583,  584,  16  Pac.  504. 

In  Bonney  v.  TiHey,  109  Cal.  346,  350,  42  Pac.  439, 
it  was  said  to  be  a  well-settled  rule  that  a  vendor's 
lien  is  not  assignable.  On  page  351,  however,  it 
was  shown  that  the  case  did  not  turn  at  all  upon 
the  question  of  vendor's  lien;  and  in  Tilley  v.  Bonney, 
123  Cal.  118,  123,  5  Pac.  798,  the  court  said  that  in 
the  Bonney  case  above  *^this  court  did  not  distinctly 
decide  that  the  vendor's  lien  was  lost  by  assignment." 

Thus  the  assignee  of  the  right  to  recover  the  money 
for  which  the  land  was  sold  cannot  enforce  the  lien: 
Woolley  V.  Wickerd,  97  Cal.  70,  31  Pac.  733. 

'^The  equitable  lien  held  by  a  vendor  of  .real  prop- 
erty after  absolute  conveyance  thereof  is  not  subject 
to  levy  and  sale  on  execution,  nor  is  it  the  subject 
of  private  transfer.  The  indebtedness  for  purchase 
price  of  real  estate  may  be  levied  upon  and  trans- 
ferred, but  the  equitable  lien  which  attaches  to  the 
land  by  virtue  of  the  indebtedness  in  the  hands  of 
the  vendor  is  extinguished  by  a  transfer  of  the  in- 
debtedness": Eoss  V.  Heintzen,  36  Cal.  313,  321. 

An  agreement,  however,  to  assign  or  transfer  the 
judgment  in  the  foreclosure  action,  when  recovered, 
is  not  a  transfer  of  the  cause  of  action  and  does  not 
waive  the  vendor's  lien:  Woolley  v.  Wickerd,  97 
Cal.  70,  31  Pac.  733. 

7  Selna  v.  Selna,  125  Cal.  357,  361,  73  Am.  St. 
Eep.  47,  58  Pac.  16. 


§    527  IMMOVABLE   PROPEETY.  813 

527.     Lien   Extinguished   by    Intention    not   to 
Look  to  It. 

A  vendor^s  lien  is  extinguished  by  any  act  or 
omission  manifesting  an  intention^  to  abandon 
it  or  not  to  look  to  it  for  security,^  without  the 
necessity  of  a  consideration/^  especially  when 

8  **The  question  is  as  to  the  intention  of  the  ven- 
dor, which  is  as  weH  shown  by  an  informal  act  as 
one  regularly  clone'^:  Hunt  v.  Waterman,  12  CaT. 
301. 

9  Extinguished  by  Intention  to  Abandon.— ^^  The 
silent  lien  of  the  vendor  [is]  extinguished  whenever 
the  vendor  manifests  an  intention  to  abandon  or  not 
to  look  to  if:   Hunt  v.  Waterman,  12  Cal.  301. 

'^This  lien  is  lost  by  any  act  on  the  part  of  the 
vendor  manifesting  an  intention  on  his  part  not  to 
rely  upon  the  lien'':  Avery  v.  Clark,  87  Cal.  619,  623, 
624,  22  Am.  St.  Rep.  272,  25  Pac.  919;  Selna  v.  Selna, 
125  Cal.  357,  361,  73  Am.  St.  Rep.  47,  58  Pac.  16. 

In  Austin  v.  Pulschen,  112  Cal.  528,  532,  533,  44 
Pac.  788,  where  the  vendor  of  certain  land  who  held 
a  vendor's  lien  thereagainst  also  remained  in  posses- 
sion thereof,  and  the  vendee  conveyed  the  land  to  a 
third  person  to  whom  the  original  vendor  for  a  con- 
sideration surrendered  the  possession  and  executed 
certain  conveyances  of  the  land,  the  court  held  that 
such  vendor  cannot  assert  a  vendor's  lien  against  the 
land  when  so  held  by  the  third  person.  The  reason 
of  this  decision  is  not  clear,  because  the  vendor's 
lien  is  independent  of  possession  and  the  conveyance 
of  the  title  is  a  prerequisite  to  its  existence  and  it 
is  valid  against  everyone  except  a  bona  fide  pur- 
chaser or  encumbrancer  for  value,  which  the  third 
person  does  not  appear  to  have  been. 

Acts  may  he  Shotvn  hy  Parol.— ^^  The  acts  and  con- 
duct of  a  vendor  which  indicate  a  waiver  of  the  lien 
may  be  shown  by  parol":  Claiborne  v.  Castle,  98 
Cal.   30,   34,    32   Pac.   807. 

10  No  Consideration  Necessary.— As  a  vendor's  lien 


814  :  vendor's  lien.  §  527 

the  act  or  omission  is  of  such  a  character  sl^ 
would  make  it  inequitable  to  permit  the  vendor 
to  assert  his  lienA* 

528.  Evidence   of  Waiver  must   be   Clear  and 
Convincing. 

The  presumption,  however,  is  that  the  lien  has 
not  been  waived,  and  the  evidence  necessary  to 
establish  a  waiver  must  be  clear  and  convincing. ^^ 

529.  Taking  Additional   Security  Prima  Facie 
Evidence  of  V/aiver. 

The  acceptance  of  a  distinct  and  separate  se- 
curity for  the  purchase  money,  whether  in  the 
shape  of  an  encumbrance  against  the  same  or  other 
property  or  of  the  personal  obligation  of  a  third 
party,  prima  facie  establishes  a  waiver  of  the 
lien.^^     The  vendor    may,  however,    by  express 

*'is  a  simple  equity  or  privilege,  purely  personal, 
something  not  dependent  for  life  upon  any  agreement 
of  the  parties,  a  consideration  is  unnecessary  to  sup> 
port  a  waiver  of  if:  Claiborne  v.  Castle,  98  Cal.  30, 
34,  32  Pac.  807. 

11  See  Selna  v.  Selna,  125  Cal.  357,  361,  73  Am. 
St.   Rep.  47,  58  Pac.   16. 

12  **The  burden  of  proof  is  upon  the  poirchaser  to 
establish  that  in  the  particular  case  the  lien  has 
been  intentionally  displaced  or  waived.  If,  under  all 
the  circumstances,  it  remains  in  doubt,  the  lien  at- 
taches. And  so  long  as  the  debt  exists  courts  will 
not  presume  that  the  lien  has  been  waived  except 
upon  clear  and  convincing  testimony'':  Selna  v.  Selna, 
125  Cal.  357,  362,  73  Am.  St.  Eep.  47,  58  Pac.  16. 

13  Taking  Security  Prima  Facie  Waiver.— Whenever 


§    529  IMMOVABLE     PROPERTY.  815 

the  vendor  takes  other  and  independent  security  upon 
the  same  land,  or  a  portion  of  the  same  land,  or  on 
other  land,  he  manifests  an  intention  to  abandon 
his  vendor's  lien:   Hunt  v.  Waterman,  12  Cal.  301. 

''Any  conduct  which  shows  an  intention  to  give  up 
the  lien  will  be  a  bar  to  its  assertion,  and  the  ac- 
ceptance of  collateral  security  is  sufficient  to  raise 
the  presumption  of  such  an  intention'':  Griffin  v. 
Blanchar,  17  Cal.  70. 

''The  acceptance  of  a  distinct  and  separate  se- 
curity for  the  purchase  money  is  prima  facie  a  waiver 
of  the  vendor's  lien.  But  it  is  only  prima  facie  evi- 
dence of  it,  and  may  be  rebutted":  Per  Sharpstein, 
J.,  in  Eemington  v.  Higgins,  54  Cal.  620,  625. 

Instances  of  Waive7\— Where  the  vendor  of  land, 
upon  conveying  it  to  trustees  in  trust  for  a  third 
person,  took  the  notes  of  the  trustees  in  payment 
therefor,  the  acceptance  of  the  collateral  security 
waives  the  vendor's  lien,  as  the  cestui  que  trust  was 
the   primary  debtor:    Griffin  v.  Blanchar,   17   Cal.   70. 

A  vendor 's  lien  is  waived  by  taking  a  mortgage 
on  the  land,  affected  by  the  vendor's  lien,  as  the 
purchase  price  does  not  thereafter  remain  unsecured 
otherwise  than  by  the  personal  obligation  of  the 
buyer:  Avery  v.  Clark,  87  Cal.  619,  626,  22  Am.  St. 
Eep.  272,  25  Pac.  919;  Lee  v.  Murphy,  119  Cal.  364, 
372,  51  Pac.  549,  51  Pac.  955;  Wells  v.  Hunter,  56 
Cal.   342. 

A  vendor  whom  it  is  agreed  is  to  remain  in  pos- 
session of  the  sold  property  until  paid  has  other  se- 
curity and  thus  is  not  entitled  to  a  vendor's  lien; 
Austin  V.  Pulschen,  112  Cal.  528,  533,  44  Pac.  788. 

Circumstances  not  Amounting  to  Waiver.— '^  The  lien 
....  is  not  waived,  in  the  absence  of  express  agree- 
ment to  that  effect,  by  the  fact  that  the  vendor  takes 
the  note  of  other  personal  security  of  the  vendor  for 
the  money.  Such  personal  security  is  considered  as 
only  intended  to  meet  and  overcome  the  acknowledg- 
ment of  the  receipt  of  the  money  in  the  deed":  Baum 
V.  Grigsby,  21  Cal.  172,  175,  81  Am.  Dec.  153. 


816  vendor's  lien.  §  529 

agreement  for  that  purpose,  retain  the  lien  after 
taking  further  security.^* 

A  recital  of  payment  in  a  deed  is  not  conclusive 
so  that  the  lien  is  not  thereby  waived,  nor  by  the 
receipt  of  the  vendee's  notes:  Cahoon  v.  Eobinson, 
6  Cal.  225. 

Where  a  vendor  makes  out  and  files  a  claim  against 
the  estate  of  a  deceased  vendee,  in  which  no  refer- 
ence was  made  to  the  vendor's  lien,  and  the  claim 
was  allowed,  the  lien  was  not  waived  (though  it 
would„  have  been  better  practice  to  state  that  the 
claim  was  so  secured) :  Selna  v.  Selna,  125  Oal.  357, 
361,  362,  73  Am.  St.  Eep.  47,  58  Pac.  16. 

Where  a  vendor  sold  land  to  a  vendee  to  whom  he 
conveyed  the  title,  the  conveyance  being  made  under 
an  agreement  that  the  vendor  was  to  receive  a  pur- 
chase money  mortgage  upon  the  sold  property,  but 
where  through  the  fraud  of  the  vendor's  agent  and 
the  negligence  of  the  vendee  the  vendor  failed  to 
receive  the  mortgage  he  contracted  for,  the  vendor's 
lien  may  be  asserted  for  the  balance  of  the  purchase 
price:  Eavmond  v.  Glover  (Cal.),  37  Pac.  772,  775A, 
37  Pac.  918. 

14  Lien  may  be  Retained  by  Express  Agreement.— 
'^  Where  an  independent  security  is  taken— as  a  mort- 
gage on  the  land,  or  upon  other  property,  or  the  per- 
sonal responsibility  of  a  third  person— the  lien  is  held 
to  be  waived,  unless  there  is  at  the  time  an  express 
agreement  for  its  retention":  Baum  v.  Grigsby,  21 
Cal.  172,  175,  81  Am.  Dec.  153;  Camden  v.  Vail,  23 
Cal.   633,   636. 

''This  lien  is  lost  by  any  act  on  the  part  of  the 
vendor  manifesting  an  intention  upon  his  part  not  to 
rely  upon  the  lien,  and  ....  although  it  is  compe- 
tent for  him  to  take  security  for  the  payment  of  the 
purchase  price  of  the  land,  and  by  an  express  agree- 
ment not  lose  the  right  to  resort  to  this  lien,  yet  hi& 
taking  such  security  is  prima  facie  a  waiver  of  the 
lien,  and,  in  the  absence  of  some  agreement  to  the 
contrary,    the   vendee   will   hold   the   land   discharged 


f    530  IMMOVABLE    PROPERTY.  817 

530.     Sale    of    Personal    Obligation    of   Vendee 
Waives  Lien  Pro  Tanto. 

An  absolute  sale  by  a  vendor  of  a  personal  ob- 
ligation of  his  vendee  given  by  him  in  part  or 
full  payment  of  the  purchase  price  of  any  prop- 
erty suspends  the  vendor^s  lien  to  the  extent  of 
the  sum  for  which  such  obligation  has  been  given, 
but  if  the  vendor  is  compelled  to  take  up  the  ob- 
ligation upon  its  nonpayment  at  maturity,  the 
lien  revives  in  his  favor.^^ 

from  such  lien'':  Avery  v.  Clark,  87  Cal.  619,  623,  624, 
22  Am.  St.  Rep.  272,  25  Pac.  919. 

The  insertion  of  a  clause  in  a  mortgage  that  it 
is  ^^  given  in  part  payment  of  the  purchase  price  of 
the  within  described  property"  does  not  constitute 
or  imply  any  agreement  or  intention  for  a  reserva- 
tion of  a  vendor's  lien:  Avery  v.  Clark,  87  Cal.  619, 
626,  22  Am.  St.  Rep.  272,  25  Pac.  919. 

15  Civil  Code,  section  3047,  provides:  "Where  a 
buyer  of  real  property  gives  'to  the  seller  a  written 
contract  for  payment  of  all  or  part  of  the  price,  an 
absolute  transfer  of  such  contract  by  the  seller  waives 
his  lien  to  the  extent  of  the  sum  payable  under  the 
contract;  but  a  transfer  of  such  contract  in  trust  to 
pay  debts,  and  return  the  surplus,  is  not  a  waiver  of 
the  lien." 

^^We  think  that  it  is  not  doing  violence  to  the  lan- 
guage [of  the  section]  to  hold  that  a  transfer  of  the 
note  [given  by  a  vendee]  by  an  indorsement  which 
makes  the  vendor  liable  for  the  debt  is  not  an  absolute 
transfer  within  the  meaning  of  the  section,  and  that 
in  such  case  the  lien  is  merely  suspended,  and  revives 
when  the  note  is  taken  up  by  the  vendor"  (p.  586). 
"Every  consideration  which  induced  courts  of  equity 
to  create  the  lien  in  the  first  instance  operates  to  its 
application  to  such  a  case.  For  if  the  note  was  trans- 
Liens— 52 


818  vendor's  lien.  §  531 

531.     Vendor's  Lien  an  Additional  Security. 

A  vendor^s  lien  is  an  additional  security,  which 
may  be  resorted  to  either  independently  of,  ou 
concurrently  with,  remedies  otherwise  available, 
but  which  is  probably  waived  by  taking  a  gen- 
eral judgment  against  the  vendee  for  the  secured 
obligation.^^ 

ferred  in  satisfaction  of  a  debt,  the  debt  would  re- 
vive upon  the  nonpayment,  and  the  vendor  would  be 
in  precisely  the  same  situation  that  he  was  in  before 
the  transfer.  And  if  he  is  compelled  to  pay  the  note 
to  some  subsequent  holder,  he  has  still  stronger 
grounds  for  relief^'  (p.  585):  Bancroft  v.  Cosby,  74 
Cal.  583,  16  Pac.  504. 

So  where  a  vendor  received  the  vendee's  promissory 
note  as  security  for  the  balance  of  the  purchase  money, 
and  indorsed  it  for  value  to  a  third  party,  but  the  note 
not  being  paid  came  back  to  the  vendor,  the  vendor's 
lien  thereupon  revives:  Bancroft  v.  Cosby,  74  Cal.  583, 
16  Pac.  504. 

16  There  is  a  conflict  of  opinion  as  to  whether  a 
vendor's  lien  is  waived  by  taking  a  common-law 
judgment  against  the  vendee. 

Lien  is  Waived.— A  vendor  ^^has  waived  his  lien  by 
taking  a  general  judgment,  which,  if  docketed,  was  a 
lien  on  all  the  real  property  of  the  plaintiff  [vendee]  ": 
Fitzell  V.  Leaky,  72  Cal.  477,  484,  14  Pac.  198;  Long- 
maid  T.  Coulte/,  123  Cal.  208,  212,  55  Pac.  791. 

Lien  not  Waived. — *'If  the  vendor  recover  a  judg- 
ment at  law  and  has  not  exhausted  his  remedy  by  exe- 
cution, he  is  not  precluded  thereby  from  proceeding  to 
enforce  his  equitable  lien  for  the  purchase  money": 
Selna  v.  Selna,  125  Cal.  357,  363,  73  Am.  St.  Jiep.  47, 
58  Pac.  16. 

This  subject  is  discussed  at  length  in  an  early  case, 
which  throws  the  weight  of  its  argument  in  favor  of 
the  proposition  that  the  lien  is  waived  by  taking  a 


I    531  IMMOVABLE   PROPEBTT.  819 

general  judgment,  although  the  court  for  certain  rea- 
sons did  not  apply  the  rule  in  that  case.  Where  a 
vendor  first  pursued  a  personal  action  against  his  ven- 
dee to  judgment,  and  obtained  an  execution  thereon 
which  was  returned  unsatisfied  because  of  the  insol- 
vency of  the  vendee,  and  afterward  brought  an  action 
to  foreclose  his  vendor ^s  lien,  the  court  said:  ^' Under 
a  system  where  law  and  equity  were  administered  in 
different  suits,  and  in  different  tribunals,  it  has  uni- 
formly been  held,  that  a  mortgagee  might  first  sue  at 
law  upon  the  note,  and  afterward  proceed  in  equity  to 
foreclose  the  mortgage.  The  remedies  were  different, 
anjd  while  the  party  could  not  proceed  upon  both  at 
the  same  time,  he  might  make  his  election,  and  first 
proceed  at  law,  and  afterward  in  equity.  And  tne 
privileges  of  two  remedies  was  as  open  to  a  vendor  as 
to  a  mortgagee.  But  under  our  system  of  practice 
where  law  and  equity  are  both  administered  by  me 
same  tribunal,  and  may  be  in  the  same  suit,  the  reason 
of  the  former  rule  does  not  exist,  and  the  rule  itself 
should  cease.  Why  should  the  purchaser  be  harassed 
by  the  costs  of  two  separate  suits  to  obtain  the  end 
that  might  as  well  be  reached  by  one.  The  whole 
spirit  of  our  system,  and  its  leading  intent,  is  to  avoid 
a  multiplicity  of  suits.     This  is  the  best  feature  in  the 

system In  this  case,  the  plaintiff  should  have 

stated  all  the  facts,  in  the  suit  upon  the  notes,  and 
asked  for  the  proper  relief,  and  the  court  could  have 
given  him  such  a  decree  as  he  was  entitled  to  have. 
But  as  this  is  only  a  question  of  practice,  and  one  that 
was  not  settled  at  the  time  the  first  suit  was  com- 
menced, and  the  only  injury  that  the  defendant  can 
suffer  will  arise  from  the  costs  of  the  second  suit,  we 
will  not  turn  the  plaintiff  out  of  court  for  that  rea- 
son^ ^:  Walker  v.  Sedgwick,  8  Cal.  398,  403,  404. 

A  Foreclosure  Action  may  he  Resorted  to  in  the 
First  Instance, 

A  vendor's  lien  ''can  be  enforced  without  previous 
recourse  to  proceedings  at  law.  We  can  see  no  ob- 
jection to  the  suit  in  equity  in  the  first  instance,  and 
many  reasons  for  it.  It  will  furnish  a  more  simple 
and  efficacious  remedy,  and,  in  many    cases,  the  only 


820  vendor's  lien.  §  532 

532.     Enforcement  of  Vendor's  Lien. ^'' 

This  lien  is  enforceable  by  a  foreclosure  ac- 
tion.^^     Where    the    secured    obligation   is    evi- 

adequate  protection  against  the  absolute  loss  of  the 
right  to  enforce  the  lien.  Pending  the  action  at  law, 
the  property  might  be  transferred  to  a  bona  fide  pur- 
chaser without  notice,  and  thus  be  placed  beyond  the 
reach  of  the  vendor.  By  the  suit  in  equity,  and  the 
filing  of  notice  of  lis  pendens,  information  of  his  claim 
may  be  imparted  to  purchasers,  and  protection  against 
transfers  pendente  lite  thus  secured.  The  court,  after 
determining  the  amount  of  the  lien,  can  by  its  decree 
either  direct  a  sale  of  the  property  in  the  first  instance 
for  its  satisfaction,  and  execution  for  any  deficiency, 
or  award  an  execution  in  the  first  place,  and  a  sale 
only  in  the  event  of  its  return  unsatisfied,  as  the  jus- 
tice of  the  case  and  the  equities  developed  in  its  prog- 
ress may  require^':  Sparks  v.  Hess,  15  Cal.  186,  i93. 

''There  is  nothing  in  the  point  that  the  remedies 
at  law  must  first  be  exhausted  before  a  bill  in  equity 
to  enforce  a  vendor ^s  lien  can  be  resorted  to'':  Bur- 
gess V.  Fairbanks,  83  Cal.  215,  216,  17  Am.  St.  Eep. 
230,  23  Pac.  292. 

17  Where  a  personal  action  is  brought  upon  the 
secured  obligation,  an  attachment  will  issue,  as 
the  vendor's  lien  is  not  a  lien  within  the  meaning 
of  Practice  Act,  sec.  120,  Code  of  Civil  Procedure,  sec- 
tion 537,  which  disallows  an  attachment  to  issue  upon 
a  demand  secured  by  a  lien.  At  any  rate  this  is  true 
when  the  liened  property  has  been  transferred,  so 
that  it  is  problematical  whether  the  lien  continues: 
Porter  v.  Brook,  35  Cal.  199,'  per  Crockett  and  Sprague, 
J  J.,  and  Sawyer,  C.  J.;  Sanderson  and  Ehodes,  JJ., 
dissenting. 

18  ^^The  title  which  comes  from  the  enforce- 
ment of  the  [vendor's]  lien  can  only  inure  after  pro- 
ceedings to  enforce  the  lien;  and  there  must  be  a  pro- 
ceeding in  the  nature  of  a  chancery  suit  to  settle  the 
sum  due,  and  have  the  lien  declared  and  a  sale  de- 
creed": Williams  v.  Young,  17  Cal.  403. 


§    532  IMMOVABLE    PROPERTY.  821 

clenced  by  writing,  such  action  must  be  com- 
menced within  four  years  after  the  maturity  of 
the  obligation  ;^^  otherwise  within  two  years 
thereafter.^^ 

19  Where  the  purchase  price  of  land  is  payable 
on  demand,  the  commencement  of  an  action  to  fore- 
close a  vendor's  lien  therefor  is  a  sufficient  demand: 
California  Sav.  Bank  of  San  Diego  v.  Parrish,  116 
Cal.  254,  259,  48  Pac.  73;  Gallagher  v.  Mars,  50  Cal. 
23. 

20  Code  Civ.  Proc,  sec.  339,  subd.  1. 


CHAPTEE   2. 

LIEN    OF    PURCHASEE    OF    IMMOVABLE 
PEOPERTY. 

533.  Who  lienor.     . 

534.  Prerequisites    to    enforcement    of    lien. 

533.     Who  Lienor.^ 

A  purchaser  of  immoyable  property  under  an 
executory  contract  of  purchase,  not  in  default  in 
the  performance  thereof,  has  a  special  lien,^  in- 
dependent of  possession,  valid  against  every  per- 
son claiming  under  the  vendor  except  a  bona  fide 
purchaser  or  encumbrancer  for  value,^  for  such 
payments  as  he  is  entitled  to  recover  back  in  case 
of  a  failure  of  consideration. 

1  Civil  Code,  section  3050,  provides:  '^One  who 
pays  to  the  owner  any  part  of  the  price  of  real  prop- 
erty, under  an  agreement  for  the  sale  thereof,  has  a 
special  lien  upon  the  property,  independent  of  posses- 
sion, for  such  part  of  the  amount  paid  as  he  may  be 
entitled  to  recover  back,  in  case  of  a  failure  of  con- 
sideration.''    As  enacted  1872. 

This  section  ^^is  intended  to  secure  a  party  from  in- 
jury through  the  wrong  or  inability  to  perform  of  the 
other  party,     it  the  vendee  did  to  himself  the  injury, 

he   is   not    injured   in   the    eye    of   the    law In 

equity  a  vendee  had  a  lien  when  in  possession  under 
a   contract,   if   the   consideration   failed.     It   was   the 

(822) 


§  534  pukchaser's    lien.  823 

534.     Prerequisite  to  Enforcement  of  Lien. 

The  purchaser  must,  as  a  prerequisite  to  the 

enforcement  of  his  lien,  surrender  the  possession 

of  the  property  if  already  obtained  by  him.^ 

counterpart  of  the  lien  given  the  vendor,  and  the  rule 
in  equity  is  that  no  such  lien  exists  in  favor  of  one 
who  is  in  default.  One  who  has  himself  abandoned 
the  contract,  or  has  refused  to  perform  it  according 
to  its  terms,  is  not  afforded  a  lien  to  secure  him  from 
loss  because  of  his  own  breach  of  the  contract'':  Mer- 
rill V.  Merrill,  103  Cal.  287,  293,  294,  35  Pac.  768,  37 
i^sic.  392. 

For  the  amount  paid  on  account  of  the  sale  of  im- 
movable property  a  vendee  **has  a  lien  upon  the  prop- 
erty, in  case  of  failure  on  the  part  of  the  vendor  to 
make  good  his  part  of  the  contract,  unless  the  vendee 
is  himself  first  in  default'':  Benson  v.  Shotwell,  87 
Cal.  49,  54,  55,  25  Pac.  249. 

So  where  a  vendor  repudiates  a  sale  upon  default 
by  the  vendee  in  the  payment  of  the  purchase  money, 
the  vendee  has  no  lien  for  the  amount  already  paid: 
Merrill  v.  Merrill,  103  Cal.  287,  35  Pac.  768,  37  Pac. 
392. 

2  Civil  Code,  section  3048:  *'The  liens  defined  in 
sections  3046  and  3050  are  valid  against  everyone 
claiming  under  the  debtor,  except  a  purchaser  or  en- 
cumbrancer in  good  faith  and  for  value." 

On  what  constitutes  bona  fide  purchaser,  see  section 
281,  note  32,  above. 

3  Where  a  purchaser  in  possession  under  an 
agreement  for  the  purchase  of  lands  relies  upon  the 
agreement  as  being  in  force,  and  as  entitling  him  to 
remain  in  possession  of  the  land,  and  pleads  a  full 
performance  on  his  part  and  the  default  of  the  vendor, 
he  is  not  entitled  to  recover  the  amount  paid  by  him, 
so  long  as  he  treats  the   contract   of  purchase   as  in 

■  force.  He  cannot  retain  the  possession  and  at  the 
same  time  recover  the  amount  paid  under  the  contract. 
And  until  he  is  entitled  to  recover  back  such  pay- 
ments he  cannot  enforce  his  purchaser's  lien:  Haile  v. 
Smith,  113  Cal.  656,  664,  45  Bac.  872. 


CHAPTER   3. 

LIENS  FOE  IMPEOVEMENTS  TO  IMMOV- 
ABLE PEOPEETY. 

(MECHANICS'  LIENS.) 

"The  principle  upon  which  liens  are  allowed  in 
favor  of  mechanics  and  materialmen  is,  that  their  la- 
bor and  materials  have  given  value  to  the  buildings 
upon  which  they  have  been  expended,  and  that  it  is 
inequitable  that  the  owner  of  the  land,  who  has  con- 
tracted with  them  for  such  improvement,  or  has  stood 
by  and  seen  the  improvement  in  progress  without 
making  objection,  should  have  the  benefit  of  their  ex- 
penditures without  making  compensation  therefor'': 
Avery  v.  Clark,  87  Cal.  619,  628,  22  Am.  St.  Eep.  272, 
25  Pac.  919. 

The  statute  contemplates  throughout  that  the  privi- 
leges it  allows  to  those  who  furnish  materials  or  labor 
for  the  execution  of  improvements  shall  be  exercised 
with  promptitude,  and  so  as  not  to  hamper  either  con- 
tracting owner,  original  contractor,  or  those  who  deal 
with  them  in  the  free  disposition  of  the  property 
rights  affected  by  or  arising  from  the  contract,  beyond 
such  time  as  may  be  convenient  for  the  assertion  of 
those  privileges:  First  Nat.  Bank  v.  Perris  Irr.  Dist., 
107  Cal.  55,  62,  63,  40  Pac.  45. 


(824) 


§    535  PRELIMINARY    PROVISIONS.  825 


AETICLE  1. 

PEELIMINAEY  PROVISIONS. 

535.  Contracting   owner  defined. 

536.  Improvement  defined. 

537.  Classification  of  persons  engaged  upon  improve- 

ment. 

538.  Original    contra-ctor    defined. 

539.  Subcontractor    defined. 

540.  Materialman   defined. 

541.  Materials    about    to    be    used    in    improvement 

exempt  from  execution. 

535.  Contracting  Owner  Defined. 

A  person  who  causes  personal  services  or  ma- 
terials to  be  bestowed  upon  an  improvement  in 
which  he  owns  any  interest  is  a  contracting 
owner. 

536.  Improvement  Defined. 

Any  specified^  fixed  object  upon  which  personal 
services  or  materials  are  bestowed,  and  against 
which  a  lien  for  such  services  or  materials  may 
be  claimed,  as  a  structure,  a  mining  claim,  or  a 
lot  in  an  incorporated  city  or  town,  is  called  an 
improvement  for  the  purposes  of  this  chapter.^ 

1  In  sections  1183,  1184,  1185,  and  1187,  of  the 
Code  of  Civil  Procedure,  *'and  others  might  be  men- 
tioned, the  term  'improvement'  is  evidently  used  as 


826  mechanics'  liens.  §  536 

(The  making  of  any  valuable  alteration  or  ad- 
dition to  specific  immovable  property,  or  the 
valuable  alteration  or  addition  which  is  made,  is 
also  sometimes  referred  to  as  an  improvement.) 

537.     Classification    of    Persons    Engaged    upon 
Improvement.^ 

All  persons  bestowing  personal  services  or  ma- 
terials upon  any  improvement  are  divided  into 
four  classes: 

(1)  laborers,  including  all  persons  of  every  class 
furnishing  their  own  personal  services  exclu- 
sively, 

equivalent  to  the  object  upon  which  the  labor  has 
been  performed,  and  it  would  be  an  unwarranted  ap- 
plication of  the  term  to  construe  it  as  equivalent  to 
the  labor  itself,  or  to  that  particular  class  of  labor  for 
which  the  claimant  was  employed '':  Davis  v.  Mac- 
Donough,  109  Cal.  547,  551,  42  Pac.  450. 

^*In  Davis  v.  MacDonough  ....  the  improvement 
upon  which  a  lien  is  authorized  by  section  1183  is  held 
to  refer  to  the  objects  enumerated  in  that  section  upon 
which  the  labor  was  performed,  or  for  which  the  ma- 
terials were  furnished'':  Warren  v.  Hopkins,  110  Cal. 
506,  510,  42  Pac.  986. 

2  See  Code  of  Civil  Procedure,  section  1194:  ''In 
every  case  in  which  different  liens  are  asserted  against 
any  property,  the  court  in  the  judgment  must  declare 
the  rank  of  each  lien,  or  class  of  liens,  which  shall 
be  in  the  following  order,  viz:  (1)  all  persons  per- 
forming manual  labor  in,  on,  or  about  the  same;  (2) 
persons  furnishing  materials;  (3)  subcontractors;  (4) 
original  contractors. ' ' 

"The  law  recognizes  a  clear  distinction  between 
these  classes  of  persons'':  Hinckley  v.  Field's  Bis* 
cuit  etc.  Co.,  91  Cal.  136,  139,  27  Pac.  594. 


§    537  PRELIMINARY     PROVISIONS.  827 

(2)  materialmen, 

(3)  subcontractors, 

(4)  original  contractors.^ 

538.     Original  Contractor  Defined. 

Any  person  who,  pursuant  to  the  terms  of  a 
contract  with  a  contracting  owner,  furnishes  to 
such  owner,  in  connection  with  the  execution  of 
his  contract  and  directly'*  upon  any  improve- 
ment, the  services  of  other  persons  under  his 
exclusive  control,^  with  or  without  materials,  is 

3  When  the  labor  is  employed  under  a  direct 
employment  by  the  contracting  owner,  or  where  the 
original  contract  is  void,  there  is  no  original  con- 
tractor: Davis  V.  MacDonough,  109  Cal.  547,  42  Pac. 
450. 

4  Directly.— In  Sparks  v.  Butte  Co.  Gravel  Min.  Co., 
bo  Cal.  389,  392,  it  was  said  that  unless  the  employees 
of  a  person  furnishing  materials  would  themselves 
have  liens,  such  person  is  not  an  original  contractor, 
but  a  materialman.  And  McCormick  v.  Los  Angeles 
Water  Co.,  40  Cal.  185,  holds  that  no  lien  is  given  for 
indirect  and  remote  services,  as  for  cooking  for  men 
engaged  in  excavating  a  reservoir. 

5  Must  Employ  Other  Persons  under  His  Control.— 
A  person  furnishing  and  hanging  paper  on  the  interior 
walls  of  a  building  is  an  original  contractor,  for  as 
such  person  and  his  employees  are  both  entitled  to 
liens  in  order  to  distinguish  their  status  the  former 
must  be  designated  as  original  contractors:  La  Grill 
V.  Mallard,  90  Cal.  373,  27  Pac.  294  (to  the  same  pur- 
port, see  Sparks  v.  Butte  Co.  Gravel  Min.  Co.,  55  Cal. 
389);  and  in  Bennet  v.  Davis,  113  Cal.  337,  54  Am. 
St.  Eep.  354,  45  Pac.  684,  the  further  reasons  are  given 
that  in  the  La  Grill  case  (1)  the  materials  were  trifling 
in  value  compared  to  the  labor,  and  (2)  the  contract- 


828  ■  mechanics'  liens.  §  538 

an  original  contractor,  provided,  however, 
that  if  the  labor  bestowed  in  affixing  materials 
into  an  improvement  is  trifling  in  comparison 
with  the  value  of  the  materials,  the  contracting 
owner's  contract  is  one  of  sale,  and  the  seller  is 
a  materialman.^ 

539.     Subcontractor  Defined. 

Any  person  who,  pursuant  to  the  terms  of  a 
contract  with  an  original  or  other  sub-contractor, 
furnishes  work,  with  or  without  materials,  as  set 
forth  in  the  preceding  section,  is  a  subcontrac- 
tor. 

ing  owner  was  to  pay  the  original  contractor  the  value 
of  the  labor. 

A  person  contracting  to  paint  a  hotel  and  to  fur- 
nish the  necessary  materials  therefor  is  an  original 
contractor:  Baird  v.  Peall,  92  Cal.  235,  28  Pac.  28o. 

A  person  to  be  paid  for  his  individual  labor  and 
also  to  be  paid  a  further  fixed  sum  for  the  labor  of 
other  persons  which  he  might  furnish  is  an  original 
contractor:  Malone  v.  Big  Flat  Gravel  Min.  Co.,  76 
Cal.  578,  585,  18  Pac.  772. 

6  Where  Labor  Trifling  in  Comparison  with  Value 
of  Materials,  it  is  Materialman's  Contract.— A  con- 
tract to  furnish  a  new  plant  of  machinery— as  for 
steam-power:  Hinckley  v.  Field's  Biscuit  etc.  Co.,  91 
Cal.  136,  27  Pac.  584;  or  as  an  electrical  plant  com- 
plete: Eoebling  Sons  Co.  v.  Humboldt  etc.  Co.,  112  Cal. 
288,  44  Pac.  568;  or  as  for  ice-works:  Bryson  v.  Mc- 
Cone,  121  Cal.  153,  155-157,  55  Pac.  637— such  plant 
to  be  placed  in  a  building  and  upon  foundations  fur- 
nished by  the  contracting  owner,  is  a  materialman's 
contract.  In  such  case  the  work  done  on  the  premises 
of  the  contracting  owner  is  only  the  completion  of  de- 
livery. 


§    540  PRELIMINARY     PROVISIONS.  829 

540.  Materialman  Defined. 

Any  person  who,  under  contract  therefor,  fur- 
nishes materials  only,  to  be  used,  and  which  are 
used,  in  the  execution  of  a  particular  improve- 
ment, is  a  materialman.'' 

541.  Materials  About  to  be  Used  in  Improve- 
ment Exempt  from  Execution.^ 

All  materials  [not  exceeding  one  thousand  dol- 

A  contract  to  furnish  and  set  up  tile  mantels  is  a 
materialman's  contract  because  the  labor  involved  is 
comparatively  trifling  in  value  compared  to  the  mate- 
rials: Bennett  v.  Davis,  113  Cal.  337,  54  Am.  St.  Eep. 
354,  45  Pac.  684. 

7  A  materialman  who  furnishes  materials  di- 
rectly to  the  contracting  owner  is  not  an  original  con- 
tractor in  the  sense  of  the  statute  for  the  reason  tnat 
in  such  case  there  could  be  no  subcontractor  nor  other 
intervening  lienor:  Sparks  v.  Butte  Co.  Gravel  Min. 
Co.,  55  Cal.  389,  392;  Schwart  v.  Knight,  74  Cal.  432, 
16  Pac.  235;  Santa  Monica  etc.  Co.  v.  Hege,  119  Cal. 
376,  378,  51  Pac.  555. 

See  section  538,  note  5. 

S  Code  of  Civil  Procedure,  section  1196:  '^When- 
ever materials  shall  have  been  furnished  for  use  in 
the  construction,  alteration,  or  repair  of  any  building 
or  other  improvement,  such  materials  shall  not  be  sub- 
ject to  attachment,  execution,  or  other  legal  process, 
to  enforce  any  debt  due  by  the  purcnaser  of  such  ma- 
terials, except  a  debt  due  for  the  purchase  money,  so 
long  as  in  good  faith  the  same  are  about  to  be  applied 
to  the  construction,  alteration,  or  repair  of  such  build- 
ing, mining  claim,  or  other  improvement. ' '  New  sec- 
tion, in  effect  May  29,  1874. 

A  similar  provision  is  found  in  Code  of  Civil  Pro- 
cedure, section  690,  subdivision  16. 

Historical.— Stats.    1867-68,    448,    sec.    12,    in    effect. 


830  mechanics'  liens.  §  541 

lars  in  valine]  ^  furnished  to  be  used,  and  which 
are  about  in  good  faith  to  be  used,  in  the  con- 
struction, alteration,  or  repair  of  any  improve- 
ment, are  exempt  from  attachment,  execution, 
or  other  legal  process  to  enforce  any  debt  ex- 
cept a  debt  for  the  purchase  money  due  by  the 
purchaser  thereof. 

March  30,  1868,  superseded  by  code  of  January  1, 
1873,  was  substantially  the  same.  Stats.  1862,  c.  297, 
sec.  16,  in  effect  June  25,  1862,  repealed  March  30, 
1868,  gave  the  exemption  solely  ^*  whenever  any  ma- 
terials shall  have  been  furnished  and  delivered  by 
any  materialman,''  but  in  such  case  omitted  the  limi- 
tation contained  in  the  proviso  *  *  except  a  debt  for  the 
purchase  money  thereof.''  Previous  enactments  con- 
tained no  similar  provision. 

9  Not  Exceeding  One  Thousand  Dollars.— No  such 
limitation  is  found  in  Code  of  Civil  Procedure,  section 
1196,  but  was  inserted  in  the  similar  provision,  Code 
of  Civil  Procedure,  section  690,  subdivision  16,  by  an 
amendment,  in  effect  February  23,  1901. 


§    542  THE    IMPROVEMENT    CONTRACT.  831 


AETICLE  2. 

THE  IMPROVEMENT  CONTRACT. 

SuMivision    1.    Contracts    Subject    to    Provisions    of 
Article. 

542.  Original  contract   defined. 

543.  Certain    original    contracts    exempt     from     the 

usual  requirements. 

Subdivision  2,    Requisites  of  Contract, 

544.  Requirements  as  to  form  and  contents  of  thou- 

sand dollar  original  contracts. 

Subdivision    3.    Record    of    Contract, 

545.  Original  thousand  dollar  contract,  or  memoran- 

dum thereof,  must  be  recorded. 

546.  Requirements    of    sufficient    memorandum. 

Subdivision  4'    Void  Contracts. 

547.  Contract   when   nonconformable     to    statute     in 

certain  cases  void. 

548.  Nature  of  recovery  when  contract  void. 

549.  When  contract  void,  original  contractor  is  con- 

tracting owner's  agent. 

SuMivision  1.     Contracts  Subject  to  Provisions  of 
Article. 

542.     Original  Contract  Defined. 

Any  contract  between  contracting-owners  and 
original  contractors  for  the  improvement  of  im- 


832  mechanics'  liens.  §  542 

movable  property  is  an  original  contract.  In 
the  execution  of  a  single  improvement,  there  may 
be  a  number  of  original  contracts  for  the  dif- 
ferent departments  of  the  work.^ 

543.     Certain   Original   Contracts   Exempt   from 
the  Usual  Requirements. 

]N"o  original  contract  for  the  improvement  of 
any  lot  in  any  incorporated  city  or  town  or  of  an 
adjoining  sidewalk  or  street,  or  of  any  vault,  cel- 
lar, or  room  under  such  sidewalk,  is  subject  to 
the  provisions  of  the  four  next  succeeding  sec- 
tions.^ 

1  **Tlie  chapter  in  the  code  relating  to  mechan- 
ic's liens  does  not  contemplate  that  there  can  be  no 
original  contractor  except  lor  the  entire  work  of  con- 
structing the  building.  For  the  purpose  of  construct- 
ing the  building,  the  owner  may  enter  into  different 
original  contracts  for  the  different  departments  of 
work  involved  therein '^  Pacific  Mutual  Life  Ins.  Co. 
V.  Fisher,  106  Cal.  224,  232,  39  Pac.  758. 

''It  is  a  common  practice  for  a  party  desirous  of 
erecting  a  building  to  let  different  contracts  to  vari- 
ous parties  for  the  building  of  certain  portions  of  it; 
these  parties  would  all  be  original  contractors '^ :  La- 
Grill  V.  MaHard,  90  Cal.  373,  375,  376,  27  Pac.  294. 

2  A  contract  for  the  construction  of  a  bulkhead 
and  sidewalk  in  a  city,  the  contract  price  exceeding 
one  thousand  dollars,  is  not  required  to  be  in  writing. 
Code  of  Civil  Procedure,  section  1183,  ''does  not,  by 
its  terms,  expressly  relate  to  contracts  for  building 
sidewalks  in  cities,  and  we  are  unwilling  to  construe 
the  section  as  applying  to  any  contract  not  clearly 
within  its  letter  as  well  as  its  reason' ':  Kreuzberger 
V.  Wingfield,  96  Cal.  251,  257,  31  Pac.  893. 


§    544  THE    IMPROVEMENT    CONTRACT.  833 

Snddivision  2.     Requisites  of  Contract, 

544.     Requirements  as  to  Form  and  Contents  of 
Thousand   Dollar    Original    Contracts.^ 

Every  original  contract^  (except  as  provided 
in  section  543  above)  in  which  the  contract  price 

3  Necessity  of  Observing  Eectuirements.— * '  The  only 
safe  course  for  one  desiring  to  have  a  house  built  by 
contract,  when  the  price  exceeds  one  thousand  dollars, 
is  to  have  the  contract  written  and  recorded,  as  pro- 
vided by  section  1183  of  the  Code  of  Civil  Procedure, 
and  to  follow  the  contract  in  his  payments  of  money. 
This  is,  no  doubt,  a  hardship  to  owners  of  land  who 
desire  to  improve  it,  and  limits,  to  them,  the  general 
control  which  men  generally  have  over  their  own 
property.  But  it  is  quite  evident  that  the  legislature 
has  industriously  endeavored  by  extreme  means  not 
only  to  protect  and  favor  mechanics  and  laborers  who 
actually  work  on  buildings  (which  seems  to  have  been 
the  original  notion  of  a  'mechanic's  lien'),  but  also 
certain  merchants  who  are  brought  in  under  the  cate- 
gory of  'materialmen.'  And  as  long  as  the  provisions 
of  the  present  lien  law  are  held  to  be  constitutional 
(and  they  seem  to  have  been  so  held  by  the  court)^ 
owners  of  buildings  must  protect  themselves  by  the 
written  contract  provided  by  the  code — unless  they 
can  induce  the  leigislature  to  change  the  law":  Per 
McFarland,  J.,  in  Booth  v.  Pendola,  88  Cal.  36,  42,  2a 
Pac.  200,  24  Pac.  714,  25  Pac.  1101. 

Other  Requirements  as  to  original  contracts  were  for- 
merly required  by  section  1183^/4  which  was  enacted 
in  1901  (Stats.  1901,  p.  817,  c.  272),  but  was  repealed 
by  Stats.  1903,  p.  21,  c.  19. 

4  Requirement  Applies  to  Original  Contracts.— Code 
of  Civil  Procedure,  section  1183,  second  and  third  sen- 
tences: ''In  case  of  a  contract  for  the  work  between 
the    [- 87n  \-  reputed   ■{  n87^    owner  and  his   contractor 

the  lien  shall  extend  to  the  entire  contract  price 

All  such  contracts  shall  be  in  writing  when  the  amount 

Liens— 53 


834  mechanics'  liens.  §  544 

exceeds  one  thousand  dollars-'^  must,  in  its  en- 
tirety, be  in  writing,^  and  subs-cribed  by  the  par- 
agreed  to  be  paid  thereunder  exceeds  one  thousand 
dollars,  and  shall  be  subscribed  by  the  parties  there- 
to.'' New  provision,  in  effect  May  17,  1885;  amended, 
in  effect  JViarcn  15,  1887. 

IIlstorical.—VndeT  Stats.  1862,  c.  297,  sec.  2,  in  ef- 
fect June  25, 1862,  repealed  March  30, 1868,  all  original 
contracts  in  which  the  contract  price  exceeded  two 
hundred  dollars  were  required  to  be  in  writing  and 
subscribed  by  the  parties  thereto,  and  penalties  simi- 
lar to  those  prescribed  under  the  existing  statute  were 
provided  for  failure  to  comply  with  its  provisions  (see 
sections  547,  subd.   1,  548,  and  594,  below). 

This  Code  Provision  Refers  to  Original  Contracts 
jbjxclusively.—^' The  section  in  requiring  the  contract 
'between  the  owner  and  his  contractor '  to  be  in  writ- 
ing and  recorded,  has  for  its  object  the  giving  of  no- 
tice of  the  terms  of  the  contract  to  those  who  may 
be  employed  by  or  furnish  materials  to  the  contractor, 
in  the  course  of  its  performance,  so  as  to  enable  them 
to  judge  whether  the  contract  price,  to  which  they 
liave  a  right  to  look  for  their  security,  is  sufficient  for 
that  purpose.  But  the  reason  for  giving  this  notice 
does  not  apply  to  the  case  of  one  who  contracts  only 
to  furnish  materials,  as  his  employees  have  no  lieu 
upon  the  price  which  he  is  to  receive  therefor,  and  for 
that  reason  the  statute  does  not  require  that  contracts 
under  which  materials  are  furnished  shall  be  in  writ- 
ing and  recorded.''  Thus  the  contract  referred  to  as 
*'a  contract  between  the  reputed  owner  and  his  con- 
tractor" is  the  original,  not  a  materialman's,  contract: 
Hinckley  v.  Field's  Biscuit  etc.  Co.,  91  Cal.  136,  140, 
27  Pac.  594. 

5  But  where  the  contract  price  is  less  than  one 
thousand  dollars,  the  contract  i^  not  required  to 
be  in  writing  and  filed:  Santa  Monica  Lumber  etc.  Co. 
V.  Hege,  119  Cal.  376,  51  Pac.  555. 

6  Contract  in  Entirety  must  be  in  Writing.— ''By 
the  terms  of  the  contract,  the  contractor  was  to  fur- 


§  544         THE  IMPROVEMENT  CONTRACT.  835 

nish  the  material  and  do  the  work  mentioned  in  the 
specifications,  and  shown  in  the  drawings,  ^  which 
drawings  and  specifications/  it  is  recited,  *are  identi- 
fied by  the  signatures  of  the  parties  hereto.'  The  ma-, 
terial  which  the  contractor  was  to  furnish,  and  the 
work  he  was  to  do,  are  shown  only  in  the  specifications 
and  drawings 

^^If  the  writing  which  is  signed  by  the  parties  does 
not  of  itself  determine  what  constitutes  the  contract, 
then  it  is  not  wholly  in  writing  as  required,  and  can- 
not be  filed  as  a  whole  in  the  recorder's  office. 

''On  the  other  hand,  to  permit  the  parties  to  prove 
that  plans  and  specifications  which  do  not  correspond 
with  the  reference  are  the  plans  and  specifications  re- 
ferred to,  is  to  make  a  different  contract,  or  at  least 
to  open  the  door  for  so  doing 

''What  occurred  after  the  contract  was  signed  by 
way  of  putting  it  beyond  doubt  as  to  what  plans  and 
specifications  were  intended,  such  as  by  attaching 
them  together,  and  filing  them  as  one  document,  and 
building  a  house  upon  the  lots  indicated  according  to 
tne  plans  and  specifications,  can  have  no  bearing  upon 
the  question  whether  the  whole  contract  was  reduced 
to  writing  and  signed  by  the  parties.'' 

So  where  specifications  as  described  by  the  contract 
were  not  recorded,  but  others  according  to  which  the 
improvement  was  made  had  been  recorded,  the  con- 
tract is  not  reduced  to  writing  as  required:  West  Coast 
Lumber  Co.  v.  Knapp,  122  Cal.  79,  82-84,  54  Pac.  533. 

Where  the  specifications  connected  to  a  building 
contract,  instead  of  setting  forth  the  details  of  the 
work  in  full,  referred  to  portions  of  the  work  on  an 
adjoining  building  as  patterns  or  samples  of  the  work 
to  be  done,  and  such  specifications  were  filed  for  record 
together  with  the  contract  and  drawings,  the  contract 
in  its  entirety  was  reduced  to  writing  and  the  filing 
is  sufficient.  The  objection  is  not  tenable  that  the 
other  building  thereby  became  a  part  of  the  specifi- 
cations, and  hence  that  the  whole  contract  was  not 
filed.  "All  written  contracts  refer  to  matters  dehors 
the  instrument,  but  such  matters  (except  where,  as  in 


836 


MECIIAJN'ICS'    LIENS.  §    544 


West  Coast  Lumber  Co.  v.  Knapp,  122  Cal.  79  [54 
Pac.  533,  above],  the  matter  referred  to  is  another 
writing)  do  not  become  a  part  of  the  instrument. 
Thus  monuments  and  natural  objects  called  for  in  a 
deed  cannot  with  any  propriety  be  said  to  be  a  part 
of  the  deed;  nor,  where  goods  are  sold  by  sample,  can 
the  sample  be  said  to  be  part  of  the  contract,  though 
conformity  to  the  sample  doubtless  is'':  California 
Iron  Construction  Co.  v.  Bradbury,  138  Cal.  328,  71 
Pac.  346. 

Illustration.— {1%Q2)  Where  a  contract  provided  for 
the  construction  of  a  barn  ^'agreeable  to  the  draft, 
plan,  and  explanation  hereto  annexed,  marked  A,"' 
payment  to  be  made  ^'upon  the  completion  of  said 
barn,  as  per  specifications,''  but  no  draft,  plan,  or 
specifications  were  attached  to  the  contract,  but  an 
unsigned  paper  was  produced,  and  testimony  was  of- 
fered that  it  was  the  plan  or  specifications  referred  to, 
the  court  held  that  in  this  case  the  plans  are  an  es- 
sential part  of  the  contract  and  are  as  material  as 
the  price  or  the  terms  of  payment,  for  the  contract 
price  was  not  to  be  paid  until  the  barn  was  completed 
according  to  the  specification^.  The  specifications 
must  be  referred  to  with  certainty,  and  where  the  ref- 
erence is  false  it  cannot  be  helped  out  with  oral  evi- 
dence. For  the  written  contract  can  neither  be  con- 
tradicted nor  added  to.  The  admission  of  such  evidence 
would  violate  the  statutory  provision  requiring  the 
contract  to  be  in  writing  and  signed  by  the  parties: 
Warden  v.  Hammond,  37  Cal.  61.  See,  also,  Willamette 
etc.  uo.  V.  Los  Angeles  College  Co.,  94  Cal.  229,  29 
Pac.  629. 

A  misreference  in  such  a  contract,  as  to  plans  and 
specifications  said  to  have  been  signed  by  the  parties, 
but  which  have  not  been  signed,  or  to  the  same  as  at- 
tached to  the  contract  when  they  have  not  been  at- 
tached, renders  the  contract  incomplete,  and  as  the 
misreference  or  misdescription  cannot  be  aided  by 
oral  evidence  void:  Donnelly  v.  Adams,  115  Cal.  129, 
46  Pac.  916,  127  Cal.  24,  59  Pac.  208. 


§    544  THE    IMPROVEMENT    CONTRACT.  837 

ties  thereto^  and  must  set  forth  the  actual  con- 
tract price  when  a  contract  price  has  been  agreed 
upon.''  Ko  such  contract  may^,  by  its  terms^  pro- 
vide that  any  of  the  contract  price  be  payable  be- 
fore the  commencement  of  work;  but  not  less 
than  twenty-five  per  cent  of  such  price  must  be 
made  payable  not  sooner  than  thirty-five  days 
after  the  final  completion  of  the  work;  and  the 
remainder  must  be  made  payable  either  at  spe- 
cified times  after  the  commencement  of  work,  or 
on  the  completion  of  specified  portions  of  the 
work;,  or  on  the  completion  of  the  whole  work;^ 

7  Must  Set  Forth  Actual  Contract  Price  When 
Agreed  Upon. 

See  section  547,  subdivision  2  and  notes,  below. 

The  obvious  intention  of  the  legislature  in  enact- 
ing that  ^Hhe  said  contract,  or  a  memorandum  there- 
of, setting  forth  ....  the  total  amount  to  be  paid 
thereunder,  and  the  amounts  of  all  partial  payments, 
....  shall  ....  be  filed''  was  to  provide  what  por- 
tions of  the  contract  would  be  set  forth  in  the  mem- 
orandum. *^The  legislature  merely  assumed  that 
building  contracts  would  usually  state  the  whole  con- 
tract price,  and  in  view  of  that  general  condition, 
enacted  the  provisions  concerning  the  memorandum. 
Had  it  been  the  purpose  to  compel  persons  to  state 
in  every  contract  the  whole  amount  that  could  in  any 
event  become  payable  under  its  terms,  or,  failing  to 
do  so,  suffer  the  penalty  imposed,  we  must  suppose 
that  so  serious  an  invasion  of  the  right  of  property 
would  have  been  expressly  and  unequivocally  stated, 
and  not  left  to  inference.''  Thus  the  portion  of  sec- 
tion 1183  setting  forth  the  requirements  of  the  mem- 
orandum cannot  be  held  to  prescribe  requirements  for 
the   contract:   Snell  v.  Bradbury,  Cal.,  June  20,  1903. 

8  Contract  Price  must  be  Payable  in  Installments 
at  Specified  Times. 


838  mechanics'  liens.  §  544 

Code  of  Civil  Procedure,  section  1184,  first  sen- 
tence: ''No  part  of  the  contract  price  shall,  by  the 
terms  of  any  such  contract,  be  made  payable,  nor 
shall  the  same  or  any  part  thereof  be  paid  in  advance 
of  the  commencement  of  work,  but  the  contract  price 
shall,  by  the  terms  of  the  contract,  be  made  payable 
in  installments  at  specified  times  after  the  commence- 
ment of  work,  or  on  the  completion  of  specified  por- 
tions of  the  work,  or  on  the  completion  of  the  whole 
work;  provided,  that  at  least  twenty-five  per  cent  of 
the  contract  price  shall  be  payable  at  least  thirty- 
five  days  after  the  final  completion  of  the  [87o]  [a] 
contract.  New  provision,  in  efPect  May  17,  1885; 
amended,  in  effect  March   15,   1887. 

(a)    Here  was  omitted:   ''Work  and.'' 

Interpretation.— The  phrase  at  the  beginning  of  1184, 
"any  such  contract,''  refers  to  the  contracts  which 
have  just  been  considered  in  the  immediately  preced- 
ing provision  of  1183,  which  were  contracts  in  which 
the  contract  price  exceeded  one  thousand  dollars.  "It 
was  not  intended,  we  think,  that  in  order  to  preserve 
the  right  of  lien  the  contracting  parties  should  be 
put  to  the  trouble  of  entering  into  a  written  contract, 
and  reserving  twenty-five  per  cent  of  the  contract 
price  for  thirty-five  days  after  the  completion  of  the 
work,  in  cases  where  the  contract  price"  does  not  ex- 
ceed one  thousand  dollars.  "There  is  nothing  in 
the  statute  which  render^  void  as  between  contractor 
and  owner  a  contract  under  which  the  amount  to  be 
paid  does  not  exceed  the  sum  of  one  thousand  aollars, 
whatever  may  be  its  terms  in  other  respects":  Sid- 
linger  V.  Kerkow,  82  Cal.  42,  44,  45,  46,  22  Pac.  932; 
Kerckhoff-Cuzner  etc.  Lumber  Co.  v.  Cummings,  86  Cai. 
22,  24,  25,  24  Pac.  814;  Denison  v.  Burrell,  119  Cal. 
180,  182,  51  Pac.  1;  Southern  Cal.  Lumber  Co.  v.  Jones, 
133'  Cal.  242,  243,  244,  65  Pac.  378. 

A  compliance  with  the  provisions  of  code,  section 
1184,  that  the  contract  price  must  be  made  payable 
in  installments  at  specified  times,  and  that  twenty- 
five  per  cent  must  be  payable  at  least  thirty-five  days 
after  the  completion  of  the  work,  does  not  require 
a  statement  either  of  the  amount  of  each  payment, 
or  the  total  amount  of  them  all. 


§    544  THE    IMPROVEMENT    CONTRACT.  839 

Thus  where  the  work  consisted  in  remodeling  an 
old  building  and  constructing  additions  thereto,  a 
duly  recorded  contract  for  lathing  and  plastering 
the  additions  at  nineteen  cents  a  square  yard,  and 
for  removing  the  old  plastering  and  replacing  it  with 
new  where  directed  by  the  owner  at  thirteen  cents 
a  square  yard  is  valid,  although  the  amount  of  plas- 
tering was  left  indeterminate  and  although  the  con- 
tract did  not  state  the  total  amount  to  be  paid  there- 
under nor  show  on  its  face  whether  or  not  the  work 
would  exceed  one  thousand  dollars  in  value  (when 
in  fact  the  value  of  the  work  done  did  exceed  one 
thousand  dollars  but  the  value  of  the  new  lathing 
and  plastering  was  not  shown  to  exceed  one  thou- 
sand dollars). 

"In  case  of  the  removal  of  a  building,  or  in  any 
case  where  alterations  are  made  to  an  old  building, 
the  performance  of  the  new  work  may  in  itself  dam- 
age the  old  one,  and  make  it  impossible  to  know  or 
determine  in  advance  how  much  of  the  old  plaster- 
ing may  need  to  be  removed.  In  such  a  case  it  may 
be  necessary  to  make  the  contract  for  a  fixed  price 
per  yard,  or  to  merely  contract  for  the  work,  in 
either  event  leaving  the  total  amount  to  be  deter- 
mined by  the  performance,  and,  if  no  measure  of 
value  is  fixed,  by  the  reasonable  value  of  the  work. 
The  right  to  make  such  contracts  under  such  cir- 
cumstances is  necessary  to  the  full  enjoyment  of 
property  which  is  protected  by  the  constitution.  To 
take  away  this  right,  would  be  an  infringement  of 
the  constitutional  guaranty.  There  is  nothing  in  the 
statute  which  expressly  forbids  such  a  contract,  and 
the  court  cannot  construe  it  to  have  an  effect  which 
would  make  it  unconstitutionaP  ^  Snell  v.  Bradbury, 
€al.,   June   20,    1903. 

Rationale  Twenty-five  Per  Cent  Reservation.— ^^  This 
provision  was  evidently  inserted  for  the  protection  of 
subcontractors,  materialmen,  and  laborers,  thus  giving 
them,  if  unpaid,  ample  time  after  the  work  is  com- 
pleted to  file  their  claims  of  lien  and  secure  payment 
of  the  sums  of  money  due  them'':  De  Camp  Lumber 
€o.  V.  Tolhurst,  99  Cal.  631,  635,  34  Pac.  438. 


840  mechanics'  liens.  §  544 

Huhstantial  Conformity  with  this  provision,  sufficient 
to  afford  the  safeguard  afforded  to  lienors,  is  all  that 
is  required:  Brill  v.  De  Turk,  130  Cal.  241,  243,  62 
Pac.  242. 

^^The  section,  in  terms,  only  requires  a  substantial 
compliance'^:  Yancy  v.  Morton,  94  Cal.  558,  561,  29 
Pac.  1111. 

'^  Every  reasonable  intendment  is  indulged  to  avoid 
a  penalty '^  Stimson  Mill  Co.  v.  Eiley  (Cal.),  42  Pac. 
1072,  1074 A;  Brill  v.  De  Turk,  130  Cal.  241,  243,  62 
Pac.  242. 

Original  Contracts  Held  to  Comply  with  Statute.-- 
XX  contract  providing  that  the  final  payment  of  twen- 
ty-five per  cent  was  payable  thirty  days  after  the 
final  completion  of  the  contract.  For  every  reason- 
fible  intendment  is  indulged  to  avoid  a  penalty,  and  no 
one  was  injured  by  the  fact  that  the  payment  became 
due  in  thirty  days:  San  Diego  Lumber  Co.  v.  Wool- 
dredge,  90  Cal.  574,  579,  27  Pac.  431. 

A  contract  providing  that  upon  the  written  order  of 
the  original  contractor  the  contracting  owner  will  pay 
(1)  the  materialmen  for  materials  furnished  as  soon 
as  they  are  actually  worked  into  the  building,  and  (2) 
the  mechanics  and  laborers  on  the  building  for  work 
actually  done  at  the  end  of  every  week,  provided  that 
the  contracting  owner  may  retain  twenty-five  per  cent 
of  the  contract  price  until  thirty-five  days  have  expired 
after  the  final  completion  of  the  contract:  Eeed  v. 
Norton,  90  Cal.  590,  601,  26  Pac.  767,  27  Pac.  426. 

A  contract  providing  that  the  final  twenty-five  per 
cent  should  be  paid  thirty-five  days  after  the  com- 
pletion of  the  building,  ^^  provided  that  payment  may 
be  made  at  any  time  between  the  date  of  completion 
and  the  said  thirty-five  days,  in  case  said  contractor 
shows  receipts,  and  gives  bonds  that  all  bills  will 
be  paid,  and  that  no  liens  or  other  claims  exist  against 
said  premises,  such  payment  to  be  optional  with  the 
owner.  ^'  "  The  proviso  found  in  this  contract  was  un- 
doubtedly inserted  for  the  benefit  of  the  contractor, 
yet  at  the  same  time  it  was  in  no  way  detrimental 
to  the  interests  of  any  lien  claimant,  for  the  section 


§    544  THE    IMPROVEMENT    CONTRACT.  841 

[i.  e.,  Code  Civ.  Proc,  sec.  1184]  expressly  so  pro- 
vides'': Yancy  v.  Morton,  94  Cal.  558,  561,  29  Pac. 
1111.  The  contract  was,  however,  declared  invalid 
on  other  grounds. 

A  contract  in  which  the  contract  price  was  two  thou- 
sand one  hundred  and  eighty  dollars,  and  the  contract 
reserved  five  hundred  and  thirty  dollars  for  thirty-five 
days,  the  amount  being  fifteen  dollars  less  than 
twenty-five  per  cent  of  the  contract  price,  the  de- 
ficiency being  trivial  in  comparison  with  the  amount 
reserved,  and  especially  as  no  one  was  injured  there- 
by: Stimson  Mill  Co.  v.  Eiley  (Cal.),  42  Pac.  1072, 
1074A. 

A  contract  providing  that  the  last  payment  of  twen- 
ty-five per  cent  ^^  shall  be  made  within  thirty-six  days 
after  the  contract  is  fulfilled.''  For  when  the  debtor 
is  allowed  a  certain  period  within  which  to  make  pay- 
ment, the  debt  is  not  due  until  the  expiration  of  that 
period:  West  Coast  Lumber  Co.  v.  Knapp,  122  Cal. 
79,  81,  82,  54  Pac.  533. 

A  contract  in  which  the  contract  price  was  nineteen 
hundred  and  seventy-five  dollars,  which  provided  that 
^^all  bills  for  material  and  labor,  when  indorsed  by 
the  contractor,  will  be  paid  on  demand,  provided  that 
said  bills  for  material  and  labor  do  not  exceed  seventy- 
five  per  cent  of  the  value  of  the  material  and  labor  em- 
ployed in  the  erection  of  said  building  up  to  the  date 
of  the  said  bills,  four  hundred  and  ninety-five  dollars 
to  be  paid  thirty  days  after  the  building  is  com- 
pleted and  accepted."  The  sum  reserved  is  more 
than  twenty-five  per  cent  of  the  contract  price:  Brill 
V.  De  Turk,  130  Cal.  241,  242,  243,  62  Pac.  462. 

Contract  Violative  of  Statutory  Requirement.— A  con- 
tract providing  that  ^  *  seventy-five  per  cent  of  the 
cost  of  material  and  work  completed  at  the  time  of 
payment  is  to  be  paid  on  the  first  and  third  Saturdays 
of  each  month  as  the  work  progresses,"  and  ^Hhe  last 
and  final  payment  is  to  be  made  thirty-five  days  after 
the  completion  of  the  work  according  to  the  contract, ' ' 
but  not  providing  that  twenty-five  per.  cent  of  the  con- 
tract price  should  be  payable  not  less  than  thirty-five 
days  after  completion.     For  there  is  a  manifest  differ- 


842  mechanics'  liens.  §  544 

nor  may  any  of  the  contract  price  be  prematurely 
paid.i^ 

Subdivision  3.     Record  of  Contract. 

545.     Original    Thousand    Dollar    Contract,    or 
Memorandum  Thereof,  must  be  Recorded. 

Every  original  contract  (except  as  provided  in 
section  543  above)  in  which  the  contract  price 
exceeds  one  thousand  dollars^  or  a  memorandum 
thereof  conformable  to  the  next  succeeding  sec- 
tion, must,  before  the  commencement  of  work, 
be  filed  in  the  office  of  the  county  recorder  of  the 
county,  or  city  and  county,  where  the  property 
is  situated.*^ 

ence  between  stating  that  a  certain  amount  is  to  be 
paid  at  any  given  date  and  that  a  certain  percentage 
of  the  cost  is  to  be  then  paid,  for  there  is  no  neces- 
sary connection  between  the  cost  or  labor  and  ma- 
terial and  the  contract  price.  When  seventy-five  per 
cent  of  cost  was  paid  there  might  be  less  than  twenty- 
five  per  cent  of  contract  price  remaining:  Willamette 
etc.  Co.  V.  Los  Angeles  CoUege  Co.,  94  Cal.  229,  235, 
29  Pac.  629. 

10  What  Amounts  to  Premature  Payment.— Where 
the  installments  were  to  be  paid  as  work  progresses, 
a  substantial  completion  to  the  required  stage  is  all 
that  is  required  to  render  the  payment  valid  (not 
premature):  Stimson  Mill  Co.  v.  Eiley  (Cal.),  42  Pac. 
1072,  1074B. 

Effect  of  Premature  Payment:  See  section  592,  below. 

11  Recordation  Rectuired.— Code  of  Civil  Procedure, 
section  1183,  third  sentence:  ^^All  such  contracts  shall 
be  in  writing  ....  and  shall  be  subscribed  ....  and 

\  87n  \  the  said  contract,  or  a  memorandum  thereof 
.  .  .  .    ^  n87  \    shall,  before  the  work  is  commenced,  be 


§    545  THE    IMPROVEMENT    CONTRACT.  843 

filed  in  the  office  of  the  county  recorder  of  the  county, 
or  city  and  county,  where  the  property  is  situated, 
who  shall  receive  one  dollar  for  such  filing/'  New 
provision  in  effect  May  17,  1885;  amended,  in  effect 
March  15,  1887. 

Object  of  Recordation.— ''  The  object  of  the  statute  in 
requiring  contracts  in  excess  of  one  thousand  dollars 
to  be  filed  with  the  recorder  seems  to  be  twofold:  (1) 
as  a  security  to  the  [contracting]  owner,  who  is  there- 
by shielded  from  liability  to  subcontractors,  laborers, 
and  materialmen  beyond  his  contract  price,  (2)  to  af- 
ford information  to  all  others  furnishing  materials  or 
performing  services  in  and  about  the  contemplated  im- 
provement, upon  which  to  predicate  an  opinion  founded 
upon  the  value  of  the  property,  the  price  to  be  paid, 
and  the  dates  of  payment,  as  to  whether  the  contract 
price  is  such  as  will  probably  be  adequate  security,  and 
the  lien  given  to  them  by  the  statute,  sufficient  to 
warrant  them  in  bestowing  their  labor  or  furnishing 
materials  for  the  proposed  improvement'':  Greig  v. 
Eiordan,  99  Cal.  316,  319,  320,  33  Pac.  913. 

The  Entire  Contract  must  be  Recorded.— In  the  follow- 
ing instances  the  filing  was  defective. 

Where  by  the  terms  of  the  contract  the  plans  and 
specifications  were  made  a  part  thereof,  but  were 
not  filed  therewith:  Barker  v.  Doherty,  97  Cal.  10,  31 
Pac.  1117;  Kuhlman  v.  Burns,  117  Cal.  469,  49  Pac. 
585. 

Where  a  contract  provided  for  the  erection  of  a 
building  '^conformable  to. the  drawings  and  specifica- 
tions   made    by ,    architect,    and    signed    by    the 

parties,  and  hereunto  annexed,"  the  drawings  and 
specifications  not  in  fact  being  annexed  and  the  con- 
tract being  filed  without  them:  Yancy  v.  Morton,  94 
Cal.  558,  562,  29  Pac.  1111.  See,  also,  Willamette  etc. 
V.O.  V.  Los  Angeles  College  Co.,  94  Cal.  229,  233,  29 
Pac.  629. 

An  original  contract  providing  that  the  improve- 
ment should  be  done  ''in  conformity  with  the  plans, 
drawings  and  specifications  for  the  same  made  by 
,  the  authorized  architect  employed  by  the  owner. 


844  mechanics'  liexs.  §  546 

546.     Requirements  of  Sufficient  Memorandum.^'^ 

The  memorandum  permitted  by  the  preceding 
section  to  be  filed  in  lieu  of  the  original  contract 
must  set  forth: 

and  which  are  signed  by  the  parties  hereto  and  are 
to  be  kept  and  remain  in  the  office  of  said  architect 
subject  to  the  inspection,  of  the  parties  hereto  and 
others  concerned  in  said  erection'':  Pierce  v.  Birkholm, 
115  Cal.  657,  47  Pac.  681. 

Where  the  original  contract  did  not  in  terms  re- 
cite that  the  plans  and  specifications  were  made  a 
part  thereof,  but  where  without  them  such  contract 
is  so  indefinite  and  uncertain  as  not  to  comply  with 
the  requirement  (prescribed  in  case  of  a  memorandum) 
that  it  should  contain  a  statement  of  the  general  char- 
acter of  the  work:  Greig  v.  Eiordan,  99  Cal.  316,  320,  33 
Pac.  913.  See,  also,  California  Iron  Construction  Co. 
V.  Bradbury,  138  Cal.  328,  71  Pac.  346,  as  quoted  under 
section  544,  note  6,  above. 

The  Original  Contract,  not  a  Copy  Thereof,  is  Re- 
quired to  he  Filed.— HenQe  the  filing  of  (1)  the  original 
agreement  of  the  parties  with  their  original  signatures 
thereon,  with  (2)  the  original  specifications  referred 
to  in  the  first  instrument,  also  signed,  and  (3)  a  sun- 
print  copy  of  the  plans  and  drawings  made  by  the 
authorized  architect,  is  insufficient:  San  Francisco 
Lumber  Co.  v.  O'Neil,  120  Cal.  455,  52  Pac.  728. 

13  RecLuirements  of  Memorandum.— Code  of  Civil 
Procedure,  section  1183,  third  sentence:  ^'All  such 
contracts  shall  be  in  writing  ....  and  shall  be  sub- 
scribed ....  and  )■  87n  \-  the  said  contract,  or  a 
memorandum  thereof,  setting  forth  (1)  the  names  of 
all  the  parties  to  the  contract,  (2)  a  description  of  the 
property  to  be  affected  thereby,  together  with  (3)  a 
statement  of  the  general  character  of  the  work  to  be 
done,  (4)  the  total  amount  to  be  paid  thereunder,  and 

(5)  the  amounts  of  all  partial  payments,  together  with 

(6)  the  times  when  such  payments  shall  be  due  and 
payable    {  n87^  ,   shall  ....  be   filed.''     New  provi- 


§  540  THE  Ijiprcvement  contract.  845 

sion  in  effect  May  17,  1885;  amended,  in  effect  March 
15,  1887. 

Canon  of  Interpretation,— ^  ^  Th.Q  statute,  imposing  as 
it  does  a  liability  upon  the  owner  beyond  the  price  he 
contracted  to  pay,  in  favor  of  a  subcontractor  with 
whom  he  has  no  contractual  relations,  is  penal  as  well 
as  remedial,  and,  therefore,  whilst  it  must  have  such 
construction  as  will  reasonably  effectuate  its  remedial 
purposes,  must  be  strictly  confined  to  such  purpose. 
Xo  merely  technical  construction  can  be  indulged  for 
the  purpose  of  visiting  a  penalty  upon  the  owner,  un- 
less there  has  been  a  substantial  failure  to  comply 
with  the  law;  such  as,  if  continued,  would  defeat  the 
remedial  purpose  of  the  statute;  but  if  there  be  a 
reasonable  doubt  as  to  the  construction  of  the  statute, 
or  as  to  whether  the  defendants  [contracting  owners] 
complied  with  it,  they  should  have  the  benefit  of  if: 
Joost  V.  Sullivan,  111  Cal.  286,  296,  43  Pac.  896. 

The  memorandum  (like  a  contract  which  is  to  bo 
filed)  must  be  complete  within  itself.  Thus  plans, 
drawings,  or  specifications  referred  to  in  a  memoran- 
dum as  those  according  to  which  the  .work  is  to  be 
done  are  an  essential  part  thereof,  and  must  be  filed: 
Bunlop  V.  Kennedy,  102  Cal.  443,  445,  36  Pac.  765; 
Butterworth  v.  Levv,  104  Cal.  506,  38  Pac.  897;  Wood 
V.  Oakland  etc.  Transit  Co.,  107  Cal.  500,  503,  504,  40 
Pac.  906.  See,  also,  Willamette  etc.  Co.  v.  Los  An- 
geles College  Co.,  94  Cal.  229,  235,  236,  29  Pac.  629. 

The  provision  that  the  memorandum  should  set 
forth  the  total  amount  to  be  paid  under  the  con- 
tract and  the  amounts  of  all  partial  payments  was 
made  in  view  of  the  fact  that  building  contracts 
usually  make  these  statements,  but  was  not  intended 
to  imply  that  a  contract  must  contain  them  in  order 
to  be  valid:  Snell  v.  Bradbury,  Cal.,  June  20,  1903. 

Illustration  of  Sufficient  Memorandum, — Where  a  con- 
tract consisted  of  (1)  an  agreement,  (2)  plans  an-i 
specifications,  and  (3)  drawings,  the  filing  of  a  ver- 
batim copy  of  (1)  together  with  a  copy  of  (2)  ex- 
cept for  the  signatures,  and  a  sun-print  copy  of  (3) 
is  sufficient:  Blinn  Lumber  Co.  v.  Walker,  129  Cal. 
62,  61  Pac.  664. 


S46  mechanics'  liens.  §  546 

(1)  the  names  of  the  contracting  parties/^ 

(2)  a  description  of  the  land  upon  which  the 
improvement  is  to  be  made, 

(3)  a  statement  of  the  general  character  of  the 
work  to  be  done/^ 

(4)  the  contract  price, 

(5)  the  amounts  of  all  partial  payments,  and 

(6)  the  times  when  such  payments  are  due  and 
payable. 

13  Names  of  Contracting  Parties.— While  the  mem- 
orandum is  not  required  to  be  signed  or  subscribed  by 
the  parties,  it  must  set  forth  their  names:  Joost  v. 
Sullivan,  111  Cal.  286,  294,  43  Pac.  896;  Blinn  Lumber 
Co.  V.  Walker,  129  Cal.  62,  65,  66,  61  Pac.  664. 

14  Statement  of  General  Character  of  Work.— ''The 
words  'general  character'  do  not  mean  a  special,  par- 
ticular, minute,  or*  detailed  description  of  the  work 
to  be  done'':  Joost  v.  Sullivan,  111  Cal.  286,  295,  43 
Pac.  896. 

Thus  a  statement  of  the  size  of  the  lot  and  that 
a  frame  building  thereon  is  to  be  raised,  repaired, 
added  to,  and  converted  into  three-story  fiats,  is  suffi- 
cient statement  of  its  general  character:  Joost  v. 
Sullivan,  111  Cal.  286,  295,  43  Pac.  896. 

Insufficient  Statements  of  General  Character  of  the 
Work    Illustrated. 

A  statement  that  a  building  three  stories  high,  con- 
formable to  certain  drawings  and  specifications  was  to 
be  erected  is  insufficient.  "It  does  not  set  forth  the 
material  of  which  the  building  was  to  be  constructed, 
or  any  item  from  which  its  'general  character'  can 
be  ascertained":  Willamette  etc.  Co.  v.  Los  Angeles 
College  Co.,  94  Cal.  229,  236,  29  Pac.  629. 

A  statement  that  certain  alterations  and  additions 
were  to  be  made  to  a  church  building  conformable  to 
certain  plans,  drawings,  and  specifications  kept  in  the 


§    547  THE    IMPROVEMENT    CONTRACT.  847 

Subdivision  J/..     Void  Contracts. 

547.  Contract  When  Nonconformable  to  Statute 
in  Certain  Cases  Void. 

(1)  If  any  original  contract  in  which  the  con- 
tract price  exceeds  one  thousand  dollars  is  not 
in  writing  and  not  duly  subscribed/^  or 

architect's  office  is  insufficient:   Greig  v.  Eiordan,  99 
Cal.  316,  320,  321,  33  Pac.  913. 

Also  that  a  two-story  building,  51  by  25,  was  to  be 
erected  conformable,  etc.  .  It  does  not  tell  of  what  the 
building  was  to  be  constructed:  Butterworth  v.  Levy^ 
104  Cal.  506,  508,  38  Pac.  897. 

The  statement  in  Dunlop  v.  Kennedy,  102  Cal.  443, . 
445,  36  Pac.  765,  was  likewise  insufficient. 

A  statement  that  a  frame  building  is  to  be  con- 
structed is  insufficient.  ^^  While  the  law  requires  no 
description  in  detail  of  the  general  character  of  the 
work  to  be  done,  still  it  requires  more  than  is  here 
found.  This  statement  is  too  general.  To  say  that 
the  building  is  to  be  a  stone  building  or  a  brick  build- 
ing, or  a  frame  building  entirely  fails  in  essentials  to 
give  the  notice  to  the  public  which  the  law  contem- 
plates. By  consulting  the  memorandum  of  contract 
it  would  be  impossible  to  say  whether  the  buildin,.^ 
is  to  be  a  diminutive  cottage,  or  a  large  public  cara- 
vansary, or  whether  the  contract  price  is  at  all  in 
proportion  to  the  character  of  the  buildings  to  be 
erected '^  Blyth  v.  Torre  (Cal.),  38  Pac.  639,  639B- 
640A  (a  rehearing  was  granted,  but  no  opinion  was 
filed.) 

IS  Code  of  Civil  Procedure,  section  1183,  third 
sentence:  ^^All  such  contracts  shall  be  in  writing  .... 
and  shall  be  subscribed  ....  and  J-  87n  }■  the  said 
contract,  or  a  memorandum  thereof  -j  n87  -{,.... 
shall,  before  the  work  is  commenced,  be  filed;  .... 
otherwise,  they  shall  be  wholly  void,  and  no  recovery 
shall  be  had  thereon  by  either  party  thereto."     New 


848  mechanics'  liens.  §  547 

(2)  if,  on  account  of  any  conspiracy  or  agree- 
ment in  which  a  contracting  party  participates, 
the  contract  price  set  forth  in  the  contract  filed 
is  less  than  the  real  price/^  or 

provision  in  effect  Mav  17,   1885;   amended,  in  effect 
March  15,  1887. 

This  provision  is  *  ^  highly  penal  in  its  character,  a  . 
violation  of  its  mandates  subjecting  the  owner  to  -i 
liability  for  debts  which  he  never  agreed  to  pay,  an! 
tor  which  he  may  receive  no  benefit/'  (See  section 
548,  below.)  ^^Such  statutes  should  not  receive  a 
construction  unduly  favoring  the  imposition  of  a 
penalty  or  forfeiture.  And  in  the  case  of  a  statute 
which  deals  with  the  constitutional  right  of  an  owner 
.of  property  to  make  contracts  relating  to  its  use  and 
enjoyment,  the  restriction  of  the  right  can  go  only 
to  the  form  of  the  contract,  and  cannot  be  extended 
by  construction  bevond  what  is  expressed '\-  Snell 
V.  Bradbury,  Cal.,  June  20,  1903. 

Historical.— Stsits.  1862,  c.  297,  sec.  2,  contained 
a  similar  provision  in  regard  to  contracts  in  which 
the  contract  price  exceeded  two  hundred  dollars. 

l«  Code  of  Civil  Procedure,  section  1202,  third 
sentence:  ^^If  the  owner  and  his  contractor  shall  di- 
rectly or  indirectly  conspire  to  or  agree  that  the  writ- 
ten contract  filed  shall  appear  to  show  the  contract 
price  to  be  less  than  it  really  is,  and  it  shall  accord- 
ingly so  show,  then  such  contract  shall  be  wholly  void, 
and  no  recovery  shall  be  had  thereon  by  either  party 
thereto."     New  provision  in  effect  March  18,  1885. 

In  California  Iron  Construction  Co.  v.  Bradbury, 
Cal.,  Jan.  16,  1903,  where  the  contract  price  of  a 
building  contract  was  stated  to  be  eight  thousand  and 
fifty-two  dollars  in  the  written  contract,  and  the  evi- 
dence showed  that  the  price  originally  agreed  upon  had 
been  eight  thousand  one  hundred  and  fifty-two  dollars, 
but  that  the  contractor  had  agreed  to  buy  an  old  house 
on  the  premises  for  one  hundred  dollars,  which  sum 
had  accordingly  been  deducted  from  the  price  orig- 


§    547  THE    IMPROVEMENT    CONTRACT.  849 

inally  agreed  upon,  the  court  held  that  the  contract  is 
not  rendered  invalid  by  reason  of  stating  an  erron- 
eous contract  price.  The  court  supported  this  con- 
clusion by  the  statement  that  ^Hhe  transfer  of  the 
house — which  was  an  executed  transaction — was  an- 
tecedent to  the  contract  as  executed,  and  formed  no 
part  of  it.  ^'  On  February  16,  1903,  the  court  denied 
n  petition  for  a  rehearing.  Beatty,  C.  J.,  dissented 
from  the  order  denying  the  rehearing,  saying  in  part: 
■'^The  contract  for  the  erection  of  the  building,  as  re- 
duced to  writing  and  recorded,  stated  the  contract 
price  at  eight  thousand  and  fifty-two  dollars.  But 
the  court  found  that  the  real  price  agreed  to  be  paid 
for  the  improvement  was  eight  thousand  one  hundred 
and  fifty-two  dollars.  If  the  real  consideration  agreed 
to  be  paid  was  one  hundred  dollars  more  than  the 
consideration  states  in  the  written  and  recorded  con- 
tract, then  it  seems  to  me  that  the  conclusion  of  the 
trial  court  was  correct;  that  the  contract  under  sec- 
tion 1183  of  the  Code  of  Civil  Procedure  was  void  as 
to  the  lienors,  and  that  they  were  entitled  to  have 
a  judgment  for  the  full  amount  of  their  claims  made 
a  lien  upon  the  property  of  the  appellant  [contracting- 
owner].  The  difference  between  eight  thousand  and 
fifty-two  dollars  and  eight  thousand  one  hundred  and 
fifty-two  dollars  is  trifling,  it  is  true,  but  the  prin- 
ciple governing  the  case  is  just  the  same  as  of  the 
difference  between  the  actual  price  and  the  stated 
price  was  relatively  much  greater.  The  reason  why 
the  contract  price  was  stated  at  one  hundred  dollars 
less  in  the  written  contract  than  as  actually  agreed 
was  that  the  contractor  was  to  take  the  old  building 
at  a  valuation  of  one  hundred  dollars,  and  it  was 
agreed  that  the  price  as  stated  in  the  written  contract 
would  be  reduced  in  that  amount.  If  the  property 
owner  agrees  with  the  contractor  that  the  proper  cost 
of  a  proposed  improvement  is  five  thousand  dollars, 
and  because  the  contractor  is  already  indebted  to  him 
m  the  sum  of  two  thousand  dollars,  proposes,  and  the 
contractor  agrees,  that  in  consideration  of  the  cancella- 
tion of  that  debt,  the  price  in  the  written  contract 
would  be  stated  at  three  thousand  dollars,  no  one 
Liens— 54 


850  mechanics'  liens.  §  547 

(3)  if  any  such  contract^  or  a  sufficient  mem- 
orandum thereof,  is  not  duly  filed^''  [then  as 
to  all  lien  claimants  whose  liens  attach  as  of 
a  time  prior  to  the  filing  thereof]^® 

such  contract  is  void.^^ 

could  doubt  that  the  recording  of  the  contract  in 
that  form  would  be  a  violation  of  the  spirit  and  a 
transgression  of  the  policy  of  the  mechanic's  lien  law. 
No  distinction  can  be  drawn  between  the  supposed 
case  and  this  case,  except  upon  the  principle  of  de 
minimis,  and  that  principle  I  think  we  have  no  right 
to  apply/' 

17'  See  code  provision  quoted  in  note  15. 

Actual  notice  of  the  existence  of  the  contract  is  not 
equivalent  to  filing,  as  this  is  not  a  question  of  notice. 
*^The  express  provision  of  the  statute  is,  that  if  the 
contract  is  not  filed,  it  shall  be  void.  This  being  so, 
there  is  in  fact  no  contract  of  which  the  subcontractor 
is  bound  to  take  notice,  and  his  knowledge  that  a 
contract  was  attempted  to  be  made,  but  was  not,  can- 
not affect  his  rights'':  Kellogg  v.  Howes,  81  Cal.  170, 
179,  22  Pac.  509. 

18  As  to  Lien  Claimants  v^itla.  Prior  Liens  Only.— 
This  is  perhaps  a  limitation  of  doubtful  validity.  It 
is  sustained  in  Giant  Powder  Co.  v.  San  Diego  Flume 
Co.,  88  Cal.  20,  22,  25  Pac.  976;  97  Cal.  263,  265,  32 
Pac.  172,  where  the  court  held  that  though  the  contract 
was  not  filed  before  the  commencement  of  work,  but 
was  at  a  subsequent  date  filed,  there  existed  from  the 
latter  date  a  valid  contract.  In  Willamette  Steam 
Mills  Co.  V.  Kremer,  94  Cal.  205,  207,  208,  29  Pac. 
633,  and  Willamette  etc.  Co.  v.  Los  Angeles  College 
Co.,  94  Cal.  229,  236,  29  Pac.  629,  the  court,  however, 
held  that  when  the  original  contract  was  not  filed  be- 
fore the  commencement  of  work,  although  it  was  sub- 
sequently filed,  it  was  'wholly  void'  for  all  purposes, 
and  cannot  be  the  basis  of  a  recovery  by  the  con- 
tractor against  the  owner,  nor  can  it  be  looked  to 
for  the  purpose  of  determining  the  amount  for  which 


§    548  THE    IMPROVEMENT    CCNTRACT.  851 

548.     Nature     of     Recovery     When     Contract 
Void.2o 

Upon  a  void  contract  no  recovery  can  be  had 
by  any  party  thereto^  nor  except  where  there  is 
a  substantia]  compliance^^  with  its  terms,  in 
quasi  contract.^^     The    amount    recoverable    by 

tne  contracting  owner  is  liable,  nor  the  time  of  any 
payment. 

1J>  Contract  Void. — This  section  contains  an  exhaus- 
tive enumeration  of  the  circumstances  rendering  the 
contract  void.  So  it  is  not  void  by  reason  of  not  con- 
taining a  description  of  the  property  upon  which  the 
building  is  to  be  erected,  as  the  statute  does  not  re- 
quire that:  Yancy  v.  Morton,  94  Cal.  558,  561,  29  Pac. 
1111. 

20  See  Code  of  Civil  Procedure,  section  1183,  and 
section  1202,  as  quoted  under  section  547,  notes  15  and 
16. 

21  Substantial  Performance  Prerectuisite.— The 
would-be  original  contractor  cannot  recover  unless 
he  has  completed  the  contract  on  his  part,  or  its  com- 
pletion is  in  some  way  waived  or  excused:  Marchant 
V.  Hayes,  117  Cal.  669,  671,  48  Pac.  840. 

A  void  contract  may  be  used  in  evidence  as  the 
test  of  substantial  performance.  As  between  the  orig- 
inal contractor  and  the  contracting  owner,  **the  con- 
tract must  remain,  not  the  basis  of  his  recovery,  but 
the  measure  and  test  of  his  right  to  recover.  He 
must  still  show  a  substantial  compliance  with  its 
terms,  to  warrant  any  recovery  at  all,  and  the  measure 
of  his  recovery,  even  under  implied  assumpsit,  must 
be  limited,  as  to  him,  by  the  contract  price ^':  Laid- 
law  V.  Marye,  133  Cal.  170,  176,  65  Pac.  391. 

Eebman  v.  San  Gabriel  Land  etc.  Co.,  95  Cal.  390, 
395,  396,  30  Pac.  564,  so  far  as  at  variance  with  this 
conclusion,  is  overruled  in  this  case. 

23  Recovery  in  Quasi  Contract  Permissible.— '*  Nor 
does  the  statute  expressly,  or  by  necessary  implication, 


852  mechanics'  liens.  §  548 

the  would-be  original  contractor  cannot  exceed 
the  contract  price  of  the  void  original  contract, 
less  any  disbursements  that  the  contracting 
owner  is  compelled  to  make  to  relieve  his  prop- 
erty from  liens  arising  in  consequence  of  the  con- 
tractor's failure  to  pay  his  debts.^^ 

prohibit  an  action  upon  such  implied  contracts,  to  re- 
cover the  value  of  the  labor  or  materials,  though  such 
value  may  exceed  one  thousand  dollars.  On  the  con- 
trary, section  1197  of  the  chapter  on  liens  [see  section 
t)UO,  note,  below]  seems  to  except  such  contracts  from 
the  penalty  of  a  failure  to  record '^  Eebman  v.  San 
Gabriel  etc.  Co.,  95  Cal.  390,  394,  30  Pac.  564;  Holland 
V.  Wilson,  76  Cal.  434,  18  Pac.  412;  Morris  v.  Wilson, 
97  Cal.  644,  647,  32  Pac.  801. 

33  Code  of  Civil  Procedure,  section  1193,  in  part: 
''In  all  cases  where  a  lien  shall  be  filed,  under  this 
chapter,  for  work  done  or  materials  furnished  to  any 
contractor,  he  shall  defend  any  action  brought  there- 
upon at  his  own  expense  ....  and  in  ease  of  judg- 
ement against  the  owner  or  his  property,  upon  the 
lien,  the  said  owner  shall  be  entitled  to  deduct  from 
the  amount  due  or  to  become  due  by  him  to  the  con- 
tractor, the  amount  of  such  judgm^ent  and  costs." 
New  provision,  in  effect  May  29,  1874.'  Stats.  1867-68, 
c.  448,  sec.  11,  contains  the  same  provision.  This  pro- 
vision applies  equally  where  the  original  contract  is 
void,  to  where  it  is  valid:  Macomber  v.  Bigelow,  1Z6 
Cal.  532,  533,  534,  56  Pac.  449. 

In  Every  Case  the  Amoimt  RecoveraUe  is  Limited  hv 
the  Contract  Price  of  the  Void  Contract:  Giant  Powder 
Co.  V.  San  Diego  Flume  Co.,  78  Cal.  193,  197,  20  Pac. 
419;  Laidlaw  v.  Marye,  133  Cal.  170,  176,  65  Pac.  391. 
The  latter  case  overrules  Eebman  v.  San  Gabriel 
Land  etc.  Co.,  95  Cal.  390,  395,  396,  30  Pac.  564,  so 
far  as  permitting  a  recovery  in  excess  of  the  amount 
of  the  void  contract.  But  with  the  proviso  that  the 
recovery  cannot  exceed  such  sum,  the  statement  in 
the   Eebman   case   that   the   void    contract   is   merely 


§    548  THE    IMPROVEMENT    CONTRACT.  853 

competent  evidence,  not  conclusive  evidence  of  the 
value  of  the  services  and  materials  furnished,  would 
probably  hold  good. 

Where  an  original  contract  was  void  because  not 
filed,  and  certain  lienors  who  had  furnished  work 
and  materials  to  the  would-be  original  contractor 
had  recovered  at  foreclosure  the  reasonable  value 
thereof  with  costs  and  counsel  fees,  the  contractor 
afterward  commenced  an  action  to  recover  the  rea- 
sonable value  of  his  work  and  materials,  in  which  he 
contended  that  the  costs  and  counsel  fees  allowed 
in  the  above-mentioned  action  should  not  be  set  off 
against  his  demand  on  the  ground  that  the  contract- 
ing owner  should  have  avoided  them  by  paying  the 
liens  without  suit.  The  court  held  that  had  the  owner 
''paid  the  demands  on  which  the  materialmen  had 
filed  liens,  without  suit  and  without  the  request  of 
the  plaintiff,  he  would  have  done  so  at  his  peril  of 
being  adjudged  to  have  paid  them  as  a  mere  volun- 
teer, to  the  extent  to  which  the  demands  paid  may 
not  have  proved  to  be  valid  liens  upon  his  property, 
and  to  this  extent  would  have  had  no  recourse  to 
the  plaintiff  for  indemnity He  was  never  un- 
der any  *  obligation  to  plaintiff  to  pay  plaintiff  ^s 
debts  to  the  materialmen.  His  only  obligation  to 
plaintiff  was  to  pay  him  so  much  as  the  labor  he  had 
performed  and  the  materials  he  had  furnished  and 
used  on  defendant's  house  were  reasonably  worth. 
Against  this  obligation  he  was  entitled  to  set  off 
plaintiff's  obligation  to  indemnify  him  for  all  that  he 
had  been  compelled  to  pay  to  relieve  his  property 
from  the  liens  thereon  to  secure  plaintiff's  debts,  in- 
cluding the  attorney's  fees  and  costs  in  the  suits  to 
enforce":  Covell  v.  Washburn,  91  Cal.  560,  562,  563, 
27  Pac.  859. 

The  reasonable  value  of  materials  furnished  by  an 
original  contractor  under  a  void  contract  cannot 
exceed  the  price  he  paid  therefor,  for  an  agent  can- 
not buy  articles  for  his  principal  at  one  price  and 
compel  him  to  pay  a  higher  price  therefor:  Kuhlman 
V.  Burns,  117  Cal.  469,  472,  49  Pac.  585. 


854  mechanics'  liens.  §  549 

549.     When  Contract  Void,  Original  Contractor 
is  Contracting  Owner's  Agent.^^ 

When  the  original  contract  is  void,  all  mate- 
rials and  personal  services  furnished  by  any  lien- 
claimant  except  the  wonld-be  original  contractor 
are  deemed  to  be  furnished  at  the  personal  in- 
stanced^ of  the  contracting  owner,  except  that 
such  owner  is  not  personally  liable  therefor.^^ 

The  Contractor's  Action  in  Quasi  Contract  cannot  he 
Tried  until  after  the  claims  of  all  lienors  have  been 
adjudicated,  as  the  sum  to  be  set  off  against  his  de- 
mand cannot  be  determined  until  such  time.  If  the 
contractor  wishes  to  avoid  the  delay  thus  arising,  he 
can  do  so  by  paying  his  debts  to  the  lienors  claiming 
under  him :  Macomber  v.  Bigelow,  123  Cal.  532,  534, 
535,  56  Pac.  449. 

24  Code  of  Civil  Procedure,  section  1183,  third  sen- 
tence: ^^All  such  contracts,  ....  otherwise,  .... 
shall  be  wholly  void,  ....  and,  in  such  .  case,  the 
labor  done  and  materials  furnished  by  all  persons 
aforesaid  [i.  e.,  by  all  lien-claimants],  except  the 
contractor,  shall  be  deemed  to  have  been  done  and 
furnished  at  the  personal  instance  of  the  owner,  and 
they  shall  have  a  lien  for  the  value  thereof.^'  New 
provision   in   effect   May   17,    1885. 

Code  of  Civil  Procedure,  section  1202,  third  sen- 
tence: '^If  the  owner  and  his  contractor  shall  di- 
rectly or  indirectly  conspire,  ....  then  such  con- 
tract shall  be  wholly  void,  ....  and  in  such  case 
the  labor  done  and  materials  furnished  by  all  per- 
sons, except  the  contractor,  shall  be  deemed  to  have 
been  done  and  furnished  at  the  personal  instance  of 
the  owner,  and  they  shall  have  a  lien  for  the  value 
thereof:  New  provision,  in  effect  March  18,  1885. 

25  Personal  Instance.— This  provision  brings  every 
person,  other  than  the  original  contractor,  into  direct 
contact  with  the  owner  as  a  contractor,  and  removes 


§    549  THE    IMPROVEMENT    CONTRACT.  855 

the  distinction  made  between  those  who  contract  di- 
rectly with  the  owner  and  subcontractors.  By  the 
terms  of  the  statute  they  become,  for  the  purposes 
of  their  liens,  original  contractors  with  the  owner, 
but  cannot  recover  against  him  personallv:  Kellogg 
V.  Howes,  81  Cal.  170,  179,  180,  22  Pac.  509,  6  L.  R. 
A.  588. 

^^If  the  contract  is  not  filed  as  directed,  it  is  void, 
and  there  being  no  contract,  it  would  follow,  even 
though  the  statute  had  not  said  so,  that  the  owner 
is  building  himself.  In  that  case,  the  so-called  con- 
tractor is  (as  to  other  lienors)  but  the  agent  of  the 
owner.  This  would  be  the  natural  result,  and  is  not 
a  forced  conclusion  made  by  the  statute^':  Gibbs 
v.  Tally,  133  Cal.  373,  377,  65  Pac.  970. 

20  No  Personal  Liability.— The  contracting  owner 
is  not  personally  liable  on  a  contract  made  by  his 
statutory  agent,  but  his  property  is  subject  to  liens 
therefor:  California  Lumber  Co.  v.  Schmitt,  74  Cal. 
625,  627,  16  Pac.  516;  Kellogg  v.  Howes,  81  Cal.  170, 
180,  22  Pac.  509,  6  L.  R.  A.  588;  Davies-Henderson 
Lumber  Co.  v.  Gottschalk,  81  Cal.  641,  647,  22  Pac. 
860;  Santa  Clara  Val.  etc.  Lumber  Co.  v.  Williams. 
31  Pac.  1128,  1129B,  1130 A;  First  Nat.  Bank  v.  Per- 
ris  Irr.  Dist.,  107  Cal.  55,  65,  40  Pac.  45;  Wood  v. 
Oakland  etc.  Transit  Co.,  107  Cal.  500,  502,  40  Pac. 
806;  McMenomy  v.  White,  115  Cal.  339,  343,  47  Pac. 
109;  Kennedy  &  Shaw  Lumber  Co.  v.  Priet,  115  Cal. 
98,  46  Pac.  903;  Madera  Flume  etc.  Co.  v.  Kendall, 
120  Cal.  182,  184,  65  Am.  St.  Rep.  177,  52  Pac.  304; 
Gnekow  v.  Confer,  48  Pac.  331;,  Marchant  v.  Hayes, 
120  Cal.  137,  139,  52  Pac.  154;  McClain  v.  Hutton, 
131  Cal.  132,  144,  61  Pac.  273. 

In  California  Lumber  Co.  v.  Schmitt,  74  Cal.  625, 
627,  16  Pac.  516,  it  was  held  that  the  Code  of  Civil 
Procedure,  section  1183,  does  not  mean  to  establish 
the  personal  liability  of  the  contracting  owner  to 
all  these  various  lien  claimants,  but  rather  *' means 
to  preserve  the  right  of  the  materialman  who  has 
duly  filed  his  lien  according  to  the  statute,  in  cases 
where  the  contractor  has  failed  by  reason  of  not 
filing  his  contract  to  preserve  the  materialman 's  rights 


856  mechanics'  liens.  §  549 

thereunder;  and  the  language  of  the  statute  an- 
nounces the  law  to  be  that  where  such  is  the  case 
the  materialman  may  duly  file  his  lien,  and  enforce 
it  just  as  if  the  owner  of  the  building  had  bought 
from  and  contracted  for  the  materials  with  the  ma- 
terialman, in  the  beginning,  instead  of  the  contrac- 
tor/' 


THE    LIEN-CLAIM.  857 


AETICLE   3. 

THE   LIEN-CLAIM. 

Subdivision  1.    Definition, 

550.  Lien-claim   defined. 

Subdivision  2.    Extent   of    Lien-claims. 

551.  Who    lien-claimant    and    what    lienable    in    case 

of    structure. 

552.  Who  lien-claimant  and  what  lienable  in  case  of 

mining  property. 

553.  Same,    in    respect    to    noncontracting    owner. 

554.  Incidence  of  lien-claim  against  leased  machinery 

upon  mining  property. 

555.  Mining   claim   defined. 

556.  Who    lien-claimant    and   what   lienable    in    case 

of    certain    city    street    and    other    improve- 
ments. 

557.  Certain   persons  presuined  to  be  owner's  agent 

for   purposes   of   creating   lien-claim. 

Subdivision  3.    Limitations  on  Rights  to    Lien-claims, 

558.  Property   of   incompetent   persons   not   lienable. 

559.  Property   of   estate   usually  not  lienable. 

560.  Public   property  not  lienable. 

561.  Bond  required  in  lieu  of  lien  in  case  of  public 

works. 

562.  When    contract    void,    original    contractor    for- 

feits   lien. 

Subdivision  ^.    Assignment. 

563.  Lien-claim    unassignable. 


858  mechanics'  liens.  §  550 

SuMivision   5.     Waiver   of     Lien-claim. 
564.     Written  consent  essential  to  valid  waiver. 

Snbdivkion  1.     Definition. 

550.  Lien-Claim  Defined. 

A  lien-claim  is  the  individual  privilege,  con- 
ferred by  law  upon  certain  persons,  of  securing 
a  lien.^  Wliat  persons  are  lien-claimants  and  the 
proceedings  prerequisite  to  securing  a  lien  are 
set  forth  in  the  following  sections. 

Subdivision  2.     Extent  of  Lien-Claims. 

551.  Who   Lien-Claimant    and   What   Lienable 
in  Case  of  Structure. 

Every  person^  who,  pursuant  to  the  terms  of 
a  contract  therefor,  furnishes  personal  services 
directly    on^    any    particular    building,    wharf, 

1  Mills  V.  La  Verne  Land  Co.,  97  Cal.  254,  33  Am. 
St.  Eep.  168,  32  Pac.  169. 

s  Every  Person  (in  Certain  Relation  to  the  Prop- 
erty) is  a  Lien  Claimant.— Code  of  Civil  Procedure, 
section  1183,  as  amended,  in  effect  May  17,  1885, 
enumerates  these  persons  exhaustively:  ''Mechan- 
ics, materialmen,  j^  85n  [  contractors,  subcontract- 
ors, ]  n85  ]  artisans,  architects,  )■  85n  ]■  machinists, 
builders,  miners,  and  all  persons  ■{  n85  ■{  and  labor- 
ers of  every  class."  The  basis  of  this  enumeration 
was  section  1183  as  amended,  in  effect  April  I'o,  1880, 
which  very  much  restricted  the  persons  to  whom  liens 
were  allowed. 

Historical.— The  code,  as  adopted  1872,  in  effect 
January  1,  1873,  to  April  15,  1880,  read,  ''every  per- 
son"; while  Stats.  1850,  c.  87,  sec.  1,  in  effect  April 


§    551  THE    LIEN-CLAIM.  859 

15,  1850,  repealed  July  1,  1855;  Stats.  1855,  c. 
130,  sec.  1,  and  Stats.  1856,  c.  134,  sec.  1,  in  effect 
July  1,  1855,  repealed  June  25,  1862;  and  Stats.  1867- 
68,  c.  448,  sec.  1,  in  effect  March  30,  1868,  repealed 
January  1,  1873,  enumerated  the  lien-claimants  ex- 
haustively. The  statute  of  1862  (Stats.  1862,  c.  297, 
sees.  1,  3  and  17),  in  effect  June  25,  1862,  repealed 
March  30,  1868,  in  case  of  a  valid  contract  with  the 
contractor  owner,  gave  a  lien  solely  with  those  who 
contracted  directly  with  such  owner,  but  provided 
that  this  lien  should  inure  primarily  to  the  benefit  of 
all  persons  who,  as  employees  of  the  original  contractor, 
furnish  work  or  materials;  and  where  there  was  no 
valid  contract,  everyone  furnishing  work  and  mate- 
rials had  a  lien  for  the  value  thereof  (see  Dore  v. 
Sellers,  27  Cal.  588,  593,  594). 

3  Personal  Services  must  be  Performed  Directly 
upon  Structure. — A  person  employed  by  an  original 
contractor  to  cook  for  the  men  engaged  in  excavatins^ 
a  reservoir,  the  cooking  being  done  on  the  ground 
as  the  work  progressed,  is  not  entitled  to  a  lien. 
Not  the  particular  place  where  the  cooking  was  done, 
but  the  nature  of  the  services  and  their  relation  to 
the  work  which  is  being  constructed,  is  the  deter- 
mining factor.  No  lien  is  given  for  indirect  and  re- 
mote services  (Stats.  1868) :  McCormick  v.  Los  Ange- 
les Water  Co.,  40  Cal.   185. 

A  person  employed  by  an  original  contractor  for 
''the  hauling  of  materials  used  in  the  construction 
of  [the]  building''  has  a  lien.  ''His  labor  was  per- 
formed on  the  biTilding  in  the  sajne  sense  as  that 
of  the  men  who  lifted  the  brick  from  the'  ground  to 
the  upper  parts  of  the  building'':  McClain  v.  Hut- 
ton,  131  Cal.  132,  137,  138  (61  Pac.  273),  63  Pac.  182. 
A  person,  however,  who  does  not  "pterform  labor 
upon  the  building  or  furnish  materials  therefor,  but 
v^as  employed  by  the  brickmen  to  haul  brick  for 
them,  and  had  no  connection  with  the  contractor, 
who  owed  him  no  liability,"  has  no  lien-claim.  "His 
position  is  not  different  from  that  of  laborers  who 
made  the  brick":  Adams  v.  Burbank,  103  Cal.  646, 
051,   37  Pac.   640. 


860  mechanics'  liens.  §  551 

bridge,  ditch,  flume,  aqueduct,  well,  tunnel, 
fence,  machinery,  railroad,  wagon  road,  or  other 
structure^  in  any  capacity  whatever,^  or  mate- 

4  Objects  for  Work  on  Which  Lien  Claim  Given.— 
Code  of  Civil  Procedure,  section  1183:  **Any  [o85o] 
[a]  building,  wharf,  bridge,  ditch,  flume,  aqueduct, 
[85o]  [b]  }^99ii|^  well  ^  n99 -|  ,  tunnel,  fence,  ma- 
chinery, railroad,  wagon  road,  or  other  structure. '  * 
As  enacted  1872;  with  amendments  in  effect  April  15, 
1880,  May  17,  1885,  and  April  30,  1899. 

(a)  Here  was   omitted:  ''Mining  claim." 

(b)  Here  was  omitted:  ''To  create  hydraulic 
power. ' ' 

Historical.— StSits.  1850,  c.  87,  sec.  1,  in  effect  April 
12,  1850,  gave  a  lien  claim  merely  on  "any  building 
or  wharf  (see  Burt  v.  Washington,  3  Cal.  246),  but 
was  extended  by  amendment,  in  effect  May  17, 
1853  (Stats.  1853,  c.  148)  to  include  "any  bridge, 
ditch,  flume  or  aqueduct  constructed  to  create  hy- 
draulic power  or  for  mining  purposes."  Stats.  1855, 
c.  130,  sec.  1,  effective  July  1,  1855,  changed  the 
phraseology  to  "building,  wharf,  or  other  superstruc- 
ture," and  this  language  was  preserved  in  Stats. 
1856,  c.  134,  sec.  1,  in  effect  April  19,  1856.  In  Elli- 
son V.  Jackson  Water  Co.,  12  Cal.  542,  554,  it  was 
held  that  a  ditch  to  carry  water,  with  here  and  there 
connecting  flumes  over  ravines  and  gulches,  is  in  its 
general  nature  an  excavation,  and  not  a  superstruc- 
ture, and  hence  no  lien  thereon  is  given  under  the 
acts  of  1855  and  1856.  See,  also,  Horn  v.  Jones,  28 
Cal.  194,  203.  By  Stats.  1857,  c.  87,  in  effect  March 
18,  1857,  the  act  of  1856  was  accordingly  enlarged 
to  include  any  "bridge,  ditch,  flume,  or  aqueduct,  to 
create  hydraulic  power  or  for  mining  purposes," 
which  was  the  same  as  the  act  of  1850  as  amended 
May  17,  1853.  By  Stats.  1862,  c.  297,  sec.  1,  in  ef- 
fect June  25,  1862,  the  lien-claim  was  again  enlarged 
to  include  any  tunnel,  fence,  machinery,  and,  by 
amendment,  in  effect  April  4,  1864  (Stats.  1863-64,  c. 


§    551  THE    LIEN-CLAIM.  861 

411),  to  include  any  railroad  or  wagon  road.  By  Stats. 
1867-68,  c.  448,  sec.  1,  in  effect  March  30,  1868,  tlie 
phrase  ^^ mining  claim''  was  included,  making  the 
enumeration  the  same  as  that  included  in  the  code 
as  enacted    1872. 

Neither  swings  nor  seats,  part  of  the  improvements 
on  a  park,  are  structures  or  buildings  within  the 
meaning  of  the  code;  hence,  no  lien  is  acquired  for 
materials  used  in  their  construction:  (Code  1878; 
Lothian  v.  Wood,  55  Cal.  159,  163. 

5  Under  What  Circumstances  Lien  Claim  Given  for 
Labor. — Code  of  Civil  Procedure,  section  1183,  gives 
the  lien  claim  for  ^^  performing  labor  upon  or  furnish- 
ing materials  to  be  used  in  the  construction, 
alteration,  }►  87n  [-  addition  to  -|n87-{,  or  repair, 
[- 85n  I  either  in  whole  or  in  part  ■{  ii85 -\  ,  of  any 
building,''  etc.  As  enacted  1872,  with  amendments 
in  effect  May  17,  1885,  and  March  15,  1887.  Stats. 
1867-68,  c.  448,  sec.  1,  read  the  same  as  the  code  as 
amended  in  1885. 

In  the  phrase  *'all  persons  and  laborers  of  every 
class  performing  labor  upon,"  ^Hhe  preposition 
'upon'  refers  to  and  has  for  its  objective  the  noun 
'building,'  and  is  to  be  read  as  though  the  word 
*  building'  with  its  qualifying  word  ^any'  followed 
immediately  upon  the  word  ^upon. '  The  lien-claiivi 
to  materialmen  is  only  given  to  those  who  furnish 
materials  to  be  used  in  the  *  construction,  alteration, 
addition  to,  or  repair'  of  the  building,  etc.;  but  that 
to  laborers  is  given  to  all  who  perform  labor  upon  it, 
whether  technically  coming  within  the  definition  of 
construction,  alteration,  etc.,  or  not":  Palmer  v.  La- 
vigne,  104    Cal.  30,  31,  32,  37    Pac.  775. 

Historical.  —  Under  Stats.  1850,  c.  87,  sec.  1; 
Stats.  1855,  c.  130,  sec.  1;  and  Stats.  1856,  c.  134,  sec. 
1,  in  effect  from  April  12,  18'50,  to  June  25,  1862,  the 
lien-claim  was  for  '' performing  labor  or  furnishing 
materials  for  the  construction  or  repair,  of  any  build- 
ing," etc.;  and  the  court  held  that  the  work  need 
not  be  done  in  the  making  or  erection  of  a  building; 
but  'Hhe  alteration  of  a  building  to  adapt  to  other 
tban  the  original  uses,  or  even  to  change  its  form  or 


862  mechanics'  liens.  §  651 

rials^  to  be  used''  and  which  have  been  nsed^  in 
the  construction,  alteration,  addition  to,  or  re- 
pair of  the  same,  has  a  lien-claim 

structure,  brings  it  within  the  provisions  of  the  stat- 
ute^ ^:  (Stats.  1856)  Donahue  v.  Cromartie,  21  Cal. 
80,  86.  Under  Stats.  1862,  c.  297,  sees.  1  and  17,  the 
lien,  as  to  persons  contracting  directly  with  the  con- 
tracting owner  was  ^^for  the  construction,  or  part  oP 
the  construction,  repair,  or  furnishing  materials  for 
the  construction  or  repair  of  any  building,'^  etc.; 
and  when  the  contract  is  void,  the  same  for  all  other 
persons. 

An  original  contractor  who  moves  a  dwelling-house 
has  a  lien  thereon  for  such  service:  Palmer  v.  La- 
vigne,  104  Cal.   30,  31,  32,  37  Pac.  775. 

The  lien  of  a  subcontractor  who  grades  a  lot  as  a 
part  of  the  general  undertaking  of  constructing  a 
building  is  authorized  by  this  section,  not  section 
556,  below:  Macomber  v.  Bigelow,  126  Cal.  9,  11,  58 
Pac.  312. 

6  Materials. — A  lien  is  not  allowed  for  the  price 
of  a  building  sold  ready  made  and  merely  to  be 
moved  onto  the  premises:  Selden  v.  Meeks,  17  Cal. 
128. 

Where  such  a  building  is  to  constitute  part  of  a 
larger  structure,  the  erection  of  which  was  provided 
for  by  the  same  agreement,  it  may  be  regarded  with 
propriety  as  material,  and  hence  a  lien  therefor  is 
allowable:  Selden  v.  Meeks,  17  Cal.  128. 

Paper,  or  decorating  a  house  with  paper  decora- 
tions, is  as  much  the  subject  matter  of  a  lien  as 
painting  or  putting  on  the  hard  finish  of  plaster.  The 
paper  loses  its  character  of  personalty,  becomes  af- 
fixed to  the  building  and  its  removal  therefrom  re- 
sults in  the  destruction  of  value:  La  Grill  v.  Mallard, 
90  Cal.  373,  376,  27  Pac.  294. 

Where  a  materialman's  contract  provided  that  he 
should  furnish  iron  couplings  at  a  fixed  price  per 
pound,  and  should  also  be  paid  the  reasonable  value 


§    551  THE    LIEN-CLAIM.  863 

of  all  patterns  for  such  couplings,  and  of  the  boxes 
in  which  they  were  shipped,  the  boxes  and  patterns 
arc  too  remote  from  the  actual  work  of  construction 
to  permit  their  value  to  be  made  a  lien,  especially 
because  they  remained  the  property  of  the  original 
contractor,  were  made  the  subject  of  separate  charges 
by  the  materialman,  and  were  not  incorporated  into 
the  improvement,  thereby  differing  from  the  cartage 
of  materials:  First  Nat.  Bank  v.  Ferris  Irr.  Dist., 
107  Cal.  55,  66,  40  Pac.  45. 

A  lien  is  allowed  under  this  provision  for  mate- 
rials furnished  for  the  construction  of  a  cement  side- 
walk constructed  in  connection  with  a  building  un- 
der circumstances  showing  it  to  be  a  part  thereof- 
McGlain  v.  Hutton,  131  Cal.  132,  137,  63  Pac.  182. 

One  who  advances  money  as  a  loan,  although  ex- 
])ressly  for  the  payment  of  labor  and  material  used 
in  the  erection  of  a  building  has  no  lien-claim: 
Godeffroy  v.  Caldwell,  2  Cal.  489,  56  Am.  Dec.  360; 
Cardenasso  v.  Antonelle,  127  Cal.  382,  387,  59  Pac. 
765. 

No  materialman  of  a  materialman  has  a  lien-claim : 
Eoebling's  Sons  Co.  v.  Humboldt  etc.  Power  Co.,  112 
Cal.  288,  291,  292,  44  Pac.  568;  Wilson  v.  Hind,  113 
Cal.  357,  45  Pac.  695. 

In  West  Coast  Lumber  Co.  v.  Newkirk,  80  Cal.  275, 
280,  22  Pac.  231,  in  computing  the  value  of  materials 
furnished,  it  was  thought  that  the  cartage  might  be 
considered  an  element  therein.  Likewise,  in  Jones 
V.  Kruse  (Cal.,  March  13,  1903),  where  in  a  notice  of 
claim  of  lien,  tha  value  of  lumber,  ^  Hncluding  cartage 
thereon,''  was  stated  to  be  a  certain  sum,  the  claim 
was  held  not  to  have  been  rendered  void  by  the  in- 
sertion of  the  italicized  words,  as  ^Hhe  cost  of  trans- 
portation of  goods  necessarily  enters  into  their 
value.'' 

7  Materials  must  be  Furnished  to  be  Used.— In  or- 
der to  be  the  ground  of  a  lien,  the  materials  must  not 
only  be  used,  but  furnished  to  be  used  on  the  partic- 
ular building  upon  which  the  lien  is  claimed:  Bot- 
tomly  V.  Grace  Church,  2  Cal.  90;  Donahue  v.  Crom- 


864  mechanics'  liens.  §  551 

(1)  against  the  structure^  as  aforesaid^  upon 
which  the  personal  services  or  materials  have 
been  bestowed,'* 

artie,  21  Cal.  80;  Roebling's  Sons  Co.  v.  Bear  Yalley 
Iir.  Co.,  99  Cal.  488,  34  Pac.  80;  Weatherly  v.  Van 
Wyck,  128  Cal.  329,  60  Pac.  846. 

Averment  and  Proof  that  the  materials  were  ex- 
pressly furnished  to  be  used  on  the  building  upon 
which  they  were  used  is  essential:  Bottomly  v.  Grace 
Church,  2  Cal.  90;  Houghton  v.  Blake,  5  Cal.  240; 
Holmes  v.  Eichet,  56  Cal.  307,  310,  38  Am.  Eep.  54; 
Cohn  V.  Wright,  89  Cal.  86,  88,  26  Pac.  643;  Neihaus 
V.   Morgan,   45   Pac.   2'55,   257A. 

A  Finding  to  that  effect  must  be  made  by  the  court: 
Wilson  V.  Nugent,  125  Cal.   280,  284,  57  Pac.  1008. 

Parol  Proof  of  the  intended  use  or  purpose  for 
which  material  is  furnished  is  admissible  in  evidence 
when  the  written  contract  is  silent  on  the  subject. 
It  does  not  contradict  nor  add  any  new  term  to  the 
written  contract;  it  merely  shows  the  purpose  to 
which  work  stipulated  for  in  the  written  contract  is 
or  was  designed  to  be  applied:  Donahue  v.  Cromar- 
tie,  21  Cal.  80. 

8  Materials  must  be  Actually  Used.— In  order  to 
be  the  ground  of  a  lien,  the  materials  must  not  only 
be  furnished  to  be  used,  but  must  be  actually  used 
on  the  particular  building  up-on  which  the  lien  is 
claimed:  Barrows  v.  Knight,  55  Cal.  155,  159. 

J>  Lien  Attaches  upon  Structure.— The  object  of 
the  statute  is  to  give  the  mechanic  a  lien  upon  what- 
ever interest  the  contracting  owner  has,  whether  m 
the  superstructure,  or  in  the  land  and  superstructure: 
(Stats.  1856)  McGreary  v.  Osborne,  9  Cal.  119.  Sa 
it  is  no  objection  to  the  lien-claim  of  an  architect 
upon  a  structure  that  at  the  time  the  contract  was 
entered  into  the  contracting  owner  owned  no  interest 
in  the  land  upon  which  the  structure  was  to  be  con- 
structed: Pacific  Mutual  Life  Ins.  Co.  v.  Fisher,  10& 
Cal.  566,  569,  42  Pac.  154. 


§    551     .  ,TITE    LTEN-CLAIM.  865 

Usually  the  Lien  must  he  SonyM  upon  the  Whole 
Structure.— Where  the  whole  structure,  as  an  aque- 
duct, ditch,  flume,  pipe  line,  or  railway,  is  continu- 
ous and  of  contemporaneous  construction,  and  the 
parts  thereof  are  useless  without  one  another,  or  arc 
so  interdependent  and  intimately  related  that  they 
must  be  regarded  as  an  entirety,  the  lien-claim  lies 
against  the  whole  structure.  In  Willamette  etc.  Co. 
V.  Krem.er,  94  Cal.  205,  210,  211,  29  Pac.  633,  the 
court  says:  ^^The  statute  gives  a  lien  upon  the  en- 
tire building  for  any  portion  of  the  labor  done  or 
materials  furnished  therefor,  and  there  is  no  provi- 
sion for  a  lien  upon  a  portion  of  a  building,  or  for 
the  sale  of  a  part  of  a  building  to  satisfy  a  lien  upon 
the  whole.'' 

Where  materials  were  furnished  an  original  con- 
tractor who  had  contracted  to  l?y  the  track  on  a 
nine-mile  extension  of  the  Sierra  Valleys  and  Mo- 
hawk E'lilway  westward  to  a  point  nine  hundred  feet 
west  of  Kirby  Mill,  the  roadbed  having  been  already 
graded,  and  where  the  whole  railway  consisted  of 
this  nine-mile  stretch,  together  with  fourteen  miles 
then  in  operation,  and  seven  miles  soon  afterward 
constructed,  the  materialman  properly  filed  his  lien 
claim  for  the  materials  furnished  by  him  against  the 
whole  railway,  including  that  already  built  and  that 
projected,  and  against  the  land  necessary  for  the  con- 
venient use  and  occupation  of  the  whole:  Bringham 
y.  Knox,  127  Cal.  40,  59  Pac.  198. 

Where  an  original  contractor  for  the  construction 
of  a  railway  one  hundred  and  twenty-three  mile? 
long  made  a  subcontract  for  the  grading  and  other 
work  of  preparing  for  the  ties  and  rails  of  a  section 
seventy-four  and  one-quarter  miles  long,  the  contract 
price  of  which  was  to  be  paid  from  time  to  time  as 
twenty-mile  sections  were  completed,  and  where  the 
original  cod  tractor  failed  to  make  the  first  payment 
Avhen  due,  and  the  subcontractor  filed  a  lien  on  the 
twenty-mile  section  then  completed,  the  court  held 
that,  as  the  subcontract  was  entire,  and  its  perform- 
ance was  not  prevented,  nor  was  it  rescinded,  a  con- 
Liens— 55 


866  mechanics'  liens.  .    §  5 'I 

(2)  against  every  interest  of  every  contractiii^ 
owner  in  the  land  required  for  its  convenient 
use  and  occupation^  the  amount  whereof  is  to 
be  determined  by  the  court  on  rendering  judg- 
ments^ and 

tractor  or  subcontractor  is  not  entitled  to  **file  suc- 
cessive iiens  for  work  and  materials  performed  and 
furnished  under  an  entire  contract ^^;  but  he  may 
^*  acquire  only  one  lien,  and  for  this  purpose  his 
claim  must  be  filed  within  the  time  specified  in  the 
statute  after  the  completion  of  the  work'^  Cox  v. 
Western  Pac.  E.  E.  Co.,  44  Cal.  18,  28;  affirmed,  47 
Cal.  87,  the  court  saying:  ^^The  amended  complaint 
[in  which  was  inserted  an  averment  that  plaintiffs 
were  prevented  from  completing  the  contract]  is  in 
no  respect  better  than  the  original  complaint.  It 
still  counts  on  an  entire  contract,  and  seeks  the  fore- 
closure of  a  lien  which  was  filed  before  the  comple- 
tion of  the  work,  and  upon  a  portion  of  the  road./' 
The  court  says  the  lien  must  be  filed  against  the 
''whole  work,-'  but  does  not  spiecify  whether  it 
means  the  entire  railway,  one  hundred  and  twenty- 
three  miles  in  length,  or  the  whole  section,  seventy- 
four  and  one-quarter  miles  in  length,  which  was  un- 
dertaken by  the   subcontractor. 

Sometimes  a  Lien  is  Allowed  on  Section  of  Structure. 
Where  the  different  sections  of  a  structure  are  con- 
structed at  different  times  by  different  contractors, 
and  the  sections  are  in  a  measure  independent,  a  lieu- 
claim  is  sometimes  allowed  against  the  section  cov- 
ered by  the  original  contract  under  which  the  work 
or  materials  were  furnished.  Where  an  irrigation 
company  owning  a  reservoir  and  pipe  line  entered 
upon  the  construction  of  a  lengthy  canal,  consisting 
of  four  divisions,  to  be  constructed  under  separate 
contracts  for  each  division,  the  plan  of  which  did  not 
include  the  pipe  line  as  any  part  of  the  canal,  but 
was  to  follow  the  route  of  the  pipe  line,  and  after 
two  divisions  were  completed,  they  were  temporarily 
connected  with  the  pipe  line,  whereupon  work  ceased 


§    551  THE    LIEN-CLAIM.  867 

Upon  the  other  two  proposed  divisions,  and  the  whole 
property  passed  into  the  hands  of  a  receiver,  lien- 
claimants  for  materials  used  in  the  construction  of 
the  two  completed  divisions  may  file  liens  thereon 
without  including  the  two  uncompleted  divisions  or 
the  pipe  line  or  the  reservoir:  Pac.  etc.  Co.  v.  Bear 
Valley  Irr.  Co.,  120  Cal.  94,  65  Am.  St.  Eep.  158,  52 
Pac.  "^136. 

Where  an  original  contract  embraced  several  out- 
buildings, but  the  claimi  of  certain  lien-claimants 
other  than  the  original  contractor  arose  upon  one  of 
such  buildings,  a  lien  claim  may  properly  be  claimed 
by  each  claimant  merely  against  the  building  upon 
which  he  bestowed  labor  or  materials:  Brunner  v. 
Marke,  98  Cal.  374,  33  Pac.  265;  Macomber  v.  Bige- 
low,  126  Cal.  9,  12,  58  Pac.  312. 

3  0  Code  of  Civil  Procedure,  section  1185:  ''The 
land  upon  which  any  building,  improvement,  |-  99n  [ 
•well  -{  n99^  ,  or  structure  is  constructed,  together 
with  a  convenient  space  about  the  same,  or  so  much 
as  may  be  required  for  the  convenient  use  and  occu- 
pation thereof,  }■  73-4n  [  [a]  to  be  determined  by 
the  court  on  rendering  judgment  ]  n73-4^  ,  is  also 
subject  to  the  lien,  if  \-  73-4f  }-  at  the  commencement 
of  the  work,  or  of  the  furnishing  of  materials  for 
the  same  -'  f73-4-j  ,  the  land  belonged  to  the  person 
who  caused  said  building,  improvement,  |^  99n  )■  well 
■\  n99  ■{  ,  or  structure  to  be  constructed,  altered,  or 
repaired;  but  if  such  person  owns  less  than  a  fee 
simple  estate  in  such  land,  then  only  his  interest 
therein  is  subject  to  such  lien. ^'  As  enacted  1872, 
with  amendments,  in  effect  Mav  29,  1874,  and  April 
24,  1899. 

(a)  Before  the  insertion  of  this  provision  the 
rule  was  the  same:  Tibbetts  v.  Moore,  23  Cal.  208, 
213. 

Provisions  similar  to  the  code  as  enacted  1872  are 
found  in  the  Mechanic's  Lien  Laws  of  1856,  sec.  4; 
1S62,  sec.  3;  and  1868,  sec.  2;  in  effect  since  April 
19,  1856.  Before  that  date  the  amount  of  land  nec- 
essary to  the  convenient  use  and  occupation  of  the 
improvement  was  limited  to  five  hundred  square  feet: 
See  Stats.  1850,  c.  87,  sec.  6,  and  1855,  c.  130,  sec.  5. 


868  mechanics'  lieas.  §  551 

(3)  against^^  every  interest  of  every  other  per- 
son in  sueli  land  who^  having  obtained  knowl- 
edge of  the  actual  improvement  thereof  fails 
to  post  within  three  days  thereafter^  or  having 
obtained  knowledge  of  the  intention  to  improve 

The  land  upon  which  the  building  is  constructed 
is  necessarily  subject  to  the  lien  to  the  extent  of  the 
contracting  owner  ^s  interest  therein,  but  if  the  plain- 
tiii'  would  claim  that  more  than  that  is  necessary  for 
the  convenient  use  and  occupation  of  the  building,  he 
must  make  appropriate  averments  to  that  effect  in 
his  complaint:  Willamette  etc.  Co.  v.  Kremer,  94  Cal. 
205,  211,  29  Pac.  633  j  Sachse  v.  Auburn,  95  Cal.  650, 
30  Pac.   800. 

Where  a  lien  attaches  to  a  leasehold  interest  which 
was  forfeited  or  surrendered  after  such  attachment, 
the  estate  is  still  subject  to  the  burden  of  the  lien; 
for,  although  the  leasehold  is  thereby  merged  in  the 
fee,  yet  the  merger  will  not  be  allowed  to  operate 
to  defeat  the  rights  of  third  parties  wliich  have  in- 
tervened before  the  merger  took  effect:  Gaskill  v. 
Trainer,  3  Cal.  334,  340. 

Amount  of  Land  Necessary  for  Convenient  Use.— 
'  *  The  uses  to  which  a  building  is  to  b-e  put  must  man- 
ifestly, many  times,  determine  the  quantity  of  land 
necessary  to  the  convenient  use  and  occupation 
thereof.  If  erected  as  a  mill  for  sawing  luipiber,  the 
space  required  for  a  log  and  lumberyard  would  be  re- 
garded as  necessary  to  its  use,  while  similar  space 
around  a  building  for  a  watch  factory  might  not  be 
at  all  necessary.  This  thing  should  be  borne  in  mind; 
it  is  for  the  convenient  use  and  occupation  of  the 
building  that  the  land  about  the  same  is  given  by  our 
statute;  a  flouring  mill  erected  on  a  large  grain  ranch 
would  require  a  given  space  about  it  for  the  purposes 
incidental  to  its  operations;  it  might  require  the 
whole  ranch  to  create  business  for  it, -but  it  would 
not  follow,  under  our  statute,  that  the  entire  ranch 
would  be  subject  to  a  lien  for  its  erection'':   Tunis  v. 


I 


§    551  THE    LIEX-CLAIM.  869 

Lakeport   Agr.   Park  Assn.,   98   Cal.   285,   286,   287,   35 
Am.  St.  Eep.  180,  33  Pac.  63. 

The  statute  means  exactly  what  it  says.  It  does 
not  mean  that  sufficient  land  around  the  dwelling.- 
house  to  support  the  owner  while  living  there  should 
be  set  apart.  Neither  the  productiveness  nor  non- 
productiveness  of  the  soil,  nor  the  profit  derived  from 
its  cultivation  are  material  elements  in  determining 
this  question.  This  source  of  income  or  support  of  the 
owner  or  tenant  of  the  building  is  a  foreign  matter: 
Cowan  V.  Griffith,  108  Cal.  224,  48  Am.  St.  Eep.  82, 
43    Pac.    42. 

Aver7nent.— There  is  no  material  distinction  between 
an  averment  that  a  lot  is  necessary  for  the  convenient 
use  and  ^^enjoymenf  of  a  building  and  that  it  is 
necessary  for  the  convenient  use  and  ^' occupations^ 
thereof:  Ward  v.  Crane,  118  Cal.  676,  50  Pac.  839, 
841  A. 

The  amount  of  land  thus  to  be  made  subject  to  the 
lien  is  an  issuable  fact.  Willamette  etc.  Co.  v.  Kre- 
mer,  94  Cal.  205,  211,  29  Pac.  633.  If  this  issue  is 
not  raised  by  the  pleadings,  the  court  cannot  pass 
upon  it  in  rendering  judgment:  Green  v.  Chandler,  54 
Oal.   626. 

11  Noncontr acting  Owner  With  Know^ledge  Must 
Disclaim  Responsibility.— Code  of  Civil  Procedure,  sec- 
tion 1192:  ^  ^  Every  building  or  other  improvement  men- 
tioned in  section  1183  of  this  code,  constructed  upon 
any  lands  with  the  knowledge  of  the  owner,  or  the  per- 
son having  or  claiming  any  therein,  shall  be  held  to 
bave  been  constructed  at  the  instance  of  such  owner 
or  person  having  or  claiming  any  interest  therein,  and 
the  interest  owned  or  claimed  shall  be  subject  to  any 
lien  filed  in  accordance  with  the  provisions  of  this 
chapter,  unless  such  owner  or  other  person  having  or 
claiming  any  interest  therein  shall,  within  three  days 
after  he  shall  have  obtained  knowledge  of  the  con- 
struction, alteration  or  repair,  or  the  intended  con- 
-struction,  alteration,  or  repair,  give  notice  that  he 
will  not  be  responsible  for  the  same,  by  posting  a 
notice  in  writing  to  that  effect,  in  some  conspicuous 
place  upon  said  land,  or  upon  the  building  or  other 


870  mechanics'  liens.  §  651 

improvement  situated  thereon.     New  section,  in  effect 
May    29,    1874. 

Historical.— Stats.  1867-68,  c.  448,  sec.  4,"  in  effect 
March  30,  1868,  superseded  by  code  January  1,  1873, 
reads  substantially  the  same.  In  Johnson  v.  DeAvey, 
36  Cal.  623,  it  was  held  that  under  the  statute  of 
1862,  no  lien  could  be  obtained  on  the  interest  of 
noncontracting  owners  in  the  land  upon  which  the 
improvement  was  made.  The  same  was*  undoubtedly 
true    concerning   all   the   earlier   statutes. 

Provision  is  Constitutional. — ^^The  power  of  the 
legislature  to  enact  this  provision  is  not  only  free 
from  doubt,  but  the  justice  and  wisdom  of  the  meas- 
ure are  obvious.  If  the  owner  of  land,  or  anyone 
claiming  an  interest  in  it,  knowingly  permits  build- 
ings or  improvements  to  be  erected  on  it,  without 
giving  notice  that  it  is  done  without  his  consent,  it 
is  eminently  just  that  he  shall  be  held  to  have 
acquiesced  in  if:  Fuquay  v.  Stickney,  41  Cal.  583, 
587.  Constitutionality  reaffirmed.  Hicks  v.  Murray^ 
43  Cal.  515,  521,  525,  526.  Among  the  cases  in  which 
the  liability  has  been  enforced  are:  Moore  v.  Jack- 
son, 49  Cal.  109;  Harlan  v.  Stufflebeem,  87  Cal.  508, 
513,  25  Pac.  686;  West  Coast  Lumber  Co.  v.  Newkirk^ 
80  Cal.  275,  22  Pac.  231,  and  Evans  v.  Judson,  120  Cal. 
282,  52  Pac.  585. 

There  is  no  conflict  between  section- 1185,  on  which 
the  second  subdivision  of  this  section  is  founded, 
and  section  1192,  above:  West  Coast  L-umber  Co.  v. 
Xewkirk,  80  Cal.  275,  278,  279,  22  Pac.  231;  Phelps  v. 
MaxwelPs  Creek  Gold  Min.  Co.,  49  Cal.  336,  338. 

Every  Owner  of  Every  Interest  Must  Give  Notice.— 
Thus  a  holder  of  a  deed  of  trust  must  give  notice. 
A  deed  of  trust  to  secure  an  indebtedness  is  not 
a  mortgage  or  other  encumbrance,  but  a  deed  convey- 
ing the  fee,  defeasible  on  payment  of  the  debt,  and 
hence  conveys  an  interest  in  the  land.  The  holder 
thereof  must  give  notice  of  nonresponsibility  to  pre- 
vent the  lien  from  attaching  to  his  interest:  Fuquay 
V.  Stickney,  41  Cal.  583,  587. 

But  a  Mortgagee  is  not  Required  to  Give  Notice.— 
A  mortgagee  does  not  own  or  claim  any  interest  in 


§    551  THE    LIEN-CLAIM.  S71 

the  property  subject  to  his  mortgage,  and  does  not 
Deed  to  disclaim  responsibility:  Williams  v.  Santa 
Clara  Min.  Assn.,  66  Cal.  193,  200,  201,  5  Pac.  85. 

JSTor  does  a  vendor  holding  a  vendor  ^s  lien  have 
such  an  interest  in  the  property  subject  to  his  lien 
as  requires  him  to  disclaim  responsibility:  Kuschel 
V.  Hunter,  50  Pac.  397,  398A. 

What  Amounts  to  Knowledge.— Where  the  lessee 
of  a  quartz-mill  undertook  some  impirovements, 
and  the  president  of  the  corpioration  owning  the 
quartz-mill  visited  it  during  the  progress  thereof,  and 
was  informed  of  the  repairs  then  in  progrciss,  this  is 
prima  facie  sufficient  to  charge  the  corporation  witli 
knowledge  of  the  fact  that  work  was  going  on,  and 
no  notice  disclaiming  responsibility  being  given,  the 
interest  of  the  corporation  becomes  subject  to  any 
liens  which  may  be  secured:  Phelps  v.  Maxwell ^s 
Creek   Gold   Min.   Co.,   49   Cal.   336. 

Although  a  director  of  a  corporation  is  an  ageni: 
thereof,  yet,  if  he  acquires  knowledge  of  the  con- 
struction of  an  improvement  on  property  in  which 
such  corporation  owns  an  interest,  either  casually  or 
privately  or  by  rumor,  and  does  not  inform  the  cor- 
poration or  its  agents  thereabouts,  the  corporation  is 
not  chargeable  with  knowledge  thereof.  Only  when 
the  director  is  engaged  officially  in  the  business  of 
the  corporation,  is  the  corporation  charged  with  his 
knowledge:   Lothian  v.   Wood,  55   Cal.   159,   162. 

Where  buildings  were  constructed,  with  the  per- 
mission of  the  noncontracting  owner,  previously 
given,  the  fact  that  they  may  not  have  been  con- 
structed in  the  particular  form,  or  at  the  place, 
authorized,  does  not  relieve  such  owner  from  knowl- 
edge: Santa  Monica  Lumber  etc.  Co.  v.  Hege,  119  Cal. 
376,  379,  51  Pac.  555. 

Where  a  lessor  makes  a  short  term  lease  with  notice 
that  the  lessee  intends  to  make  improvements, 
especially  where  the  lessor  may  share  in  the  benefits 
of  such  improvements,  lien-claimants  have  a  claim 
against  his  interest  unless  he  posts  a  notice  dis- 
claiming  responsibility,    on   the    ground    that    he    has 


872  mechanics'  liens.  §  551 

sucli  land  fails  to  post  before  the  expiration  of 
three  days  after  the  actual  commencement  of 
the  improvement/^  in  some  conspicnons  place 
upon  the  land  or   some  structure  thereon,   a 
notice    disclaiming   responsibility   for  the   im- 
provement, 
as  security  for  the  payment  of  his  compensation 
for  the  personal  services  or  materials  bestowed 
upon  the  structure  by  him  under  his  contract.^^ 
A  noncontracting  owner  is  not,  however,  ren- 
dered personally  liable  to  any  lien-claimant  by 
failing  to  post  a  notice  disclaiming  responsibil- 
ity.i* 

constructive    notice    of    the    improvement:    Evans    v.. 
Judson,  120  Cal.  282,  52  Pac.  58o. 

Averment  in  Complaint.— It  is  not  necessary  to  aver 
in  the  complaint  that  the  noncontracting  owner  diil 
not  give  notice  of  nonresponsibility  in  order  to  charge 
his  interest  with  the  lien:  West  Coast  Lumber  Co.  v. 
Newkirk,  80  Cal.  275,  277,  22  Pac.  231. 

12  Birch  V.  Magic   Transit   Co.,   Cal.,  July  2,   1903. 

13  As  Security  for  His  Compensation.— ^^  That  the 
protection  of  the  mechanics'  lien  law  is  not  confined 
to  those  who  actually  perform  labor,  but  is  extended 
to  subcontractors  and  others,  is  settled  by  the  lan- 
guage of  the  code:  Code  Civ.  Proc,  sees.  -1183,  1184. 
A  fair  construction  of  these  sections  gives  to  the 
subcontractor  a  lien  for  the  work  done  on  the  build- 
ing by  his  employees,  and  this,  too,  where  the  original 
contract  is  void.  If  it  had  been  intended  by  the 
legislature  that  a  subcontractor  should  have  a  lien  for 
nothing  except  his  own  personal  labor,  they  should 
have  made  the  statute  read,  'shall  have  a  lien  upon 
the  property  upon  which  they  have  performed  labor.' 
Instead  of  the  word  'performed'  the  legislature  used 


%    552  THE    LIEN-CLAIM.  873 

552.     Who  Lien-Claimant  and  What  Lienable  in 
Case    of   Mining   Property.^^ 

Every  person  who,  pursTiant  to  the  terms  of 
a  contract  therefor,  furnishes  personal  servicer 

the  word  ^bestowed';  which  means  'used^  or  ^placed/ 
and  never  means  ^performed/  This  language  shows 
that  it  was  intended  to  give  a  subcontractor  a  lien 
for  the  labor  that  he  caused  his  employees  to  perform 
on  the  building.  The  fact  that  the  original  contract 
was  void  can  m  no  wav  affect  the  question  under 
consideration' ':  Macomber  v.  Bigelow,  126  Cal.  9,  14, 
58  Pac.  312. 

'  14  A  Personal  judgment  cannot  be  rendered  against 
a  noncontracting  owner:  Phelps  v.  Maxwell's  Creek 
Gold  Min.  Co.,  49  Cal.  336. 

15  Code  of  Civil  Procedure,  section  1183,  first  sen- 
tence, second  clause,  provides:  ^^And  any  person  who 
performs  labor  in  any  mining  claim  or  claims,  \-  03n  j- 
or  in  or  upon  any  'real  property  worked  as  a  mine, 
either  in  the  development  thereof,  or  in  working 
thereon  by  the  subtractive  pTOcess  ■{  n03  ^  has  a 
lien  upon  the  same,  and  the  works  owned  and  used 
bj  the  owners  for  reducing  the  ores  from  such  min- 
ing claim  or  claims  )■  03n  |-  or  real  property  so  worked 
as  a  mine  -|  n03  ]  ,  for  the  work  or  labor  done  or  mat- 
erials furnished  by  each  respectively,  whether  done 
or  furnished  at  the  instance  of  the  owner  [  03n  ]■  of 
such  mining  claim  or  claims  or  real  property  worked 
us  a  mine  or  <j  n03  ]  of  the  building,  or  other  im- 
provement or  his  agent.'''  New  provision  in  effect 
May  17,  1885,  as  amended  Stats.  1903,  March  5,  p. 
84,   c.   76. 

Historical.— A  lien  was  first  given  for  work  done 
about  a  mining  claim  by  Stats.  1867-68,  c.  448,  sec. 
1,  in  effect  March  30,  1868,  which  provided:  '* Every 
(mechanic,  artisan,  machinist,  builder,  contractor, 
lumber  merchant,  miner,  laborer,  and  other)  [a]  per- 
son ....  who  shall  perform  labor  on  any  mining 
claim  shall  have  a  lien  upon  the  same  for  the  work 
or  labor   done   (or  materials  furnished)    [b]    by   each, 


874  mechanics'  liens.  §  552 

connected  with  the  working  of/^  or  materials 
to  be  used,  and  which  have  been  used,  abont^'' 
any  mining  claim  or  any  property  worked  as  a 

respectively,  whether  done  or  furnished  at  the  in- 
stance of  the  owner  of  the  building,  or  other  im- 
provement,   or    his    agent/' 

(a)  Upon  the  adoption  of  the  code,  1872,  these 
parenthesized  words  were  omitted,  but  the  provision 
remained    substantially    the    same. 

(b)  Taking  the  section  as  a  whole,  the  words  ^ '  or 
materials  furnished '^  do  not  seem  to  have  any  an- 
jdication  to  mining  claims,  but  merely  to  materials 
furnished  to  be  used  in  the  construction,  etc.,  of  any 
building,  wharf,  bridge,   etc. 

By  the  amendment,  in  effect  April  15,  1880,  the 
persons  entitled  to  liens  were  limited,  but  a  lien  for 
materials  furnished  on  a  mining  claim  was  allowed. 
The  section  read:  ^^' Mechanics,  materialmen,  artisans, 
architects,  and  laborers  of  every  class  performing 
labor  upon,  or  materials  to  be  used  in  the  construc- 
tion, alteration,  or  repair  of  any  mining  claim  .... 
shall  have  a  lien  upon  the  property  upon  which  they 
have  bestowed  labor  or  furnished  materials  for  the 
value  of  such  labor  done  and  material  furnished. ' ' 
In  Helm  v.  Chapman,  66  Cal.  291,  5  Pac.  352,  de- 
cided under  this  provision,  the  court  said:  '^Strictly 
speaking,  a  mining  claim  cannot  be  constructed, 
altered  or  repaired.  The  intention  of  the  law-maker3 
seems  to  have  been  to  give  a  lien  upon  the  whole 
claim,  for  labor  performed  on,  and  for  materials  fur- 
nished for  and  used  in  any  structure,  or  on  or  in  the 
alteration  or  repair  of  any  structure,  or  on  or  in  the 
mining  claim.'* 

In  1885,  the  scope  of  the  lien  was  again  extended 
to  the  limits  existing  before  the  amendment  of  1903. 

i«  Lien  for  Personal  Services.— The  character  of 
the  work  should  not  be  scrutinized  too  strictly.  If 
the  labor  has  a  legitimate  connection  with  the  work- 
ing of  the  mine,  it  is  sufficiently  within  the  meaning 


§    552  THE    LIEN-CLAIM.  875 

of  the  law:  Malone  v.  Big  Flat  Gravel  Min.  Co.,  76 
Cal.   57G,   586,   19  Pac.   772. 

Where  a  lien  was  claimed  for  work  done  in  ^^  break- 
ing down  and  tearing  away  from  the  face  of  the 
diifts  and  mine  the  quartz  and  substance  of  the 
mine/'  it  was  contended  that  this  being  work  and 
labor  tending  to  destroy  the  property  rather  than 
improve  it,  a  lien  was  not  allowable;  but  the  court 
held:  '^We  are  satisfied  that  section  1183  is  suffi- 
ciently broad  to  entitle  liens  to  be  filed  for  the  work 
done'':  Chappius  v.  Blankman,  128  Cal.  362,  366,  60 
Pac.  925.  So  in  Helm  v.  Chapman,  66  Cal.  291,  5 
Pac.  352  (Code  1880),  a  lien  was  given  for  work  con- 
sisting of  quarrying  and  extracting  quartz  rock,  and 
working  in  stopes  and  levels  for  the  purpose  of  tak- 
ing out  rock  to  be  crushed. 

A  person  working  at  the  hoisting  works  of  a  mine 
as  engineer  of  the  hoisting  engine  has  a  lien-claim.. 
So  does  a  man  working  as  '^pumpman"  at  the  pump 
which  kept  the  mine  free  from  water:  Tredinnick  v. 
Mining  Co.,   72   Cai.   18,   83,   13   Pac.   152. 

A  blacksmith  working  in  a  blacksmith-shop,  upon 
ii  mining  claim,  sharpening  picks  and  drills,  and  do- 
ing other  necessary  work,  has  a  lien-claim,  for  by  the 
Civil  Code,  section  661:  '^Sluice-boxes,  flumes,  hose, 
pipes,  railway  tracks,  cars,  blacksmith-shops,  mills, 
and  all  other  machinery,  or  tools,  used  in  working 
or  developing  a  mine,  are  to  be  deemed  affixed  to 
the  mine":  Malone  v.  Big  Flat  Gravel  Min.  Co.,  76 
Cal.  578,  585,  18  Pac.  772. 

Persons  engaged  in  constructing  the  instrumen- 
talities through  which  mines  are  opened,  developed, 
prospected,  improved,  and  worked,  as  shafts,  tunnels, 
levels,  stopes,  chutes,  uprises,  cross-cuts,  and  in- 
clines, are  engaged  in  mining,  and  are  entitled  to  lien- 
claims:  Hines  v.  Miller,  122  Cal.  517,  519,  55  Pac.  401. 

17  Lien  for  Materials.— In  order  to  entitle  a  mat- 
erialman to  a  lien  claim,  the  material  must  both  be 
furnished  to  be  used,  and  actually  used  on  the  mining 
claim:  Silvester  v.  Coe  Quartz  Mine  Co.,  80  Cal.  510, 
512,  22  Pac.  217;  Bewick  v.  Muir,  83  Cal.  368,  375, 
23  Pac.  389;  see  section  551,  notes  7  and  8. 

The  language  of  the  code  seems  somewhat  uncertain 


876  mechanics'  liens.  §  552 

mine,  whether  furnished  in  the  development 
thereof  or  in  working  thereon  by  the  snhtractive 
process,  has  a  lien-claim  against  the  interest  of 
every  contracting  owner  in  all  the  property  ope- 
rated together  as  snch  mining  claim  or  mines/^ 
and  against  their  interests  in  the  works  used  by 
them  for  reducing  the  ores  therefrom,  as  security 
for  the  payment  of  his  compensation  therefor. 

as  to  how  far  liens  are  given  to  materialmen,  if  at 
all,  but  they  have  been  uniformly  upheld  by  the 
court.  In  Silvester  v.  Coe  Quartz  Mine  Co.,  80  Cal. 
510,  511,  22  Pac.  217,  this  issue  was  distinctly  raised, 
and  the  court  in  bank  sustained  materialmen's  liens 
upon  a  mining  claim  as  a  whole  for  materials  used 
in  the  rep«air  thereof;  and  in  Jordan  v.  Myres,  126 
Cal.  565,  58  Pac.  1061,  a  materialman's  lien  was 
enforced  without  question. 

18  Extent  of  Property  Covered  by  Lien.— Where 
several  mining  claims  are  owned  (as  leasehold  or 
otherwise)  ''and  operated  as  one  mine,  as  against 
the  parties  so  uniting  them,  they  may,  for  the  pur- 
poses of  the  lien  law,  be  regarded  and  treated  as  a 
single  claim,  and  declared  on  as  such":  Hamilton  v. 
Delhi  Min.  Co.,  118  Cal.  148,  151,  50  Pac.  378 ;  Tredin- 
nick  V.  Eed  Cloud  Consol.  Min.  Co.,  72  Cal.  78,  84,  13 
Pac.   152. 

Where  a  lien  was  claimed  on  a  five  hundred  acre 
tract  of  land,  with  improvements  and  an  adjoining 
ditch,  the  court  said:  ''We  think  that  since  the 
several  claims  all  adjoin  each  other,  with  the  ditch 
as  a  backbone,  and  are  all  owned  by  the  same  owner, 
and  were  used  and  operated  as  one  mine,  they  may  be 
considered  as  one  piece  of  property,  for  the  purpose 
of  the  present  question.  We  do  not  understand  that 
the  five  hundred  acres  consisted  of  land  which  was 
not  subject  to  appropriation  for  mining  purposes. 
....  As  we  gather  from  the  record,  the  five  hundred 

acres    consisted    of   placer    mining    ground We 

do   not   say   that   the   unity   of    the   property   follows 


s  553  THE  LiEx-CLAnr.  877 

553.     Same,     in     Eespect     to     Noncontracting 
Owner.^^ 

Every  person  who^  pursuant  to  the  terms  of  a 
contract  therefor^  constructs,  alters,  or  repairs, 
or  furnishes  materials  to  be  used,  and  which  have 

from  the  unity  of  ownership  alone,  but  from  that 
and  the  other  circumstances  mentioned^ ^:  Malone  v. 
Big  Flat  Gravel  Min.  Co.,  76  Cal.  578,  582,  583,  18  Pac. 
772. 

Where  materials  were  furnished  to  be  used,  and 
were  used  in  the  construction  of  a  quartz-mill,  tram- 
way, and  flume,  upon  a  mining  claim,  and  these 
fixtures  would  be  valueless  without  the  other  fixtures 
upon  the  mining  claim,  the  tramway,  for  instance, 
being  valueless  without  the  tunnel  in  which  it  ran, 
lien-claims  for  the  value  of  such  materials  must  be 
filed  upon  the  whole  claim:  Williams  v.  Mountaineer 
Gold  Min.  Co.,  102  Cal.  134,  34  Pac.  702,  36  Pac.  388. 

When  a  single  and  entire  original  contract  is  made 
for  the  erection,  upon  a  mining  claim,  of  hydraulic 
power  hoisting  works,  and  pumping-works  building 
and  gallows  frame,  and  for  the  laying  of  a  track, 
and  a  water  pipie  to  supply  water  to  the  mine,  and 
for  the  pumping  out  of  the  mine  to  the  third  level, 
materialmen  furnishing  materials  to  such  original 
contractor  to  be  used,  and  which  were  used  thereon, 
have  a  lien-claim  upon  the  mining  claim  as  a  whole: 
Silvester  v.  Coe  Quartz  Min.  Co.,  80  Cal.  510,  512,  22 
Pac.  217. 

^*One  who  performs  labor  in  any  pit,  shaft,  or  gal- 
lery of  a  mine  is  entitled  to  a  lien  on  the  whole  min- 
ing claim  ^  ^ :  Helm  v.  Chapman,  66  Cal.  291,  5  Pac.  352. 

3  9  See  Code  of  Civil  Procedure,  section  1192,  as 
quoted    under    section    551,    note    11,    above. 

Also  Code  of  Civil  Procedure,  section  1183,  first 
sentence,  second  clause,  and  historical  note,  under 
previous   section. 

Historical.— This  section  has  been  fully  operative 
since  May  17,  1885,  and  has  had  a  partial  operation 


878  mechanics'  liens.  §  553 

been  used^  in  the  construction^  alteration^  or  re- 
pair^^  of  any  mining  claim  or  any  property 
worked  as  a  mine,  has  a  lien-claim  against  everv 
interest  of  every  noncontracting  owner^^  in  all 

since  March  30,  1868,  the  period  between  January  1, 
1873,  and  May  29,   1874,  being  excepted. 
20  Constructs,  Alters,  Repairs.— Code  of  Civil  Pro- 

■  cedure,  section  1192,  giving  a  lien  on  the  interest  of  a 
noncontracting  owner,  who  fails  to  disclaim  respon- 
sibility, would  hardly  cDver  the  case  of  a  person  per- 
forming any  labor  thereon,  but  merely  to  cases  of  con- 
struction, alteration,  or  repair:  Williams  v.  Santa 
Clara    Min.    Assn.,    66    Cal.    193,    200,    5    Pac.    85.     It 

* ' '  cannot  be  held  applicable  to  the  claim  of  a  miner 
for  labor  in  a  mine.  Labor  in  a  mine  is  not  a 
building  or  improvement  constructed  upon  lands'': 
Eeese  v.  Bald  Mountain  etc.  Min.  Co.,  133  Cal.  285, 
289,  65  Pac.  578. 

The  mining  phrase  "drifting  in  a  tunnel' '  means 
taking  earth,  gravel,  or  ore  from  ground  made  acces- 
sible by  means  of  the  tunnel;  it  is  a  subtractive 
process — the  removal  of  the  very  corpus  of  the  prop- 
erty; it  is  not  the  same  as  "running  a  tunnel,"  and 
is  not  the  construction,  alteration,  or  repair  of  any 
improvement  about  a  mine;  hence  an  owner  who  sees 
a  person  drifting  in  a  tunnel  is  not  required  to  post 
notice  of  nonliability.  It  is  equitable  to  require  the 
noncontracting  owner  to  give  notice  of  nonliability  • 
in  case  of  an  unauthorized  beneficial  improvement, 
but  not  where  the  work  is  a  subtractive  process: 
Jurgenson  v.  Diller,  114  Cal.  491,  493,  55  Am.  St. 
Eep.  83,  46  Pac.  611.  "The  doctrine  of  notice  does 
not  apply  when  the  work  consists  of  a  subtractive 
process— the  removal  of  the  very  corpus  of  the  prop- 
ertv":  Reese  v.  Bald  Mountain  etc.  Min.  Co.,  133 
Cal.  285,  289,  65  Pac.  578. 

31  Has  Lien  Claim  Against  Every  Interest.— A 
mortgagee  does  not,  however,  own  or  claim  any  in- 
terest in  the  property  subject  to  his  mortgage  (see 
section  268,  above),  and  hence  is  not  a  person  who, 


§    553  THE    LIEN-CLAIM.  879 

the  property  operated  together  as  such  mining 
claim  or  mine^  who,  within  three  days  after  hav- 
ing obtained  knowledge  of  the  intended  or  ac- 
tual work  about  such  mining  claim  fails  to  place 
in  some  conspicuous  place  thereupon  a  notice  dis- 
claiming responsibility  for  such  work,  as  security 
for  the  payment  of  his  compensation  therefor. 

within  the  provisions  of  tnis  section,  is  required  to 
file  a  notice  of  nonliability.  His  rights  are  determined 
by  Code  of  Civil  Procedure,  section  1186  (see  sections 
1,  10,  578-580):  Williams  v.  Santa  Clara  Min.  Assn., 
66  Cal.  193,  200,  201,  5  Pac.  85. 

Instances  Wherein  'Notice  Disclaiming  ResponHMUty 
is  Required. — Where  a  mine  owner  leases  it  to  per- 
sons with  knowledge  that  they  intend  to  work  it,  his 
interest  therein  is  subject  to  liens,  unless  he  disclaims 
responsibility,  on  the  ground  that  he  has  constructive 
notice  of  the  work:  Hines  v.  Miller,  122  Cal.  517,  519- 
522,  55  Pac.  401. 

The  separate  and  distinct  interests  of  all  persons 
owning  interests  in  severalty  in  distinct  mining  claims, 
when  such  claims  are  operated  together,  are  subject  to 
a  lien-claim  filed  against  the  property  in  its  entiretv, 
when  they  have  notice  of  the  work  and  do  not  dis- 
claim responsibility:  Hamilton  v.  Delhi  Min.  Co.,  118 
Cal.  148,  152,  50  Pac.  378. 

Wherein  Notice  is  not  Required.— Where  the  contract- 
ing owner.  A,  is  director  of  a  mining  corporation  own- 
ing the  mining  claim,  in  question,  and  A  undertakes 
work  upon  it  in  his  individual  capacity  and  on  his 
individual  responsibility,  and  states  such  facts  to  the 
original  contractor  at  the  time  of  making  the  con- 
tract, the  fact  that  A  is  a  director  of  such  mining  cor- 
poration does  not  give  it  such  notice  of  the  work  as 
would  charge  its  property  with  a  lien  in  the  absence 
of  a  notice  disclaiming  responsibility:  Ayers  v.  Green 
Gold  Min.  Co.,  116  Cal.  333,  48  Pac.  221. 


880  mechanics'  liens.  §  554 

554.  Incidence   of   Lien-Claim   Against   Leased 
Machinery  upon  Mining  Property. 

The  lien-claim  conferred  against  mining  claims 
and  mines  does  not  extend  to  nor  cover  such 
leased  mining  machinery  as  is  merely  resting 
unattached  and  unnsed  upon  the  mining  prop- 
erty and  is  subsequently  removed^^^  nor  such 
leased  machinery  as  is  attached  to  and  used  in 
connection  with  the  mining  property  but  with- 
out an  intention  on  the  part  of  its  owner  to  per- 
manently annex  it  to  the  freehold.^^ 

555.  Mining  Claim  Defined. 

A  mining  claim  is  that  portion  of  a  vein  or  lode 
and  of  the  adjoining  surface,  or  of  the  surface 
and  subjacent  material,  to  which  the  claimant 

32  Hamnton  v.  Delhi  Min.  Co.,  118  Cal.  148,  152, 
50  Pac.  378. 

23  Leased  Machinery  Attached  and  Used  Without 
Intention  to  Permanently  Annex  not  Covered  by  Lien 
Claim. — Thus  where  the  title  to  the  machinery  is  in 
a  third  party  and  such  intention  prevails,  a  lien-claim- 
ant, although  without  notice  of  this  fact,  has  no  lien- 
claim  against  it.  '^Any  other  view  of  the  matter 
would,  we  think,  greatly  retard  development,  espe- 
cially of  mining  property,  where  it  often  becomes  nec- 
essary for  the  owner  or  his  lessee  to  borrow  or  hire  the 
use  of  machinery  which  for  the  time  being,  in  order  to 
utilize  it,  must  be  affixed  to  the  realty.  No  one  would 
have  the  temerity  to  loan  or  hire  machinery  to  an- 
other person  for  feuch  purposes  if  he  has  to  take  the 
risk  of  losing  his  property  through  the  liens  of  laborers 
or  materialmen  working  in  or  supplying  material  to  the 
mine'':  Jordan  v.  Myers,  126  Cal.  ^65,  570,  58  Pac. 
1061. 


§    555  THE    LIEN-CLAIM.  881 

has  acquired  a  right  of  possession  by  virtue  of 
a  compliance  with  the  laws  of  the  United  States 
and  the  local  rules  and  customs  of  miners.  Th3 
term  has  no  reference  to  the  different  stages  in 
the  acquisition  of  government  title. ^^ 

556.     Who  Lien-Claimant  and  What  Lienable  in 
Case   of   Certain    City   Street   and   Other 
Improvements.^^ 
Every  person  who,  pursuant  to  the  terms  of  a 

contract  therefor,  grades,  fills  in,  or  otherwise 

24  Williams  v.  Santa  Clara  Min.  Assn.,  66  Cal.  193, 
198,  5  Pac.  85;  Morse  v.  De  Ardo,  107  Cal.  622,  40  Pac. 
1018.  Compare  Bewick  v.  Muir,  83  Cal.  368,  372,  23 
Pac.  389,  criticised  in  Morse  v.  De  Ardo. 

25  Code  of  Civil  Procedure,  section  1191:  ''Any 
person  who,  at  the  request  of  the  }-87n  j-  reputed 
■{  n87  ■{    owner  of  any  lot  in  any  incorporated  city  or 

town,  grades,  fills  in,  or  otherwise  improves  the  same, 
or  the  street  [  85n  [►  or  sidewalk  ■{  n85  ^  in  front  of 
or  adjoining  the  same,  j-  87n  \-  or  constructs  any  areas, 
or  vaults,  or  cellars,  or  rooms,  under  said  sidewalks, 
or  makes  any  improvement  in  connection  therewith 
■\  87n-{  ,  has  a  lien  upon  said  lot  for  his  work  done 
and  materials  fijrnished.  This  provision  was  section 
1184  of  the  code  as  enacted  1872;  it  became  1191  in 
3885;  was  amended  in  effect  May  17,  1885,  and  March 
15,   1887. 

Historical.— StRts.  1855,  c.  130,  sec.  2,  Stats.  1856, 
c.  134,  sec.  1£,  Stats.  1862,  c.  297,  sees.  21  and  22, 
and  Stats.  1867-68,  c.  448,  sec.  9,  give  substantially 
the  same  lien  as  was  provided  by  the  code  as  enacted 
1872.  Under  Stats.  1855  and  1862,  the  contract  was 
required  to  be  in  writing,  etc.  Stats.  1856,  c.  134, 
sec.  13,  extended  the  lien  to  a  contract  with  a  bona 
Liens— 56 


882  mechanics'  liens.  §  5oQ 

improves  any  lot^*^  in  any  incorporated  city  or 
town,^''  or  an  adjoining  sidewalk  or  street,  or 
constructs  or  makes  any  improvement  about  any 
area,  vault,  cellar,  or  room  under  such  sidewalk, 
has  a  lien-claim 

(1)  against  every  interest  of  every  contracting 
owner  in  such  lot,  and 

(2)  against  every  interest  of  every  other  person 
therein  whose  ostensible  agent^®  such  con- 
tracting owner  is,  who  does  not  with  due  dili- 
gence disclaim  responsibility  therefor, 

as  security  for  the  payment  of  his  compensation 
therefor. 

fide  holder  of  the  land  for  more  than  one  year  under 
a  claim  of  ownership. 

26  Lot.— ^' The  *lot^  upon  which  a  lien  is  author- 
ized by  section  1191  is  not  limited  to  any  artificial 
subdivision  upon  the  surface  of  the  earth,  or  to  any 
ofiicial  designation  upon  the  map,  but  ....  its  mean- 
ing includes  whatever  territory  is  own-ed  by  a  person 
which  he  mav  cause  to  be  graded  under  a  single  con- 
tract'':  Warren  v.  Hopkins,  110  Cal.  506,  511,  42 
Pac.  986. 

2T  Property  outside  of  an  incorporated  city  or  town 
is  not  lienable  for  these  purposes:  Durrell  v.  Dooner, 
119  Cal.  411,  51  Pac.  628. 

38  Ostensible  Agency— Estoppel.— Where  the  vi- 
dence  shows  that  the  element  of  estoppel  exists,  and 
that  the  contracting  owner  was  the  ostensible  agent 
of  the  real  owner,  the  lien-claim  covers  the  interest 
of  the  real  owner  unless  he  disclaims  responsibility. 
This  lien-claim  against  the  noncontracting  owner  is 
not  given  by  virtue  of  Code  of  Civil  Procedure,  sec- 
tion 1192   (see  section  551,  note  11),  but  arises  from 


§    557  THE    LIEK^-CLAIM.  883 

557.  Certain  Persons  Presumed  to  be  Owner's 
Agent  for  Purposes  of  Creating  Lien 
Claim2» 

Every  person  having  charge^^  (either  as  lessee, 
or  under  a  working  bond  or  contract,  or  other- 

the  legislative  intendment,  shown  by  the  use  of  the 
word  ^  ^  reputed, '^  to  give  the  lien-claim  upon  the 
whole  lot:  Santa  Cruz  Eock  Pavement  Co.  v.  Lyons, 
133  Cal.  114,  118,  119,  65  Pac.  329. 

Where,  however,  no  element  of  estoppel  exists,  it 
is  unconstitutional  for  the  legislature  to  attempt  to 
give  a  lien-claim  upon  any  interest  of  any  noncon- 
tracting  owner:  Santa  Cruz  Rock  Pavement  Co.  v. 
Lyons,  117  Cal.  212,  59  Am.  St.  Eep.  174,  48  Pac. 
1097. 

29  Code  of  Civil  Procedure,  section  1183,  first  sen- 
tence, last  clause,  provides:  ''And  every  contractor, 
subcontractor,  architect,  builder,  or  other  person  hav- 
ing charge  of  any  mining,  [  03n  ^  or  work  and  labor 
performed  in  and  about  such  mining  claim  or  claims, 
or  real  i3roperty  worked  as  a  mine  -{  n03^  ,  or  [o03o] 
[a]  the  construction,  alteration,  \-  87n  )■  addition  to 
■{  n87  ■{  ,  or  repair,  either  in  whole  or  in  part  of  any 
building  or  other  improvement  as  aforesaid,  \-  03n  \- 
or  of  such  mining  claim  or  claims,  either  as  lessee  or 
under  a  working  bond  or  contract  thereon,  with  the 
privilege  of  purchase,  or  otherwise  -j  n03  ^  shall  be 
held  to  be  the  agent  of  the  owner  for  the  purposes  of 
this  chapter.''  New  provision,  in  effect  May  17, 
1885,  as  amended  March  18,  1887,  and  March  5,  1903. 

(a)  Here    was    omitted    ''of.'' 

Historical. — This  provision  as  originally  adopted 
was  also  in  effect  from  May  29,  1874,  to  April  15, 
1880,  and  was  the  last  clause  of  Stats.  1867-68,  p.  589, 
c.  448,  sec.  1,  in  effect  from  March  30,  1868,  until 
superseded  by  the  code  January  1,  1873. 

The  constitutionality  of  this  provision  was  upheld 
in  Hicks  v.  Murray,  43  Cal.  515,  521,  525,  526. 


884  mechanics'  liens.  §  557 

wise)  of  any  mining  or  other  work  performed 
about  any  mining  claim  or  property  worked  as 
a  mine^  or  of  the  construction^  alteration,  addi- 
tion to,  or  repair  of  any  building,  wharf,  bridge, 
ditch,  flume,  aqueduct,  well,  tunnel,  fence,  ma- 
chinery, railroad,  wagon  road,  or  other  structure, 
is  prima  facie  the  agent^^  of  the  owner  thereof, 
and  the  property  is  rendered  lienable  by  his  con- 
tract in  respect  to  such  property,  unless  the  pre- 
sumption of  agency  is  rebutted. 

Averment  and  Proof.— In  order  to  bring  a  transac- 
tion under  the  provisions  of  this  section,  it  is  es- 
sential for  the  plaintiff  to  aver  and  prove  that  the 
labor  was  performed  at  the  instance  of  the  owner 
within  the  definitions  contained  in  this  section  as  to 
who  shall  be  held  to  be  such  agent:  Eeese  v.  Bald 
Mountain  etc.  Min.  Co.,  133  Cal.  285,  287,  65  Pac. 
578. 

30  Person  Having  Charge— Evidence  Thereof.— 
The  open  declarations  and  continued  acts  of  a  per- 
son in  control  of  a  mining  claim  are  admissible  in 
evidence  to  show  that  a  person  is  in  charge  of  the 
mining.  This  showing,  under  the  rule  of  evidence 
declared  by  this  section,  if  not  dispelled  or  over- 
come, establishes  his  agency:  Donohoe  v.  Trinity  etc. 
Min.  Co.,  113  Cal.  119,  123,  45  Pac.  259. 

31  Prima  Facie  Agent.— "The  owner,  or  other  per- 
son in  interest,  might  overcome  this  [prima  facie 
agency]  by  proof  of  his  want  of  knowledge  and  non- 
employment  of  the  alleged  agent,  coupled  with  a 
showing  that  he  had  exercised  ordinary  care  in  the 
premises'':  Donohoe  v.  Trinity  etc.  Min.  Co.,  113 
Cal.  119,  123,  45  Pac.  259;  Jurgenson  v.  Diller,  114 
Cal.  491,  492,  46  Pac.  610. 

So  where  it  was  shown  that  a  laborer  employed 
on   a  mining  claim  knew  that   his   employer   did  not 


§    558  THE    LIEN-CLAIM.  885 

Subdivision  3.     Limitations  on  Rights  to  Lien- 
Cilaims, 

658.     Property    of     Incompetent    Persons    not 
Lienable. 

The  property  of  any  person  disqualified  from 
making  a  binding  contract  is  not  by  his  voidable 
contract  rendered  lienable.^^ 

own  the  mine  and  was  not  working  the  mine  as  the 
owner's  representative,  and  that  he  paid  him  such 
wages  as  he  got  on  his  own  account,  and  at  no  time 
assumed  to  act  on  the  owner's  behalf,  the  presump- 
tion of  agency  is  repelled:  Jurgenson  v.  Diller,  114 
Cal.  491,  492,  46  Pac.  610. 

A  finding  that  a  certain  person  was  in  possession 
of  certain  premises  under  a  contract  with  the  .owner 
Which  authorized  him  to  occupy  and  hold  possession 
and  to  make  improvements  and  prosecute  develop- 
ment work  and  prospecting  therein  does  not  show 
that  such  person  was  in  any  manner  agent  of  the 
owner;  the  contract  may  have  been  the  conveyance 
of  a  life  estate.  '^The  agent  referred  to  in  the  sec- 
tion must  be  the  agent  of  the  owner  of  the  building, 
mining,  or  improvement;  and  when  the  statute  says 
that  certain  persons  are  'deemed  to  be  the  agent  of 
the  owner,'  it  means  the  agent  of  the  owner  of  the 
building,  mining,  or  other  improvement":  Eeese  v. 
Bald  Mountain  etc.  Min.  Co.,  133  Cal.  285,  287,  288, 
65  Pac.  578. 

32  Not  Rendered  Lienable  by  Voidable  Contract.— 
''As  the  mechanic's  lien  arises  from  work  done  and 
materials  furnished  under  an  obligatory  contract,  if 
the  contract  be  not  binding,  the  lien  necessarily  fails. 
An  infant  is  not  bound  by  his  contract,  except  in 
certain  cases,  in  which  the  erection  of  a  building  is 
not  included":  Fish  v.  McCarthy,  96  Cal.  484,  31 
Am.  St.  Eep.  237,  31  Pac.   529. 

So  a  guardian  cannot  by  a  contract  for  the  repair 


886  MECHAIS^ICS'    LIENS.  §    559 

559.  Property  of  Estate  Usually  not  Lienable. 

The  property  of  an  estate  of  a  deceased  per- 
son is  not  rendered  lienable  by  any  contract  of 
the  executor  or  administrator  thereof  made  with- 
out an  order  of  court  with  a  person  who  had  no- 
tice that  the  property,  which  would  otherwise  be 
lienable,  belonged  to  the  estate.^^ 

560.  Public   Property   not   lienable. 

Public  property  dedicated  to  public  uses  is  not 
lienable.^^ 

of  his  ward^s  property  subject  it  to  a  mechanic's  lien 
without  first  obtaining  an  order  of  court  authorizing 
it:  Guy  v.  Du  Uprey,  16  Cal.  195,  200,  76  Am.  Dec. 
518;  Fish  v.  McCarthy,  96  Cal.  484,  31  Am.  St.  Eep. 
237,  31  Pac.  529. 

In  Western  Lumber  Co.  v.  Phillips,  94  Cal.  54, 
29  Pac.  328,  where  the  lien  was  allowed,  this  ques- 
tion  does  not   seem   to  have  been  raised. 

33  Not  Rendered  Lienable  by  Executor's  Contracts. 
''It  is  not  within  the  power  of  tha  executor,  with- 
out an  order  of  court,  to  make  a  contract  which 
would  give  the  plaintiff  the  right  to  file  liens  on  the 
estate  property^ ^:  San  Francisco  Paving  Co.  v.  Fair- 
field, 134  Cal.  220,  224,  66  Pac.  255;  Chappius  v. 
Blankman,  128  Cal.  362,  364,  60  Pac.  925. 

Where,  however,  the  property  stood  in  the  name  of 
the  executor,  and  the  lien-claim  accrued  to  a  bona 
fide  encumbrancer  without  actual  or  constructive  no-- 
tice  of  the  trust,  his  lien  is  valid,  as  no  implied  or 
resulting  trust  can  prejudice  the  rights  of  such  a 
purchaser  or  encumbrancer  of  immovable  property: 
Chappius  V.  Blankman,  128  Cal.  362,  365,  60  Pac. 
925. 

34  Public  Property  not  Lienable.— ''The  original 
words  of  a  statute  ought  not  to  include  the  govern- 


§    560  THE    LIEN-CLAIM.  887 

ment,  or  affect  its  rights,  unless  the  construction  be 
clear  and  indisputable  on  the  text  of  the  act.  .... 
The  import  of  the  language  is  not  limited,  because  it 
would  .be  against  public  policy  to  give  the  words 
their  natural  effect,  but  because,  in  view  of  the 
familiar  rules  of  construction,  a  different  intent  is 
manifested   by   the'  language   used.     The   government 

was    created    and '  shaped    by   the    constitution 

The  property  it  holds  is  simply  to  enable  it  to  per- 
form the  services  required  of  it.  It  is  as  much  ue- 
voted  to  public  use  as  are  the  streets  and  highways, 
though  in  a  different  way;  and  it  is  generally  held 
by  a  different  tenure.  Instead  of  being  the  obvious 
and  natural  conclusion  that  a  general  law  providing 
remedies  for  private  individuals  was  intended  to  en- 
able a  creditor  of  the  state  to  seize  the  property  for 
the  satisfaction  of  his  debts,  it  would  be  a  most  un- 
natural inference.  The  constitution  has  itself  pro- 
vided, as  the  only  means  which  the  state  has  for  the 
payment  of  its  debts,  the  exercise  of  the  sovereign 
power  of  taxation.  And  for  each  political  division 
the  rule  is  the  same":  Mayrhoffer  v.  Board  of  Edu- 
cation, 89  Cal.  110,  112,  113,  23  Am.  St.  Eep.  451,  26 
Pac.  646. 

A  lien  cannot  be  acquired  against  any  public  Duild- 
ing:  Bates  v.  County  of  Santa  Barbara,  90  Cal.  d43, 
546,  27  Pac.  438.       . 

A  public  schoolhouse  cannot  be  subjected  to  a 
lien:  Mayrhoffer  v.  Board  of  Education,  89  Cal.  iiO, 
23  Am.  St.  Eep.  451,  26  Pac.  646;  Union  Sheet  Metal 
Works  V.  Dodge,  129  Cal.  390,  393,  62  Pac.  41. 

A  monument,  though  built  by  private  contribu- 
tion, erected  upon  and  as  an  adornment  of  one  of 
the  public  parks  of  a  municipality,  cannot  be  sub- 
jected to  a  lien.  It  is  affixed  to  the  freehold,  and 
thus  becomes  a  part  of  the  land,  the  property  of  tne 
municipality:  Griffith  v.  Happersberger,  86  Cal.  605, 
613,  25  Pac.  137,  25  Pac.  487. 

Remedy  hy  Intercepting  Contract  Price  Available.— 
The  remedy  of  intercepting  the  contract  price  while 
in  the  hands  of  the  contracting  owner,  as  provided  in 


888  mechanics'  liens.  §  561 

561.  Bond  Required  in  Lieu  of  Lien  in  Case  of 
Public  Works. 
Every  person  to  whom  is  awarded  by  the  state^ 
or  any  city,  city  and  county,  county,  town,  or  dis- 
trict therein,  a  contract  for  the  execiition  or  per- 
formance of  any  building,  excavating,  or  other 
mechanical  work,  must,  before  entering  upon  the 
performance  thereof,  file  with  the  body  by  whom 
the  contract  was  awarded  a  good  and  sufficient 
bond,  to  be  approved  by  such  contracting  body, 
in  a  sum  amounting  to  not  less  than  one-half  of 
the  total  amount  payable  by  the  terms  of  the 
contract.  Such  bond  must  be  executed  by  such 
contractor  and  at  least  two  sureties,  and  must 
provide  that,  in  case  such  contractor  fails  to  pay 
for  any  materials  or  supplies  furnished  for  the 
performance  of  the  work  contracted  to  be  done, 
or  for  any  work  or  labor  done  thereon  of  any 
kind,  that  the  sureties  will  pay  the  same,  in  an 
amount  not  exceeding  the  sum  specified  in  the 
bond.  Every  person  claiming  the  benefit  of  this 
security  must,  within  thirty  days  after  the  com- 
pletion of  work  or  of  furnishing  materials  or  sup- 
plies, file  with  the  contracting  body  a  verified 

article  6,  below,  is  applicable  as  it  does  not  con- 
travene any  principal  of  public  policy,  but  merely 
operates  as  an  assignment  pro  tanto  of  the  money 
due  to  the  original  contractor  without  in  any  way 
affecting  the  public  property:  Bates  v.  County  of 
Santa  Barbara,   90      Cal.   543,  546,  547,   27  Pac.  438. 


§  561  contractors'  bonds.  880 

statement  of  his  claim^  together  with  a  statement 
that  it  has  not  been  paid^,  and  may,  within  ninety 
days  after  the  filing  of  the  claim,  commence  an 
action  on  such  bond.^^ 

35  See  Stats.  1897,  c.    140,  in  effect  March  27,  1897. 

NOTE.— Concerning  the  Requirement  of  Bonds  in  Case 
of  Contracts  for  Private  Improvements. 

In  case  of  contracts  for  improvements  to  property 
which  is  lienable  because  held  in  private  ownership, 
the  legislature  in  1893,  by  enacting  section  1203  of 
the  Code  of  Civil  Procedure,  attempted  to  reinforce 
the  security  which  the  materialman  and  laborer  were 
afforded  by  their  liens  by  the  security  of  a  bond,  in 
many  respects  similar  to  that  which  is  required  in 
case  of  contracts  for  public  improvements.  (Pre- 
viously from  March  18,  1885,  to  March  15,  1887,  a 
somewhat  similar  bond  had  been  required.) 

By  this  statute  the  legislature  required  that  when- 
ever an  original  contract  or  memorandum  thereof  was 
required  to  be  filed,  there  must  likewise  be  filed 
a  good  and  sufficient  joint  and  several  (Stimson  Mill 
Co.  V.  Eiley  (Cal.),  42  Pac.  1072,  1074B,  1075A)  bond 
executed  with  at  least  two  (Gibbs  v.  Tally  (Cal.), 
63  Pac.  168)  sureties  in  an  amount  equal  to  at  least 
twenty-five  per  cent  of  the  contract  price,  made  to 
inure  to  the  benefit  of  any  and  all  persons  who  per- 
form labor  for,  or  furnish  materials  to,  the  contractor 
or  any  person  acting  for  him  or  by  his  authority. 
A  failure  to  comply  with  these  requirements  rendered 
the  contracting  owner  and  original  contractor  jointly 
and  severally  liable  in  damages,  to  the  amount  for 
which  the  bond  is  required  to  be  given  (Gibbs  v. 
Tally  (Cal.),  63  Pac.  168,  169B),  to  any  and  all  ma- 


890  mechanics'  liens. 

terialmen,  laborers,  and  subcontractors  entitled  to 
liens  against  the  property  affected  by  their  con- 
tracts. 

Where  a  valid  bond  was  given,  any  person  for 
whose  benefit  it  was  made  to  inure  might  recover 
upon  the  bond  the  value  of  such  labor  or  materials 
not  exceeding  the  amount  of  the  bond,  without  in 
any  way  affecting  his  lien  or  the  right  to  foreclose  the 
same,  except  that  there  might  be  but  one  satisfaction 
of  his  demand  with  costs  and  counsel  fees.  The  right 
of  action  upon  the  bond  was  several,  and  the  claimant 
who  first  sued  and  obtained  judgment  was  entitled  to 
recover  up  to  the  limit  of  liability,  so  long  as  other 
claimants  did  not  intervene  or  as  a  number  of  inde- 
pendent actions  were  not  consolidated:  Gibbs  v.  Tally 
(Gal.),   63   Pac.   168,   169B. 

It  will  be  noticed  that  the  statute  did  not  say  who 
should  execute  the  bond.  The  intention  of  the  legis- 
lature was,  apparently,  that  the  original  contractor 
should  execute  it:  the  former  section  in  effect  from 
1885  until  repealed  in  1887,  as  well  as  the  Commission- 
ers' Amendments,  attempted  to  be  adopted  in  1901,  so 
provided,  and  such  was  the  construction  given  it  in 
practice.  But  in  Gibbs  v.  Tally,  133  Gal.  373,  65  Pac. 
970,  the  court  held  that  the  owner  was  in  effect  com- 
pelled to  execute  this  bond,  as  he  alone  was  subjected 
to  a  penalty  for  failure  to  do  so,  the  penalty  being 
a  liability  for  damages  to  the  amount  of  the  required 
bond. 

The  filing  of  the  bond  was  prerequisite  to  its  valid- 
ity, for  the  personal  delivery  otherwise  essential  to 
a  binding  contract  was  in  this  case  impossible  be- 
cause the  beneficiaries  were  an  undetermined  class; 
Mangrum  v.  Truesdale,  128  Gal.  145,  60  Pac.  775. 
The    bond    being    several    as    well    as   joint    was    not 


cOiS tractors'  bonds.  891 

rendered  invalid  as  to  the  sureties  because  signed  by 
the  sureties  alone:  Stimson  Mill  Co.  v.  Eiley  (Cal.), 
42  Pac.  1072,  1074B,  1075A.  As  an  action  on  the 
bond  did  not  impair  a  subsequent  foreclosure  ac- 
tion to  recover  a  deficiency,  so  conversely  the  right 
of  action  on  the  bond  was  not  affected  by  a  judgment 
of  foreclosure  where  a  satisfaction  of  the  secured  de- 
mand was  not  obtained:  Gibbs  v.  Tally  (Cal.),  63  Pac. 
168,  170A.  Conceding  that  this  bond  was  no  longer 
required  in  case  of  contracts  for  the  improvement 
of  public  property  ^after  the  enactment  of  the  act 
^of  March  27,  1897,  above,  it  was  nevertheless  binding 
upon  the  sureties  when  given  by  a  contractor  for  a 
public  building:  Union  Sheet  Metal  Works  v.  Dodge, 
129  Cal.  390,  395,  396,  62  Pac.  41. 

A  bond  conditioned  to  keep  the  contracting  owner 
harmless,  but  not  made  to  inure  to  the  benefit  of 
all  persons  furnishing  materials  and  labor  to  the  orig- 
inal contractor,  did  not  comply  with  the  requirements 
of  the  statute:  Gibbs  v.  Tally  (Cal.),  63  Pac.  168, 
169A.  Under  the  statute  of  1885  and  the  Commis- 
sioners^ Amendment  attempted  to  be  enacted  in  1901, 
however,  the  bond  was  also  required  to  be  condi- 
tioned for  the  faithful  performance  by  the  original 
contractor  of  his  contract   with  the   owner. 

In  Carpenter  v.  Furrey,  128  Cal.  665,  668,  669,  61 
Pac.  379,  the  question  of  the  constitutionality  of 
this  enactment  was  first  raised,  and  the  court  held, 
that  the  section  was  not  unconstitutional  on  the 
ground  that  the  subject  of  the  act  was  not  embraced 
in  the  title,  nor  because  it  was  class  legislation  or  a 
special  law.  (In  Shaughnessy  v.  American  Surety  Co. 
(Cal.),  71  Pac.  701,  below,  however,  the  court,  in 
effect,  held  that  the  law  amounted  to  class  legisla- 
tion.) 


892  mechanics'  liens. 

In  Gibfcs  V.  Tally,  133  Cal.  373,  65  Pac.  970,  where 
an  action  was  brought  by  certain  lien-claimants 
against  the  contracting  owner  to  recover  damages  for 
which  the  owner  was  liable  because  of  her  failure  to 
file  a  bond  conformable  to  the  statutory  requirements, 
the  court,  on  rehearing  in  bank,  held  the  statute  un- 
constitutional so  far  as  concerned  the  contracting 
owner,  saying: 

^^The  statute  does  not  say  who  shall  cause  this 
bond  to  be  executed,  nor  to  whom  it  shall,  in  form,  be 
made  payable.  It  does  not  undertake  that  the  con- 
tractor shall  faithfully  perform  his  contract.  In 
short,  there  is  nothing  which  can  be  of  any  possible 
advantage  to  the  owner  in  any  event.  On  the  other 
hand,  no  possible  loss  will  accrue  to  the  contractor  by 
a  failure  to  provide  the  bond.  The  declaration  that 
he  shall  be  severally  and  jointly  liable  with  the  owner 
is  useless  verbiage.  The  contractor  is  already  lia- 
ble for  all  labor  or  materials  furnished  to  him  or  by 
his  authority.  The  only  person,  therefore,  upon  whom 
a  penalty  is  put  for  the  failure  is  the  owner.  He, 
therefore,  and  he  only,  is  required  to  furnish  the 
bond,  and,  in  effect,  the  bond  is  conditioned  only  that 
the  contractor  will  pay  *such'  persons  the  value  of 
labor  and  materials  so  furnished  to  him.  And  the 
action  by  a  lienor  does  not  affect  his  lien,  rfr  an  ac- 
tion commenced  for  the  foreclosure  of  it. 

*  ^  The  section  assumes  a  valid  contract,  under  which, 
if  the  contract  is  performed,  the  lienors  can  have 
the  entire  contract  price  distributed  to  them.  But 
after  this  has  been  done,  or  even  before  it,  a  suit 
can  be  brought  upon  the  bond,  or  if  it  has  not  been 
filed,  against  the  owner,  to  recover  an  additional 
twenty-five  per  cent  upon  the  contract  price.  .  .  .  , 
The  statute  attempts  to  compel  the  owner  to  furnish 


COXTEACTORS'    BONDS.  893 

security  for  [lienors  employed  by  an  original  con- 
tractor]  If    this    can    be    required    from    the 

owner,  it  lessens  materially  the  value  of  his  con- 
tract; in  fact,  so  far  as  price  is  concerned,  it  de- 
prives him  of  it.  He  has  no  assurance  that  his  house 
will   be   built   for   the   stipulated   price 

^'That  the  owner  may  be  required  to  pay  more  than 
the  contract  price  is  not  the  only  injustice  which 
may  result  from  this  most  unreasonable  statute. 
The  owner,  or  the  sureties  he  is  required  to  furnish, 
would  be  responsible  in  case  the  owner  failed  to 
perform   his    contract 

''It  is  perfectly  manifest  that  this  section,  if  valid, 
places  an  unreasonable  restraint  upon  the  owner  of 
property,  in  respect  to  the  use  thereof.  It  compels 
him  to  become  responsible  for  liabilities  he  has  not 
incurred,  and  which  were  not  created  for  his  benefit. 

''To  impose  this  burden  upon  an  owner  is,  to 
some  extent,  to  deprive  him  of  his  property,  for  the 
value  of  property  depends  upon  the  right  use  of 
it 

"It  is  also  an  unnecessary  and  unreasonable  re., 
striction  upon  the  power  to  make  contracts 

"It  clearly  contravenes  the  provisions  of  section 
1  of  article  1  of  the  constitution  of  the  state,  and 
the  fourteenth  amendment  to  the  constitution  of  the 
United  States. 

"It  is  not— and  clearly  it  could  not  be— contended 
that  this  law  is  a  regulation  which  comes  within 
what    is    called    the    police    power '' 

In  Shaughnessy  v.  American  Surety  Co.,  69  Pac. 
250,  71  Pac.  701,  where  an  action  was  brought  by 
a  materialman  who  furnished  materials  for  which  he 


894  mechanics'  liens. 

had  a  lien  claim  to  an  original  contractor  against  the 
sureties  on  the  contractor's  bond  which  was  filed 
in  express  compliance  with  section  1203,  the  court 
also  held  that  the  liability  provided  for  by  the  stat- 
ute could  not  be  constitutionally  imposed  upon  the 
original  contractor.  On  rehearing  in  bank,  the  court 
adopted  the  decision  in  department,  and  said  (71 
Pac.  701): 

''In  Gibbs  v.  Tally  the  rights  of  the  owner  of  the 
building  were  only  directly  involved,  yet  the  prin- 
ciple of  the  decision  covers  the  invalidity  of  section 
1203,  as  to  the  contractor.  In  the  opinion  in  that  case 
it  is  not  only  said  that  the  section  'places  an  un- 
reasonable restraint  upon  the  owner  of  the  property 
in  regard  to  the  use  thereof,'  but  that  'it  is  also  an 
unreasonable  and  unnecessary  restriction  upon  the 
power  to  make  contracts.'  As  there  said,  a  compul- 
sory bond  may  not  be  as  great  a  burden  upon  the 
contractor  as  upon  the  owner;  but  the  difference  is 
one  of  degree  and  not  of  kind.  Section  15  of  article 
20  of  the  state  constitution  specifically  provides  that 
mechanics,  materialmen,  etc.,  shall  have  a  lien.  But 
the  right  to  a  'lien'  does  not  include  the  right  to 
every  onerous  burden'  which  may  be  thought  ad- 
vantageoiis  to  the  favored  creditors;  the  burden 
sought  to  be  enforced  must  be  something  that  can 
reasonably  be  considered  as  naturally  a  part  of  the 
thing  granted— the  lien.  But  a  lien  on  real  prop- 
erty is  a  thing  entirely  different  and  distinct  from 
a  personal  obligation  in  the  form  of  a  bond;  the 
latter  is  not  included  in  the  former,  and  is,  indeed, 
a  totally  different  kind  of  security.  The  require- 
ment of  such  a  bond  is  entirely  outside  the  protec- 
tion of  said  constitutional  provision  as  to  mechanics' 
liens;  and  it  is  violative  of  constitutional  safeguards 


contractors'  bonds.  805 

of  botji  the  state  and  federal  constitutions.  Why 
should  those  who  contract  about  erecting  a  building 
be  compelled  to  secure  their  contract  by  bonds,  while 
those  making  contracts  about  the  innumerable  other 
subjects  of  contracts  are  not  subjected  to  that  bur- 
den? Whether  or  not  a  general  law  requiring  all 
persons  making  contracts  of  any  kind  to  secure  their 
fulfillment  by  bonds  would  be  an  unconstitutional 
restraint  of  the  common  right  of  the  citizens  to  con- 
tract, need  not  here  be  considered;  for  the  section  in 
question  here  undertakes  to  make  a  discrimination 
upon  the  subject  not  founded  upon  any  natural,  in- 
herent, or  constitutional  distinction,  and  is  therefore 
invalid. ' ' 

In  San  Francisco  Lumber  Co.  v.  Bibb,  Cal.,  June  2, 
1903,  the  court  summarized  the  effect  of  the  Gibbs 
and  Shaughnessy  cases  upon  code  section  1203,  as 
follows: 

^^In  the  case  of  Gibbs  v.  Tally,  133  Cal.  373,  65 
Pac.  970,  section  1203  was  declared  unconstitutional, 
in  as  far  as  it  required  a  bond  to  be  given  by  an 
owner  of  a  building,  conditioned  in  the  same  general 
terms  as  that  we  are  now  considering. 

' '  And  in  the  recent  case  of  Shaughnessy  v.  American 
Surety  Co.,  69  Pac.  250,  71  Pac.  701,  it  is  held  that 
the  section  is  void  in  requiring  a  similar  bond  from 
a   contractor. 

*^As  the  sole  object  with  which  the  section  dealt 
was  that  requiring  the  execution  of  such  bonds  by 
the  owner  and  the  contractor,  for  the  benefit  of  la- 
borers and  materialmen,  and  as  these  two  decisions 
have  declared  it  unconstitutional,  as  to  the  only 
objects  it  had  in  view,  it  has  now  ceased  to  be 
operative  or  effective  for  any  purpose.  ^^ 

Thus  in  San  Francisco  Lumber  Co.  v.  Bibb,  Cal., 
June   2,    1903,   and   in   San   Francisco   Lumber   Co.    v. 


S96  MECHAJ^ICS'   LIENS. 

Bibb,  Cal.,  June  15,  1903,  where  a  bond  given  by 
an  originai  contractor  to  the  contracting  owner  con- 
tained provisions  running  in  favor  of  the  owner,  as 
would  an  ordinary  common-law  bond,  but  further 
provided  that  it  should  inure  to  the  benefit  of  all 
lien-claimants,  and  while  containing  no  recitals  to 
that  effect  was  clearly  shown  (in  view  of  its  pro- 
visions and  the  circumstances  of  its  execution  and 
recordation)  to  have  been  made  in  contemplation  of 
code  section  1203,  the  court  held  the  bond  to  be 
void  because  the  code  provisions  requiring  it  were 
unconstitutional,  and  no  man,  except  under  compul- 
sion, would  give   such  a  bond. 

Moreover  conceding  that  the  failure  to  file  the 
bond  was  intended  by  the  legislature  to  render  the 
original  contract  void,  the  court  in  Snell  v.  Brad- 
bury, Cal.,  June  20,  1903,  held  that  tnis  result  can- 
not now  follow  this  omission,  as  ^^the  requirement 
of  a  bond  is  beyond  the  power  of  the  legislature, 
and  the  imposition  of  the  penalty,  being  dependent 
upon  the  validity  of  the  provisions  requiring  a  bond, 
would  fall  with  the  provision  on  which  it  stands/' 

Thus  the  supreme  court  has  rendered  any  requir- 
ing of  such  a  bond  impossible  for  the  future,  and 
has  apparently  overruled  the  case  of  People's  Lum- 
ber Co.  V.  Gillard,  136  Cal.  55,  57-58,  68  Pac.  576, 
where  a  bond  in  conformity  with  section  1203  and 
doubtless  made  pursuant  to  its  provisions,  although 
making  no  reference'  to  it,  but  also  conditioned  for 
the  faithful  performance  of  his  contract  by  the  origi- 
nal contractor,  was  given  by  a  contractor  for  a  pub 
lie  building  at  the  instance  of  the  public  corporation 
owning  the  building,  and  where  the  court  held  that 
the  bond,  being  sufficient  as  a  common-law  bond, 
could  be  enforced  by  a  materialman  of  the  original 
contractor. 


§    562  THE    LIEN-CLAIM.  897 

562.     When  Contract  Void,  Original  Contractor 
Forfeits  Lien. 

When  the  original  contract  is  void,  the  would- 
be  original  contractor  forfeits  his  right  to  a 
lien.se 

Subdivision   Jf.     Assignment, 

663.     Lien-Claim  Unassignable. 

A  lien-claim  is  a  personal  privilege,  and  unas- 
signable.^'' 

36  Morris  v.  Wilson,  97  Cal.  644,  646,  647,  32  Pac. 
801;   Spinney  v.   Griffith,  98   Cal.   149,   32  Pac.  974. 

^^The  omission  to  file  the  contract  in  the  office  of 
the  county  recorder  deprived  the  contractor  of  any 
lien  for  his  labor  and  materials'':  Marchant  v.  Hayes, 
117  Cal.  669,  671,  48  Pac.  840. 

^^The  original  contractor  is  penalized  by  losing 
his  lien'':  Laidlaw  v.  Marye,  133  Cal.  170,  176,  65 
Pac.  391. 

Article  20,  section  15,  of  the  California  constitution 
provides:  ^^  Mechanics,  materialmen,  artisans,  and 
laborers  of  every  class  shall  have  a  lien  upon  the 
property  upon  which  they  have  bestowed  labor  or 
furnished  materials;  and  the  legislature  shall  pro- 
vide by  law  for  the  efficient  enforcement  of  such 
liens."  ^'The  constitution  is  not,  and  does  not,  pro- 
fess   to   be    self-acting.     It    commands   legislation    on 

the  subject He  who  would  avail  himself  of  the 

benefits  of  the  law  must  bring  himself  within  its 
purview  as  to  time  and  manner  of  filing.  In  short, 
he  must  comply  with  the  statute,  to  avail  himself  of 
its  benefits":  Morris  v.  Wilson,  97  Cal.  644,  646; 
Spinney  v.  Griffith,  98  Cal.  149,  151,  152. 

3T  A  mere  right  to  take  a  lien  in  the  present  or 
future  is  not  assignable.  It  is  noticeable  that  no- 
where in  the  statute  is  the  assignee  of  a  material- 
Liens— 57 


898  mechanics'  liens/  §  ^64 

Subdivision  5.     Waiver  of  Lien-Claim. 

564.     Written     Consent     Essential     to     Valid 
Waiver. 

The  written  consent  of  the  person  upon  whom 
a  lien-claim  is  conferred  is  essential  to  a  valid 
waiver  thereof.  Thns  the  original  contractor 
•cannot,  by  any  agreement  with  the  contracting 
owner,  waive  the  right  of  any  other  person  to 
obtain  or  enforce  his  lien.^^ 

man,  subcontractor,  or  laborer  given  the  right  to 
file  a  lien:  Mills  v.  La  Verne  Land  Co.,  97  Cal.  254, 
33  Am.  St.  Rep.  168,  32  Pac.  169;  McCrea  v.  Johnson, 
104  Cal.  224,  37  Pac.  902;  Simons  v.  Webster,  108 
Cal.  16,  40  Pac.  1056;  Eauer  v.  Fay,  110  Cal.  361, 
367,  42  Pac.  902. 

But  where  a  right  to  create  a  lien  belongs  to  a 
partnership,  it  also  exists  in  each  partner  separately 
and  severally,  and  so  is  not  destroyed  by  the  extin- 
guishment of  the  partnership:  Simons  v.  Webster, 
108   Cal.   16,  40  Pac.   1056. 

38  Written  Consent  Essential  to  Valid  Waiver.— 
Code  of  Civil  Procedure,  section  1201:  ^'It  shall  not 
be  competent  for  the  owner  and  contractor,  or  either 
of  them,  by  any  term  of  their  contract,  or  otherwise, 
to  waive,  affect,  or  impair  the  claims  and  liens  of 
other  persons,  whether  with  or  without  notice,  except 
by  their  written  consent,  and  any  term  of  the  con- 
tract to  that  effect  shall  be  null  and  void.''  New  sec- 
tion, in  effect  March  18,  1885. 

Historical.— VndieT  the  provisions  of  Stats.  1862,  c. 
297,  sees.  1,  3,  and  17,  in  effect  June  25,  1862,  re- 
pealed March  30,  1868,  the  liens  of  all  other  persons 
than  the  original  contractor,  in  cases  where  there  was 
such  contractor,  inured  to  them  through  the  lien  of 
such  contractor,  and  were  not  independent  and  exist- 
ing in  their  own  right  (Shaver  v.  Murdock,  36  Cal. 
293;  Henley  v.  Wadsworth,  38  Cal.  356,  361),  so  that 


§    564  THE    LIEN-CLAIM.  S99 

the  waiver  of  the  lien  by  the  original  contractor 
waived  the  liens  of  all  persons  claiming  under  such 
contractor. 

By  the  statute  of  1868,  however,  the  liens  of  all 
persons  were  given  them  independently  in  their  own 
right,  and  hence  could  not  be  affected  by  any  waiver 
of  lien  by  the  original  contractor:  Whittier  v.  Wil- 
bur, 48  Cal.  175.  Yet  under  the  statute  of  1856, 
amended  1858,  which  also  gave  lien-claims  to  all  per- 
sons in  their  own  rights,  the  court  had  previously 
held  that  where  the  original  contractor's  contract 
contained  a  provision  ^*that  he  will  not  encumber 
or  suffer  to  be  encumbered  the  said  building  or  lot 
on  which  it  is  erected,  by  any  mechanic's  lien,''  a  sub- 
contractor under  such  contract,  who  knew  of  its  ex- 
istence but  had  no  notice  of  the  conditions  thereof, 
was  charged  with  notice  of  such  waiver  of  lien,  and 
could  not  claim  any  lien:  Browne  v.  Aubrey,  22  Cal. 
56Q,   572. 

Illustration  of  Valid  Waiver.— An  agreement  in 
writing  entered  into  by  two  or  more  lienors  by  which 
they  agree  to  accept  a  pro  rata  payment  as  a  full 
discharge  of  their  liens,  is  valid  and  binding  upon 
them,  and  so  long  as  the  consent  of  all  the  lienors 
is  not  made  a  condition  precedent  to  the  obligation 
of  the  agreement,  it  is  binding  upon  all  entering 
into  it,  irrespective  of  the  existence  of  other  lienors. 
When  they  mutually  agree  to  forego  their  right  to 
pursue  the  usual  method  of  enforcing  their  demands 
in  consideration  of  being  paid  at  a  given  time,  the 
engagement  of  each  is  a  sufficient  consideration  for 
the  engagement  of  the  others  to  do  the  same.  In 
this  respect  it  is  in  principle  not  distinguishable  from 
a  composition  agreement.  Again,  the  acceptance  of 
the  agreement  by  the  contracting  owner  and  pay- 
ment by  him  is  a  sufficient  consideration  for  the 
agreement:  Wilson  v.  Samuels,  100  Cal.  514,  519,  520,  35 
Pac.  418;  Schroeder  v.  Pissis,  128  Cal.  209,  60  Pac. 
758. 

Such  an  agreement  is  not,  however,  a  composi* 
tJon  agreement:  Wilson  v.  Samuels,  100  Cal.  514,  518, 
35  Pac.  418. 


^00  MECIIAIS'ICS'    LIEXS.  §    CG5 


AKTlCLE  4. 

DUTIES    OF    OWNEE    OF    LIENED    INTEREST. 

565.     Must  not   impair  the   security. 
5Q6.     Must  file  notice  of  completion  or  cessation  from 
labor.. 

565.  Must  not  Impair  the  Security. 

'No  person  whose  interest  in  any  property  is 
subject  to  an  improvement  lien  may  deal  with 
the  property  in  a  manner  which  will  substantially 
impair  the  lienor's  security.^ 

566.  Must  File  Notice  of  Completion  or  Cessa- 
tion from  Labor.^ 

A  contracting  owner,  or  where  he  has  trans- 
ferred his  interest  in  the  lienable  property  be- 

1  Where  a  building  on  leased  property  was  sub- 
ject to  an  improvement  lien,  and  the  leasehold  in- 
terest would  be  valueless  without  the  building,  and 
the  person  personally  liable  to  the  lien-claimant  was 
insolvent,  an  injunction  will  issue  to  prevent  the  re- 
moval of  the  building  by  a  judgment  creditor  whose 
interest  therein  is  subordinate  to  the  lien.  "Although 
not  technically  waste,  the  removal  would  be  in  the 
nature  of  waste'':  Barber  v.  Eeynolds,  33  Cal.  497, 
503. 

2  Code  of  Civil  Procedure,  section  1187,  first  and 
second  sentences:  ''The  owner  of  any  property  on 
which   labor   has   been   performed,   or   for   which   ma- 


§    566  DUTIES    OF    OWNER.  901 

fore  the  time  when  the  notice  herein  described 
is  required  to  be  filed  his  successor  in  interest, 
or  a  noncontracting  owner  whose  interest  is  sub- 
ject to  the  improvement  lien,^  must,  within  ten 

terials  have  been  furnished,  to  be  used  in  the  con- 
struction, alteration,  addition  to,  or  repair,  either 
in  whole  or  in  part,  of  any  work  mentioned  in  sec- 
tion 1183  of  this  code,  must,  within  ten  days  after 
the  completion  thereof,  or  within  forty  days  after 
cessation  from  labor  upon  any  unfinished  contract,  or 
upon  any  unfinished  building,  improvement,  or  struc- 
ture, or  the  alteration,  addition  to,  or  the  repair 
thereof,  file  for  record  ....  a  notice  setting  forth  the 
date  when  such  building,  improvement,  or  structure, 
or  the  alteration,  addition  to,  or  repair  thereof,  was 
actually  completed,  or  in  case  of  cessation  from 
labor  for  thirty  days,  the  date  on  which  such  cessa- 
tion actually  occurred In  case  any  such  owner 

neglect  to  file  said  notice  as  herein  required,  with- 
in the  time  herein  required,  then  the  said  owner  and 
all  persons  deraigning  title  from  him,  and  all  per- 
sons claiming  an  interest  in  said  property,  shall  be 
estopped  in  any  proceedings  brought  to  foreclose  any 
mechanic 's  lien  or  liens,  provided  for  in  this  chap- 
ter, from  maintaining  a  defense  therein  based  on  the 
ground  that  said  lien  or  liens  have  not  been  filed 
within   the   time   provided   in   this   chapter.'' 

Effect  of  Failure  to  File  Notice  of  Completion  or 
Cessation  from  Lalor:   See  section  570,  below. 

3  Who  must  File  Notice.— The  statute,  in  terms,  re- 
quires ^^the  owner  of  the  property''  to  file  the  no- 
tice of  completion.  The  effect  ot  a  failure  to  file  the 
notice  is  to  prevent  'Hhe  said  owner,  and  all  per- 
sons deraigning  title  from  him,  and  all  persons  claim- 
ing an  interest  in  said  property"  from  contesting 
the  validity  of  any  lien  which  may  be  filed  upon  the 
property  ''on  the  ground  that  said  lien  or  liens  have 
not  been  filed  within  the  time  provided  in  this  chap- 
ter."    This  penalty  affects  everyone  who  has  an  in- 


^0^  mechanics'  liens.  §  56i> 

days  after  the  completion  of  or  after  thirty  days^ 
cessation  from  labor  npon^  any  improvement,^ 
file  for  record  with  the  recorder  of  the  county, 

terest  in  the  property  at  the  time  the  notice  should 
be  filed,  or  subsequently  thereto,  unless  his  interest 
is  not  subject  to  the  lien.  It  does  not,  however,  af- 
fect a  contracting  owner  who  has  transferred  hi» 
interest  before  the  expiration  of  the  time  within 
which  the  notice  is  required  to  be  given,  nor  a  non- 
contracting  owner,  who  has  no  knowledge  of  the  im- 
provement or  who  has  ported  a  notice  disclaiming 
responsibility  therefor.  The  persons,  then,  who  are 
required  under  penalty  to  file  this  notice  are:  Either 
a  contracting  owner  or  his  successor  in  interest  at 
the  time  the  notice  is  required  to  be  filed,  or  a  non- 
contracting  owner  whose  interest  is  subject  to  the 
lien. 

4  Time  When  Notice  must  be  Filed.— The  statute 
at  the  outset  says  that  the  notice  must  be  filed 
^'within  ten  days  after  the  completion''  of  the  im- 
provement, '^or  within  forty  days  after  cessation 
from  labor  upon  any  unfinished  contract,  or  upon  any 
unfinished  building,  improvement,  or  structure,  or  the 
alteration,  addition  to,  or  the  repair  thereof. ' '  Where, 
however,  there  is  a  cessation  from  labor,  the  stat- 
ute provides  that  *'in  case  of  cessation  from  labor 
for  thirty  days''  the  notice  must  state  the  ^^date  on 
which  such  cessation  actually  occurred";  and  that 
*^  cessation  from  labor  for  thirty  days  upon  any  con- 
tract or  upon  any  building,  improvement,  or  struc- 
ture, or  the  alteration,  addition*  to,  or  repair  there- 
of, shall  be  deemed  equivalent  to  a  completion  there- 
of for  the  purposes  of  this  chapter."  In  view  of 
these  provisions,  the  intention  appears  to  be  that 
in  case  of  cessation  from  labor  the  notice  must  be 
filed  not  until  after  the  expiration  of  thirty  days 
after  the  cessation  from  labor,  but  within  forty  days 
thereafter;  in  other  words,  it  must  be  filed  within 
ten   days   after  thirty   days'   cessation  from  labor. 


§    666  DUTIES   OF   OWNER.  903 

Where  a  number  of  original  contracts  have  been 
let  in  the  course  of  the  same  improvement,  and  these 
contracts  are  completed  at  widely  different  times,  or 
work  upon  some  of  them  ceases  for  thirty  days,  while 
on  others  it  is  carried  on  continuously  for  more  than 
thirty  days  after  such  cessation,  the  question  arises: 
Is  the  notice  of  completion  or  cessation  from  labor 
to  be  filed  within  ten  days  after  the  completion  of 
or  after  thirty  days'  cessation  from  labor  upon  each 
original  contract,  or  upon  the  whole  improvement? 
The  answer  is  found  in  the  fact  that  the  statute  ap- 
parently contemplates  that  but  one  notice  of  com- 
pletion should  be  filed  in  the  course  of  any  improve- 
ment, and  this  being  the  case,  it  must  be  evidently 
filed  after  the  final  completion  of  or  cessation  from 
labor  upon  the  whole  improvement,  while  if  a  notice 
was  to  be  filed  upon  the  completion  of  or  cessation 
from  labor  upon  each  original  contract,  a  plurality  of 
notices  would  be  required  in  many  instances. 

5  In  Case  of  What  Improvement  Notice  Should  be 
Filed. — The  opening  clause  of  section  1187  of  the 
code  requires  the  notice  to  be  filed  in  case  of  any 
improvement  '^mentioned  in  section  1183  of  this 
code.''  But  if  the  notice  is  not  filed,  certain  per- 
sons there  enumerated  are  '^estopped  in  any  proceed- 
ing brought  to  foreclose  any  mechanics'  lien  or 
liens,  provided  for  in  this  chapter,  from  maintain- 
ing a  defense  therein  based  on  the  ground  that  said 
lien  or  liens  have  not  been  filed  within  the  time 
provided  in  this  chapter."  The 'estoppel  is  broad  and 
inclusive,  and  by  its  terms  operates  equally  in  the 
case  of  a  lien  for  certain  city  street  improvements 
under  section  1191  of  the  code  (see  section  556 
above),  as  in  case  of  a  lien  under  section  1183  of  th« 
code,  and  is  supported  by  the  same  reason  in  both 
cases. 

Moreover,  the  latter  half  of  section  1187  of  the 
code,  in  prescribing  the  time  within  which  the  lien 
claim  must  be  filed,  allows  in  every  case  in  which  a 
notice  of  completion  of  cessation  from  labor  has  not 
been  filed   a  period   of   ninety   days  within  which   to 


904  mechanics'  liens.  §  566 

or  city  and  county^  in  which  such  property,  or 
some  part  thereof,  is  situated,  a  verified  notice® 
setting  forth 

(1)  the  date  of  such  completion  or  cessation 
from  labor,'' 

(2)  the  name  of  the  contracting  owner,® 

(3)  the  nature  of  his  interest  in  such  improve- 
ment and  in  the  property  on  which  it  is  situ- 
ated,® and 

file  the  lien-claim,  equally  in  the  case  of  a  city  street 
improvement  contract  under  section  1191  of  the  code 
as  in  that  of  an  improvement  under  section  1183. 

The  same  inducement  is  thus  offered  for  filing  tho 
notice  in  every  case.  The  opening  clause  of  the  stat- 
ute, then,  should  be  considered  elliptical,  and  inter- 
preted to  require  notice  of  completion  or  cessation 
from  labor  to  be  filed  in  every  case  where  an  im- 
provement lien  is  obtainable,  whether  under  section 
1183  or  section  1191  of  the  code. 

6  The  code  language  is:  ''File  for  record  in  the 
ofiice  of  the  county  recorder  of  the  county,  or  city 
and  county,  in  which  such  property  or  some  part 
thereof  is  situated,  a  notice  ....  and  said  notice 
must  be  verified  by  said  owner  or  some  other  per- 
son in  his  behalf.'' 

7  Where  a  notice  of  cessation  was  filed  about  thirty- 
two  days  after  the  cessation  from  labor,  an  error 
of  one  day  in  the  statement  of  the  date  of  cessation, 
being  (under  the  circumstances)  nonprejudicial  to 
lien-claimants,  does  not  vitiate  the  notice:  Boscow  v. 
Patton,  136  Cal.  90,  68  Pac.  490. 

8  The  code  language  is:  ''The  name  and  the  nature 
of  the  title  of  the  person  who  caused  the  said  build- 
ing, improvement,  or  structure,  to  be  erected,  or  said 
alteration,  addition  to,  or  repair  to  be  made." 


^    566  DUTIES    OF   OWNER.  905 

(4)   a  description  of  such  property  sufficient  to 

identify  it  with  reasonable  certainty.^ 
Such  notice  must  be  recorded  by  the  recorder  up- 
on receipt  of  a  fee  of  one  dollar  therefor>^ 

^  The  code  language  is:  *'A  description  of  tlie 
property  sufficient  for  identification/^  A  similar 
expression  is  interpreted  in  section  568,  note  15. 

10  See  Code  of  Civil  Procedure,  section  1187,  third 
sentence. 


906  mechanics'  liens. 


AETICLE  5. 

THE    PEKFECTED    LIEN. 

Snhdivisio7i  1.    P^^oceedings  Whereby  Lien  is  Perfected, 

567.  Every    lien-claimant    may    perfect    his    lien  by 

filing   notice. 

568.  Eequisites   of   notice   of   claim   of  lien. 

569.  Time  of  filing  notice  when  notice  of  completion 

or  cessation  filed. 

570.  Time  of  filing  notice  when  notice  of  completion 

of  cessation  not  filed. 

571.  Original   contract  as   evidence   of   completion. 

572.  Matters   treated   as   completion  for  purposes   of 

filing   notice. 

573.  Trivial    imperfection    to    be    disregarded. 

574.  Notice   of  claim  of  lien  cannot  be  reformed  or 

amended. 

575.  Substantial    observance    of    requirements    essen- 

tial. 

576.  Filing    fraudulent    notice    works    forfeiture    of 

lien. 

577.  Claimant  who   files  joint   claim   must   segregate 

separate   amounts   claimed. 

8 ithdi vision  2.     Time  of  Attachment  of  Liens. 

578.  Contractor's  lien  attaches  at  commencement  of 

work    on    contract. 

579.  Laborer's   lien   at    commencement    of   labor. 

580.  Materialman'^    lien    at    commencement    of    fur- 

nishing materials. 


§  567  PERFECTING  THE  LIEN.  907 

SuMivision   3.     Operation   of   Perfected   Lien. 

581.  Notice  compels  contracting  owner  to  retain  cer- 

tain  moneys. 

Subdivision    //.     Assignment    of    Lien. 

582.  Assignment   of   lien. 

Subdivision  1.     Proceedings  WJierehy  Lien  is  Per- 
fected. 

567.  Every    Lien-Claimant    may    Perfect    His 
Lien  by  Filing  Notice. 

Each  person  upon  whom  the  privilege  of  ob- 
taining an  improvement  lien  is  conferred  may, 
in  his  own  right/  perfect  his  lien  by  filing  a  no- 
tice of  claim  of  lien  as  hereinafter  set  forth. 
C{1)  the  claimant's  name/  )-> 

568.  Eequisites  of  Notice   of  Claim  of  Lien.^ 

Every  notice  of  claim  of  lien^  must  be  verified 
by  the  oath  of  the  claimant  or  some  other  per- 
son/ and  filed  for  record  with  the  recorder^  of 
the  county,  or  city  and  county,  in  which  some 
part  of  the  property  sought  to  be  charged  is  situ- 
ated/ and  must  set  forth        C 

I  Every  Lien  Claimant  may  File  Notice  in  His  Own 

Right. — Where  a  subcontractor  filed  a  lien-claim  in 
which  he  includes  the  value  of  work  done  by  his 
employees,  who  are  persons  also  entitled  to  lien 
claims,  ^'they  were  not  precluded  by  his  filing  a  lien 
from  filing  a  claim  of  lien  in  their  own  behalf,  since 
they  could  not  know  whether  he  would  prosecute  his 
claim  to  judgment^' :  Macomber  v.  Bigelow,  126  Cal. 
9,  15,  58  Pac.  312. 


908  mechanics'  liens.  §  568 

(2)  the  general  character  of  the  work  or  mate- 
rials furnished  by  the  claimant,^ 

(3)  the  amount  claimed  to  be  dne  after  deduct- 
ing all  just  credits  and  offsets,® 

(4)  the  name,  if  known,  of  each  owner  or  re- 
puted owner  at  the  time  of  filing  the  claim  of 
any  interest  sought  to  be  charged  with  the 
lien^  [and  if  not  known,  a  statement  to  that  ef- 
fect] ,i« 

(5)  the  name  of  the  person  by  whom  he  was 
employed  or  to  whom  he  furnished  materials/"*- 

(6)  the  express^^  terms  of  claimant's  contract, 
including  price,^^  time  of  payment,^'*  and  con- 
ditions thereof,  and 

(7)  a  description  of  the  property  sought  to  be 
charged  with  the  lien  sufficient  to  identify  it 
with  reasonable  certainty.^^ 

The  recorder  must  record  each  such  notice  in  a 
book  kept  by  him  for  that  purpose,  which  record 
must  be  indexed  as  deeds  and  other  conveyances 
are  required  by  law  to  be  indexed,  and  for  which 
he  may  receive  the  same  fees  as  are  allowed  by 
law  for  recording  deeds  and  other  instruments.^^ 

2  See  Code  of  Civil  Procedure,  section  1187,  fourth 
sentence. 

Historical.— VndeT  earlier  statutes,  there  were  some 
requirements  in  regard  to  the  notice  of  lien,  which 
are  no  longer  in  force.  Under  Stats.  1850,  c.  87,  sec. 
7,  Stats.  1855,  e.  130,  sec.  6,  Stats.  1856,  c.  134,  sec. 
5,  the  notice  was  required  to  state  that  it  was  the 


§  568  PERFECTIXG  THE  LIEN.  909 

intention  of  the  person  filing  the  claim  to  hold  a 
lien.  By  Stats.  1850,  c.  87,  sees.  10  and  11,  Stats. 
1855,  c.  130,  sec.  10,  Stats.  1856,  c.  134,  sec.  9,  the  lien- 
or upon  the  satisfaction  of  his  lien  was  required  un- 
der penalty  to  file  a  satisfaction  thereof.  Other  pro- 
visions required  the  lien-claimant  to  give  the  con- 
cracting  owner  or  his  agent  a  copy  of  the  notice  with- 
in five  days  if  either  of  them  was  in  the  county,  or 
else  to  post  the  same  upon  the  improvement  (Stats. 
1855,  c.  130,  sec.  3;  Stats.  1856,  c.  134,  sec.  2, 
amended  1858,  c.  270,  sec.  1).  The  code  as  enacted 
1872  added  the  provision,  repealed  March  30,  1874, 
that  '^ if  his  contract*  or  any  part  thereof  is  in  writ- 
ing, a  copy  of  such  writing  must  be  filed  with  and 
made  a  part  of  his  claim.'' 

3  It  has  been  thought,  apparently,  that  the  notice 
must  state  that  the  benefit  of  the  lien  law. is  claimed. 
''The  demand  with  which  the  claim  of  lien  con- 
cluded—  that  the. claimant  have  the  benefit  of  the  law 
allowing  the  lien,  was  equivalent  to  a  statement  that 
he  claimed  a  lien  on  the  property  he  had  described'': 
Bringham  v.  Knox,  127  Cal.  40,  44,  59  Pac.  198;  Euss 
Lumber  Co.  v.  Garrettson,  87  Cal.  589,  595,  25  Pac. 
747. 

4  Verification. — This  section  does  not  require  that 
the  verification  shall  be  in  form  like  that  attached 
to  a  pleading;  so  where  the  afiidavit  attached  to  the 
notice  of  claim  stated  that  the  same  ''is  true,"  omit- 
ting to  state  "of  his  own  knowledge,"  it  is  not  de- 
fective: Arata  v.  Tellurium  Gold  etc.  Min.  Co.,  65  Cal. 
340,  4  Pac.  195. 

A  notice  of  claim  of  lien  which  is  signed  and  veri- 
fied by  the  claimant's  attorney,  who  states  "that  as 
such  attorney  he  has  knowledge  of  the  facts"  and 
makes  the  affidavit  for  the  claimant  on  account  of 
his  absence  from  the  state  is  sufficient  in  that  re- 
spect:  Jones  V.  Kruse,  Cal.,  March  13,  1903. 

5  Must  be  Filed.— Code  of  Civil  Procedure,  sec- 
tion 1187,  fourth  sentence,  in  part:  "File  }►  73-4n  }- 
for  record  -|  n73-4^  with  the  county  recorder  of  the 
county,  or  city  and  county,  in  which  such  property  or 


910  mechanics'  liens.  §  568 

some  part  thereof  is  situated,  a  claim  ....  which 
claim  must  be  verified  by  the  oath  of  himself  or  of 
some  other  person.^'  Enacted  1872;  amended  in  ef- 
fect May  29,  1874. 

Historical.— ±\  substantially  similar  provision  has 
been  effective  since  July  1,  1855.  See  Stats.  1855, 
c.  130,  sec.  3;  Stats.  1856,  c.  134,  sec.  2;  Stats.  1862, 
c.  297,  sec.  25,  amended  1863-64,  c.  262,  sec.  3;  and 
Stats.  1867-68,  c.  448,  sec.  5. 

(Stats.  1856.)  After  the  statement  has  been  re- 
corded by  the  recorder,  the  statement  may  be  with- 
drawn from  file  by  the  lien-claimant.  ^'The  object 
of  the  statute  is  to  give  notice  to  the  public  of  the 
existence  of  the  lien,  and  this  is  as  well  accomplished 
by  the  record  alone  as  by  both  record  and  account. 
As  this  object  is  not  defeated,  or  in  any  manner  af- 
fected, by  the  removal  of  the  account  after  it  has 
been  recorded,  to  hold  that  such  removal  destroys  the 
lien  would  be  a  harsh  and  illiberal  construction  of 
the  statute.  The  fact  that  the  filing  of  the  account 
is  a  prerequisite  to  the  bringing  of  a  suit  to  enforce 
the  lien,  does  not  militate  against  this  view":  Mars 
V.  McKay,  14  Cal.  127. 

6  In  County  Where  Soma  Part  of  tlie  Property  is 
Situated.— The  notice  of  claim  of  lien  is  not  required 
to  be  filed  in  every  county  in  which  any  part  of  the 
improvement  is  situated,  but  merely  in  one  county 
in  which  some  part  is  situate:  Bringham  v.  Knox,  127 
Cal.  40,  44,  59  Pac.  198. 

7  The  Claimant's  Name.— (Stats.  1868.)  The  state- 
ment is  not  required  to  be  signed  by  the  claimant, 
provided  it  appears  in  the  body  of  the  statement  who 
the  claimant  is  and  by  whom  the  materials  were  fur- 
nished or  the  labor  performed;  and  provided,  also, 
the  statement  is  verified  by  the  claimant.  These 
would  sufficiently  identify  the  claimant  and  authen- 
ticate the  statement  without  the  actual  signature  of 
the  claimant  to  the  bodv  of  the  statement:  Hicks  v. 
Murray,  43  Cal.  515,  521,  522,  523. 

8  General  Character  of  Work— Amount  Claimed  to 
be  Due.— Code  of  Civil  Procedure,  section  1187,  fourth 
sentence,  in  part:  '^A  statement  of  his  demand,  after       : 


§  568  PERFECTIXG  THE  LIEN.  911 

deducting  all  just  credits  and  offsets/^  As  enacted 
1872. 

Hist07^ical.—St2its.  1867-68,  c.  448,  sec.  5,  in  effect 
March  30,  1868,  reads  ^'a  true  statement,^'  etc.  Stats. 
1862,  c.  297,  sec.  25,  effective  April  26,  1862,  amended 
1863-64,  c.  262,  sec.  3,  ^^a  just  and  true  account  of 
the  demand  due  to  him,  after  deductilig  all  proper 
credits  and  offsets.^'  Stats.  1855,  c.  130,  sec.  3, 
and  Stats.  1856,  c.  134,  sec.  2,  substitute  ^* assets'' 
for  ^^ offsets.''  Stats.  1850,  c.  87,  sec.  7,  required  every 
iien-claimant  to  file  for  record  within  *  ^  sixty  days 
after  the  completion  of  the  building  or  repairs,  no- 
tice of  his  intention  to  hold  a  lien  ....  setting  forth 
the  amount  claimed;  upon  his  failure  to  do  so,  the 
lien  shall  be  lost." 

The  code  phrase  '^a  statement  of  his  demand,  after 
deducting,"  etc.,  may  be  resolved  into  the  two  prop- 
ositions in  the  text.  ^'It  was  unnecessary  to  set  out 
the  items  of  the  account.  Nothing  more  was  required 
than  a  statement  of  the  demand,  showing  [1]  its  na- 
ture and  character,  and  [2]  the  amount  due  or  ow- 
ing thereon":  (Stats.  1856)  Brennan  v.  Swasey, 
16  Cal.  140,  76  Am.  Dec.  507;  (Stats.  1856)  Selden 
V.  Meeks,  17  Cal.  128;  (Code)  Jewell  v.  McKay,  82 
Cal.  144,  150,  23  Pac.  139. 

Tlie  General  Character  of  the  Work  is  All  that  is 
Required  to  he  Stated.— "The  particular  character  of 
the  materials  need  not  be  stated  in  the  notice": 
(Stats.  1862)  Davis  v.  Livingston,  29  Cal.  283,  289. 
So  in  case  of  a  contract  for  a  gross  sum,  it  is  not 
necessary  to  place  in  the  statement  filed  an  account 
giving  the  items  of  work  and  materials:  (Stats. 
1856)  Heston  v.  Martin,  11  Cal.  41.  ^'It  is  unneces- 
sarv  to  state  specifically  the  kind  of  materials  fur- 
nished": McClain  v.  Button,  131  Cal.  132,  63  Pac. 
182. 

The  Amount  Due  After  Deducting  Just  Credits  and 
Offsets.— Where  a  notice  failed  to  state  the  amount 
of  the  claim  as  affected  by  payments  and  offsets,  it 
is  invalid:  (Stats.  1862)  Davis  v.  Livingston,  29  Cal. 
283,  286,  287.    But  where  a  notice  was  objected  to 


912  mechanics'  liens.  §  568 

because  stating  the  amount  due,  '^less  payments  and 
offsets,^'  instead  of  less  credits  and  offsets,  the  court 
held  that  the  words  are  substantially  equivalent  to 
each  other,  and  a  lienor  ought  not  to  be  deprived 
of  his  lien  upon  a  philogical  criticism  of  so  flimsy  a 
character:  (Stats.  1868)  Preston  v.  Sonora  Lodge,  39 
Cal.   116,   119. 

Tlie  Notice  is  not  Vitiated  hij  Including  Erroneous 
Items. — The  rule  is  that  unless  there  is  something  to 
show  a  willful  attempt  to  claim  a  lien  for  nonlienable 
articles  which  have  been  furnished,  the  lien  is  not 
lost  by  including  them  in  the  notice  of  lien  claim: 
Gordon  Hardware  Co.  v.  E.  E.  Co.,  86  Cal.  620,  622, 
25  Pac.  125;  Harmon  v.  San  Francisco  etc.  E.  E.  Co., 
86  Cal.  617,  619,  25  Pac.  124;  Snell  v.  Payne,  115  Cal. 
218,  222,  46  Pac.  1069.  So  where,  as  in  the  Gordon 
case,  the  lien-claim  was  in  part  for  articles,  as  picks 
and  shovels,  not  the  subject  matter  of  liens,  or  where 
as  in  Malone  v.  Big  Flat  Gravel  Min.  Co.,  76  Cal. 
578,  586,  18  Pac.  772,  some  small  items,  as  for  deer 
and  bear  meat,  were  included  in  the  claim,  their 
value  should  be  deducted  from  the  amount  claimed 
and  a  lien  declared  for  the  balance. 

On  the  same  principle  it  was  held  in  Barber  v. 
Eeynolds,  44  Cal.  519,  533,  that  notwithstanding  that 
the  claim  filed  was  for  too  much,  it  would  still  be 
valid,  unless  it  should  appear  that  it  was  a  willfully 
false  claim  within  the  meaning  and  intent  of  section 
576,   below. 

Sufficient  Statements  of  Character  of  Work.— Where 
the  roof  and  three  sides  of  a  building  were  removed, 
an  addition  erected  on  one  side,  a  kitchen  in  the  rear, 
and  a  porch  on  the  front,  with  new  roof,  new  parti- 
tions, and  new  ceiling  joists,  the  evidence  supports 
the  statement  of  the  notice  that  the  lien  was  claimed 
for  the  ^ erection^  of  a  house,  and  an  obiection  to 
the  notice  that  the  work  was  merely  *the  altern- 
tion  and  repair  of  an  old  house'  will  not  be  sustained: 
Ward   V.   Crane,   118    Cal.   676,   50   Pac.    839,   840A. 

A  notice  of  claim  of  lien  for  materials  furnished 
is    not    required    to    state    that    the    materials    were 


§    568  PERFECTING    THE    LIEN.  913 

furnished  ^^to  be  used'^:  Neihaus  v.  Morgan  (Cal.), 
45   Pac.   255,   257A. 

Sufficient  Statement  of  Amount  Claimed.— A.  notice 
iiled  against  two  buildings  stating  that  the  reasonable 
value  of  the  materials  furnished  by  the  claimant 
for  each  house  was  one  hundred  and  eighty-two 
dollars  and  seventy  cents,  no  part  of  which  had 
been  paid,  and  that  the  sum  of  three  hundred  and 
sixty-five  dollars  and  forty  cents,  ^'in  gold  coin  of 
the  United  States, '*  was  still  due  on  such  buildings, 
after  deducting  all  just  credits  and  offsets,  is  not 
open  to  the  objection  that  it  does  not  state  the 
amount  of  claimant's  demand  after  deducting  all 
just  credits  and  offsets,  because  of  the  quoted  words: 
Neihaus    v.    Morgan    (Cal.),    45    Pac.    255,    257B. 

A  subcontractor  properly  includes  in  his  notice  of 
claim  the  value  of  work  done  by  employees  of  his,  al- 
though they  are  also  entitled  to  file  notices:  Macomber 
V.  Bigelow,  126  Cal.  9,  15,  58  Pac.  312. 

o  Name  of  Owner  at  Time  of  Filing  Claim  to  be 
Stated.— Code  of  Civil  Procedure,  section  1187,  fourth 
sentence,  in  part:  ^^The  name  of  the  owner  or  re- 
puted owner,  if  known,'*  as  enacted  1872.  The  same 
provision  has  been  effective  since  March  30,  1868 
(Stats.  1867-68,  c.  448,  sec.  5).  The  earlier  statutes 
contain  no   such  proposition. 

^^ There  is  no  limitation  upon  the  term  'owner,' 
as  used  in  the  above  section  of  the  code,  nor  does 
it  refer  to  the  owner  with  whom  the  contract  for 
the  im^provement  was  made,   or  to  the  owner  at  any 

other  time  than  at  the  date  of  filing  the  claim 

The  object  of  requiring  the  claim  to  be  filed  in  order 
to  perfect  the  lien  is  to  give  notice  of  the  lien 
to  those  interested  in  the  property  upon  which  it 
is  claimed,  and,  as  the  owner  at  the  time  of  filing 
the  claim  is  the  party  to  be  affected  thereby,  rather 
than  one  who  has  parted  with  the  property  subse- 
quent to  the  making  of  the  original  contract,  it  is 
reasonable  to  suppose  that  the  legislature  intended 
the  name  of  the  owner  at  the  time  the  claim  is  filed, 

rather    than    that    of    any    previous    owner It 

Liens— 58  ' 


914  MECHANICS'    LIENS.  §    568 

intended  the  owner  of  the  property  who  would  be 
affected  by  the  lien,  rather  than  a  prior  owner  who 
had  authorized  the  improvement,  and  who  by  an  in- 
tervening sale  had  ceased  to  have  any  interest  in 
the  property  or  in  the  lien  thereon^ ^:  Corbett  v. 
Chambers,  109  Cal.  178,  180,  181,  182,  41  Pac.  873. 
Thus  the  person  required  to  be  named  is  the  owner 
of  an  interest  therein  (1)  at  the  time  the  claim  is 
filed,  (2)  which  interest  is  sought  to  be  charged  with 
the   lien.  « 

^^The  statute  does  not  require  the  claimant  to 
state  the  name  of  the  actual  owner,  at  the  risk  of 
losing  his  lien,  but  makes  his  statement  of  the  name 
of  the  reputed  owner  as  effective  as  that  of  the  true 
owner '\-  Kelly  v.  Lemberger  (Cal.),  46  Pac.  8,  8B. 

If  in  good  faith  the  claimant  states  the  name  of 
a  reputed  owner,  he  does  not  lose  his  lien  although 
he  afterward  discovers  that  some  other  person  was 
in  fact  the  owner:  -  Corbett  v.  Chambers,  109  Cal. 
178,  184,  41  Pac.  873;  Bryan  v.  Abbott,  131  Cal.  222, 
^24,  63  Pac.  363;  Santa  Cruz  Eock  Pavement  Co. 
V.  Lyons,  133  Cal.  114,  119,  65  Pac.  329. 

Where  by  mistake  the  claimant  states  the  name  of 
a  person  who  has  not  any  interest  at  all,  the  claim 
is  not  affected:  McClain  v.  Hutton,  131  Cal.  132,  138, 
63  Pac.  182. 

'^The  statement  of  the  same  name  as  owner  and 
as  reputed  owner  does  not  deprive  the.  claimant  of 
his  lien'':  Kelly  v.  Lemberger  (Cal.),  46  Pac.  8,  8B; 
Arata  v.  Tellurium  etc.  Min.  Co.,  65  Cal.  340,  341, 
4  Pac.    195. 

Averfnent.— The  complaint  in  foreclosure  must  con- 
tain an  averment  setting  forth  the  names  of  the 
owners  or  reputed  owners:  Hicks  v.  Murray,  43  Cal. 
515,  521,  522. 

lo  When  Name  Unknown,  State  that  Fact.— 
There  is  doubt  as  to  the  validity  of  this  clause.  In 
West  Coast  Lumber  Co.  v.  Newkirk,  80  Cal.  275, 
277,  22  Pac.  231,  and  McClain  v.  Hutton,  131  Cal. 
132,  138,  63  Pac.  182,  the  court  says:  '^f  the  names 
are  not  known  the   claim  is  sufficient,  if  it  is  silent 


I    568  PERFECTING    THE    LIE:;.  915 

on  the  subject.''  This  statement  was  not,  however, 
necessary  to  the  decision  in  either  case:  See.  also, 
Kelly  vl  Lemberger  (Cal.),  46  Pac.  8,  8B.  But  in 
Hooper  v.  Flood,  54  Cal.  218,  222,  223  (Stats.  186S,\. 
where  a  claim  did  not  state  the  name  of  the  owner 
or  reputed  owner  of  the  property,  nor  that  the  name 
of  such  owner  or  reputed  owner  was  unknown  to 
the  lien-claimant  filing  the  claim,  the  claim  was  re- 
jected as  insufficient  on  that  ground,  and  the  lien 
denied.  In  Corbett  v.  Chambers,  109  Cal.  178,  184, 
41  Pac.  873,  and  Bryan  v.  Abbott,  131  Cal.  222,  224, 
63  Pac.  363,  the  court  says:  ''The  provision  that 
the  claimant  shall  give  the  'name  of  the  owner  or 
reputed  owner  if  known'  implies  that,  if  he  does 
not  know  the  name  of  the  owner,  he  may  state  this 
fact,  and  perfect  his  lien  without  naming  an  owner." 

11  Must  State  Name  of  Employer  or  Person  to 
Whom  Materials  Furnished.— Code  of  Civil  Proo 
dure,  section  1187,  so  provides,  as  did  also  Stats. 
1867-68,  c.  448,  sec.  5,  in  effect  March  30,  1868.  The 
oarlier  statutes   contained   no   similar  provision. 

Object  of  Statement.— ^^Tlae  intention  was  that  the 
claimant  should  put  enough  in  his  notice  of  lien  to 
enable  the  owner  to  understand  whether  the  claim- 
ant was  an  original  or  a  subcontractor;  in  other 
words,  whether  the  claimant  asserted  that  he  had 
contracted  with  the  owner  and  had  a  personal  claim 
against  him,  or  whether  he  contracted  with  the  con- 
tractor, and  looked  only  to  him  and  the  property. 
The  rights  and  duties  of  the  two  classes  of  claim- 
ants are  materially  different  in  several  respects,  and 
it  is  important  for  the  owner  to  know  which  atti- 
tude the  claimant  assumes":  Malone  v.  Big  Flat 
Gravel  Min.  Co.,  76  Cal.  578,  584,  585,  18  Pac.  772. 

This  is  Intended  to  he  the  Statement  of  a  Fact  and 
not  of  a  Mere  Conclusion  of  Law:  (Stats.  1868)  Mc- 
Donald V.  Backus,   45   Cal.   262,   265. 

So  where  S.,  who  employed  a  plasterer,  was  the 
member  of  a  partnership,  a  statement  in  the  notice 
that  he  was  employed  by  S.,  without  mention  of  the 
partnership,  is  sufficient:  McDonald  v.  Backus,  45 
Cal.    262,    265. 


916  mechanics'  liens.  §  568 

Where  an  agent  of  the  owner  was  named  as  the 
employer,  the  notice  is  sufficient:  (Code)  Mclntyre 
V.    Trautner,   63   Cal.   429. 

On  the  Other  Hand  a  Statement  will  not  he  Rejected 
Because  Stating  a  Conclusion  of  Latv.— Where  the 
original  contract  was  void,  and  the  lien-claimant 
was  employed  by  the  wonld-be  original  contractor, 
a  notice  stating  that  such  claimant  was  employed 
by  the  contracting  owner  is  valid  and  proper  in  view 
of  section  549  above:  McClain  v.  Hutton,  131  Cal. 
132,  136,  63  Pac.  182. 

A  claimant,  as  a  materialman,  is  not  required  to 
state  in  his  claim  what  relation  the  person  to  whom 
he  furnished  the  material  bore  to  the  contracting 
owner,  whether  original  contractor  or  agent;  nor 
does  the  burden  of  determining  whether  any  con- 
tract made,  or  attempted  to  be  made,  between  the 
contracting  owner  and  the  original  contractor,  is 
valid  or  not,  rest  on  him  when  he  comes  to  file  his 
lien-claim:  Davies-Henderson  Lumber  Co.  v.  Gotts- 
chalk,   81    Cal.    641,   646,   22   Pac.   860. 

Sufficient  Statement.— A  statement  that  claimant's 
labor  was  performed  under  an  agreement  with  said 
F.  for  an  agreed  price  of  two  dollars  and  fifty 
cents  per  day,  payable  at  the  end  of  each  week, 
states  substantiallv  that  claimant  was  employed  by 
F.:  Ascha  v.  Fitch   (Cal.),  46  Pac.  298,  299A. 

Insufficient  Statement,— K  claim  stating  that  the 
materials  were  to  be  furnished  to  P.  does  not  state 
to  whom  they  were  actually  furnished  and  is  of 
no  effect:  Madera  Flume  etc.  Co.  v.  Kendall,  120 
Cal.  182,  183,  65  Am.  St.  Eep.  177,  52  Pac.  304. 

Foreclosure  Complaint. — Where  the  claim  states 
that  the  claimant  was  employed  by  a  certain  con- 
tractor as  in  fact  he  was,  the  complaint  may  pro- 
ceed upon  the  theory  that  the  contract  was  void, 
and  the  contractor  the  statutory  agent  of  the  owner, 
without  causing  anv  variance:  Davies-Henderson 
Lumber  Co.  v.  Gottschalk,  81  Cal.  641,  646,  647,  22 
Pac.  860;  Coss  v.  MacDonough,  111  Cal.  662,  667,  44 
Pac.  325. 


§  568  PERFECTING  THE  LIEN.  917 

12  Merely  Express  Terms  Required  to  be  Stated.— 

Code  of  Civil  Procedure,  section  1187,  fourth  sen- 
tence, in  part:  '^A  statement  of  the  terms,  time 
ofiven,  and  conditions  of  his  contract,''  as  enacted 
1872.  Before  the  enactment  of  the  code  no  such 
statement    was    required. 

"The  code  does  not  require  the  notice  to  state 
implications  made  by  law.  For  example,  if  there 
was  nothing  but  a  request  for  labor  or  materials, 
and  a  silent  compliance  With  it,  we  do  not  think 
that  a  statement  of  the  implied  promise  to  pay  what 
the  labor  or  materials  were  reasonably  worth  would 
be  necessary.  It  seems  to  us  that  the  statute  re- 
quires only  the  a^eement  which  is  expressly  made 
to  be  stated  in  the  notice*':  Jewell  v.  McKay,  82 
Cal.   144,   152,  23  Pac.  139. 

Thus  it  cannot  be  presumed,  in  the  absence  of 
averment  and  proof,  that  the  terms,  time  given,  and 
conditions  of  the  contract,  are  not  all  stated:  Kelley 
V.  Plover,   103  Cal.  35,  36,   36  Pac.   1020. 

On  the  contrary,  where  no  time  of  payment  is 
stated,  the  presumption  of  law  is  that  no  time  was 
given:  McClain  v.  Hutton,  131  Cal.  132,  137,  63  Pac. 
182. 

Thus  where  no  distinct  time  of  payment  was  agreed 
upon,  the  ''time  given"  need  not  be  stated:  Hills 
V.  Ohlig,   63  Cal.   104. 

The  statute  "is  not  to  be  construed  as  requiring 
a  statement  of  all  the  details  of  the  contract,  but  is 
to  receive  a  reasonable  construction,  in  view  of  the 
purpose,  for  which  it  is  manifestly  required":  Mc- 
Ginty  v.  Morgan,  122  Cal.   103,   104,  54  Pac.   392. 

The  following  have  been  held  sufficient  statements 
of  the  terms,  time  given,  and   conditions: 

"Cash  upon  demand,  in  gold  coin  of  the  United 
States":   Blackman  v.   Marsicano,   61   Cal.   638. 

"The  price  of  all  materials  furnished  by  said  firm 
....  should  be  due  on  the  delivery  of  the  same": 
Cohn  V.  Wright,  89   Cal.   86,  89,  26  Pac.  643. 

"Cash  on  completion  of  the  contract":  Kelley  v. 
Plover,   103   Cal.   35,   36,   36   Pac.   1020. 


918  MECHANICS'    LIENS.  §    568 

The  statement  that  the  terms,  time  given,  and 
conditions  ^^are  and  were  cash''  was  held  insuffi- 
cient in  Hooper  v.  Flood,  54  Cal.  218,  212,  222.  This 
case   was   distinguished   in   each   of   the   three   above. 

Reference  to  Recorded  Original  Contract  for  Certain 
Term^  Sustained.— K  notice  of  claim  of  lien  filed  by  a 
materialman  who  furnishes  materials  to  the  original 
contractor,  which  refers  to  the  contract  between  the 
original  contractor  and  the  contracting  owner  for 
the  terms  of  making  payment  to  th-e  materialman,  is 
not  invalidated  because  it  does  not  repeat  the  pro- 
visions referred  to,  where  the  original  contract,  being 
for  more  than  one  thousand  dollars,  has  been  duly 
filed,  and  the  terms  can  be  ascertained  therefrom: 
San  Diego  Lumber  Co.  v.  Wooldredge,  90  Cal.  574, 
557,  578,  27  Pac.  431. 

13  Contract  Price  must  be  Stated.— Yet  the  price 
of  the  several  items  of  materials  furnished  is  not 
required  to  be  stated:  McClain  v.  Hutton,  131  Cal. 
132,   136,   63  Pac.   182. 

A  statement  that  the  claimant  was  to  receive  i 
certain  price,  when  in  fact  he  was  to  receive  the 
reasonable  value,  is  fatally  defective:  Malone  v.  Big 
Flat  Gravel  Min.  Co.,  76  Cal.  578,  580,  581,  18  Pac. 
772;  Wagner  v.  Hansen,  103  Cal.  104,  107,  37  Pac.  195. 

But  a  statement  (1)  that  the  claimants  were  to 
receive  ^Hhe  usual  price  and  what  the  materials  were 
reasonably  worth  at  their  place  of  business''  (Eeed 
V.  Norton,  90  Cal.  590,  597,  26  Pac.  767,  27  Pac.  426), 
or  (2)  that  the  claimant  was  to  be  paid  for  mate- 
rials at  the  current  market  price  (Santa  Monica 
Lumber  etc.  Co.  v.  Hege,  119  Cal.  376,  379-381,  51 
Pac.  555),  is  in  effect  a  statement  that  he  was  to 
receive  the  reasonable  value. 

So  also  a  statement  that  the  claimant  was  to 
receive  the  reasonable  value  when  he  was  to  receive 
a  fixed  price  invalidates  the  claim:  Eeed  v.  Norton, 
90   Cal.   590,   599,   26   Pac.   767,   27  Pac.   426;   Wilson 


§  568  PERFECTING  THE  LIEN.  910 

V.  Nugent,  325  Cal.  280,  283,  57  Pac.  1008;  Buell  v. 
Brown,  131  Cal.  158,  162,  63  Pac.  167. 

Where  a  notice  of  claim  of  lien  filed  by  a  material- 
man stated  that  the  claimant  was  to  be  paid  the 
reasonable  price  of  certain  extras  furnished,  and 
the  proofs  showed  that  except  for  one  item  upon 
which  there  was  an  agreed  price  this  statement  was 
true,  this  item  should  be  excluded  and  the  lien  al- 
lowed for  the  remainder:  Linck  v.  Johnson  (Cal.), 
66    Pac.    674,    675A. 

Sufficient  Statement,— The  contract  price  is  suffi- 
ciently stated  by  a  notice  filed  by  an  original  con- 
tractor which  omitted  to  state  that  the  contract 
price  was  payable  in  installments  but  correctly  stated 
its  amount,  and  the  amount  paid  on  it.  ''The  owner 
contracted  for  the  improvement  directly  with  the 
person  claiming  the  lien,  and  therefore  had  full 
knowledge  of  the  terms  of  the  contract'':  McGinty 
V.  Morgan,  122  Cal.  103,  105,  54  Pac.  392. 

Whether  this  statement  would  be  sufficient  when 
there  was  no  contractual  relation  between  the  par- 
ties is  left  in  doubt. 

A  statement  that  the  value  of  lumber  ' '  including 
cartage  thereon''  is  a  certain  sum  is  not  invalidated 
by  the  insertion  of  the  phrase  quoted,  as  ''the  cost 
of  the  transportation  of  goods  necessarily  enters 
into  their  value":  Jones  v.  Kruse  (Cal.),  March  13, 
1903. 

14  Time  of  Payment.— "  The  words  of  the  statute, 
'time  given,'  in  our  judgment  mean  the  time  of 
payment  for  the  work  and  labor  performed  and  ma- 
terials furnished,  as  agreed  on  and  expressed  in  the 
contract":  Hills  v.  Ohlig,  63  Cal.  104. 

The  statement  that  "the  terms  of  payment  of  said 
labor  were  cash,  as  soon  as  said  labor  was  per- 
formed" is  sufficient:  Tredinnick  v.  Eed  Cloud  etc. 
Min.  Co.,  72  Cal.  78,  80,  13  Pac.  152. 

Where  a  materialman  was  to  deliver  lime  in  such 
quantities  as  might  be  required  during  the  progress 
of  the  improvement,  the  statement  that  he  "was  to 
be  paid   thereafter   therefor,  on   demand   of  payment 


1)20  mechanics'   liens.  §  568 

as  to  each  delivery  of  any  quantity  on  said  property 
by  him,  the  reasonable  market  value  thereof, '^  is 
sufficient:  Snell  v.  Payne,  115"  Cal.  218,  221,  46  Pac. 
1069. 

15  Description  of  Property.— Code  of  Civil  Proce- 
dure, section  1187:  ^^A  description  of  the  property 
to  be  charged  with  the  lien,  sufficient  for  identifica- 
tion.'' 

Historical.— The  same  provision  is  found  in  Stats. 
1867-68,  c.  448,  sec.  5.  Stats.  1862,  c.  297,  sec.  25, 
amended  1863-64,  c.  262,  sec.  3,  read:  *'A  description 
of  the  property  }'63-4n  \-  sought  ]  n63-4^  to  be 
charged.''  Stats.  1855,  c.  130,  sec.  3,  and  Stats. 
1856,  c.  134,  sec.  2:  '^A  correct  description  of  the 
property  to  be  charged." 

The  description  must  ^*  enable  a  party  familiar 
with  the  locality  to  identify  the  premises  intended 
to  be  described  with  reasonable  certainty  to  the  ex- 
clusion of  others":  Fernandez  v.  Burleson,  110  Cal. 
.164,  167,  52  Am.  St.  Eep.  75,  42  Pac.  566;  Willam- 
ette Steam  Mills  Co.  v.  Kremer,  94  Cal.  205,  209,  29 
Pac.  633;  (Stats.  1856)  Tibbetts  v.  Moore,  23  Cal. 
208,  213. 

Where  there  are  two  descriptions  of  the  property, 
one  by  name  and  the  other  by  courses  distances  and 
monuments,  and  it  appears  from  the  evidence  that 
the  property  was  well  known  by  the  name  given  to 
it,  but  the  description  by  courses  and  distances  was 
so  erroneous  that  the  lines  could  not  thereby  bo 
traced,  the  description  by  name  is  sufficient  to  iden- 
tify the  property,  and  the  attempted  description  by 
courses  may  be  disregarded:  Tredinnick  v.  Eed 
Cloud  etc.  Min.  Co.,  72  Cal.  78,  81,  82,  13  Pac.  152. 

^'As  a  general  rule,  the  sufficiency  of  the  descrip- 
tion is  a  question  of  fact  to  be  determined  by  the 
trial  court":  Willamette  Steam  Mills  Co.  v.  Kremer, 
94  Cal.  205,  209,  29  Pac.  633. 

The  inclusion  of  some  nonmining  land  in  the  de- 
scription of  a  mining  claim  to  be  charged  with  a 
lien  does  not  vitiate  the  notice  of  claim  of  lien  so  long 
as  any  part  of  the  land  included  in  the  description 


§  568  PERFECTING  THE  LIEN.  921 

is  a  mining  claim  as  in  such  case  the  court  can  ad- 
just the  rights  of  the  parties  by  the  judgment:  Be- 
wick V.  Muir,  83  Cal.  368,  372,  23  Pac.  389. 

A  notice  of  claim  filed  under  section  556  above  need 
not  state  that  the  lot  of  land  affected  by  the  lien 
is  '^in  an  incorporated  city  or  town, '^  where  the 
lot  was  described  as  being  ^^  situate  in  the  city  of 
San  Diego,  county  of  San  Diego,''  etc.:  Bryan  v. 
Abbott,    131    Cal.    222,    225,    63   Pac.    363. 

Description  of  Land  Ahoiit  Improvement.— The  de- 
scription of  the  land  about  a  quartz-mill  thus:  ^'With 
such  convenient  space  of  land  around  the  same  as 
may  be  required  for  the  convenient  use  and  occupa- 
tion thereof  is  sufficient:  (Stats.  18'56)  Tibbetts  v. 
Moore,  23  Cal.  208,  213. 

Descriptions  Which  have  teen  Held  Sufficient,— ^  ^  A 
wharf  situated  on  Battery  street  between  Jackson 
and  Pacific  in  San  Francisco'':  Hotaling  v.  Cronise, 
2  Cal.   60. 

'^A  quartz-mill,  being  at  or  near  the  town  of 
Scottsville  in  Amador  county,  known  as  Moore's  New 
Quartz-mill,"  there  being  no  evidence  that  there 
was  any  other  quartz-miil  at  that  place  so  desig- 
nated as  to  render  the  description  uncertain:  Tib- 
betts V.  Moore,  23  Cal.  208,  212,  213. 

'^Red  Cloud  Mine,"  proof  showing  that  the  mine 
was  well  known  by  that  name,  and  that  the  whole 
claim  was  designated  by  it,  and  notwithstanding  the 
fact  that  the  mine  was  also  described  by  courses 
and  distances  which  were  so  erroneously '  stated  that 
the  lines  could  not  thereby  be  traced:  Tredinnick  v. 
Red  Cloud  etc.  Mine,  72  Cal.  78,  81,  82,  13  Pac.  152. 

''Lot  6,  in  block  28,  of  the  Huber  Tract,"  and 
' '  situate  at  the  southwest  corner  of  Hope  and  Eighth 
streets,"  Los  Angeles,  notwithstanding  that  the 
proof  showed  that  the  building  projected  onto  lot 
7,  and  the  description  should  have  read  ''northeast 
corner,"  but  there  being  no  evidence  that  the  con- 
tracting owner  had  caused  the  construction  of  any 
other  building  at  that  corner  than  the  one  on  the 
northeast  corner:  Willamette  Steam  Mills  Co.  v. 
Kremer,   94   Cal.   205,   209,   29   Pac.   633. 


922   .  mechanics'  liexs.  §  568 

Descriptions  Held  Insufficient.— Where  the  property 
was  described  as  ^^a  dwelling-house  lately  erected 
by  me  for  C,  situated  on  Bryant  street,  between 
Second   and   Third,  in  the  city  of  San  Francisco,   on 

lot ,"    proof    showing    that    C    owned    no    oth-er 

dwelling-house  on  Bryant  street,  but  where  the  prop- 
erty had  been  transferred  to  a  bona  fide  purchaser 
for  value  without  notice  of  the  fact  that  C.  owned 
no  other  dwelling  on  Bryant  street,  and  without 
actual  notice  of  the  existence  of  the  lien  on  the 
property,  as  against  the  purchaser  the  description 
is  insufficient:  (Stats.  1855)  Montrose  v.  Conner,  8 
Cal.    344. 

^'A  notice  that  the  property  to  be  charged  is  the 
property  where  claimant  worked  does  not  take  the 
first  step  toward  compliance  with  the  statute ''* 
Fernandez  v.  Burleson,  110  Cal.  164,  168,  52  Am. 
St.  Kep.  7f^,  42  Pac.   566. 

Where  a  notice  stated  the  name  of  the  reputed 
owner  of  a  mining  claim,  its  size,  and  the  fact  that 
certain  mining  facilities  were  upon  it,  but  by  mis- 
take the  description  by  monuments,  metes  and  bounds 
applied  to  the  adjoining  mining  claim,  and  the  same 
person  was  the  reputed  owner  of  both,  the  descrip- 
tion is  misleading  in  an  essential  particular  where 
it  should  be  true,  and  the  reference  to  the  mining 
facilities  taken  by  itself  is  not  sufficient:  Fernan- 
dez V.  Burleson,  110  Cal.  164,  52  Am.  St.  Eep.  75, 
42  Pac.  566. 

A  notice  describing  the  land  to  be  charged  as 
'Hhat  certain  lot  and  parcel  of  land  situated  in  said 
county  of  Nevada  state  of  California,  and  sought  to 
be  charged  with  this  lien,  and  described  as  follows, 
to  wit,''  when  all  other  description  is  entirely  omit- 
ted, is  insufficient,  there  being  in  fact  absolutely  no 
description  of  the  property  at  all:  Penrose  v.  Calkins, 
77  Cal.  396,  19  Pac.  641. 

16  Recorder  must  Record  Lien  Claim.— See  Code  of 
Civil  Procedure,  section  1189,  as  enacted  1872.  Com- 
pare Political  Code,  sections  4235  and  4236:  *'He 
[the  recorder]  must,  upon  payment  of  his  fees  for  the 


§  569  PERFECTING  THE  LIEN.  923 

569.     Time   of   Filing   Notice   When   Notice   of 
Completion  or  Cessation  Filed. 

When  a  notice  of  completion  or  cessation  from 
labor  has  been  filed^  a  notice  of  claim  of  lien  may 
be  filed  for  record 

(1)  by  an  original  contractor/''  at  any  time  af- 
ter the  completion  of  his  contract  and  within 
sixty  days  after  the  filing  of  the  notice  of  com- 
pletion or  cessation  from  labor^  or 

same,  record,  separately,  in  large  and  well-bonnd  sepa- 
rate books,  in  a  fair  liand  ....  6.  Notices  of  me- 
chanics^ liens. '^  [Same  provision  in  County  Govern- 
ment Act  1897,  section  120.]  ^^ Every  recorder  must 
keep:  ....  16.  An  index  of  notices  of  mechanics' 
liens,  labeled  *  Mechanics^  Liens,'  each  page  divided 
into  three  columns,  headed  respectively:  'Parties 
claiming  liens,'  'Against  whom  claimed,'  'Notices, 
when  and  where  recorded.'  " 

Historical.— A.  substantially  similar  provision  is 
found  in  Stats.  1867-68,  c.  447,  sec.  6,  in  effect  March 
30,  1868.  Stats.  1862,  c.  297,  in  effect  from  April  26, 
1862,  to  March  30,  1868,  contained  no  such  provision. 
Stats.  1850,  c.  87,  sec.  7,  in  effect  AprH  12,  1850; 
Stats.  1855,  c.  130,  sec.  6,  and  Stats.  1856,  c.  134,  sec. 
5,  provided  that  the  recorder  must  record  such  notice 
in  a  book  provided  for  that  purpose. 

17  Original  Contractor  must  File  Claim  Within 
Sixty  Days.— Code  of  Civil  Procedure,  section  1187, 
fourth  sentence:  "Every  original  contractor,  [- 97m  ]► 
[a]  at  any  time  after  the  completion  of  his  contract, 
and  until  the  expiration  of  sixty  days  after  the  filing 
of  said  notice  of  completion  or  notice  of  cessation  of 
labor  by  the  owner  ^m97-|."  Enacted  1872,  in 
effect  January  1,  1873;  amended,  in  effect  Mav  27, 
1897. 

(a)  Former  reading:   "Within  sixty  days  after  the 


924  mechanics'   liexs.  §  569 

(2)   by  any  other  lien-claimant/^ 

(a)  within  thirty  days  after  the  performance 
of  any  labor  [or  the  furnishing  of  any  ma- 
terial] ^^  about  a  mining  claim,  or^ 

completion  of  his  contract.''  Effective  July  1,  1855 
—May  27,  1897. 

Historical.—StSits.  1855,  c.  130,  sec.  3,  Stats.  1856, 
c.  134,  sec.  2,  Stats.  1862,  c.  297,  sec.  25,  amended 
Stats.  1863-64,  c.  262,  aec.  3,  and  Stats.  1867-68,  c. 
448,  sec.  5,  were  substantially  similar  to  the  code  as 
enacted  1872.  Stats.  1850,  c.  87,  sec.  7,  reads:  '*  With- 
in sixty  days  after  the  completion  of  the  building  or 
repairs. ' ' 

18  Other  Lien  Claimants.— Code  of  Civil  Procedure, 
section  1187,  fourth  sentence,  second  clause:  *^And 
every  person,  save  the  original  contractor,  claiming 
the  benefit  of  this  chapter,  \^  97m  \  [a]  at  any  time 
after  the  completion  of  any  building,  improvement, 
or  structure,  or  of  the  alteration,  addition  to,  or  re- 
pair thereof,  and  until  the  expiration  of  thirty  days 
after  the  filing  of  said  notice  of  completion  or  cessa- 
tion, by  said  owner  ■{  m97  ^  ,  or  \-  97f  j-  [b]  within 
thirty  days  after  ^  f97^  the  performance  of  any  labor 
in  any  mining  claim.''  Enacted  1872;  amended,  in 
effect  May  2l,  1897. 

(a)  Former  reading:  *' Within  thirty  days  after  the 
completion  of  any  building,  improvement,  or  structure, 
or  after  the  completion  of  the  alteration,  J-  87n  \-  ad- 
dition to  ■{  n87^  ,  or  repair  thereof."  Enacted  1873; 
amended  in  effect  May  15,  1887. 

(b)  These  words  were  inserted  to  preserve  the  orig- 
inal meaning  when  the  provision  containing  them 
(see  previous  sentence)  was  struck  out  by  the  amend- 
ment of  May  27,  1897. 

Historical.— ^tats.  1862,  c.  297,  sec.  25,  amended 
Stats.  1863-64,  c.  262,  sec.  3,  and  Stats.  1867-68,  c. 
448,  sec.  5,  were  substantially  similar  to  the  code  as 
enacted   1872.     Between  July   1,   1855,   and  April  26, 


§  569  PEKFECTIXG  THE  LIEN.  925 

(b)  in  case  of  other  improvement,  where  there 
is  an  original  contract  at  any  time  after  the 
completion  of    the    contract,^^    and  where 

1862,  the  provision  as  to  time  of  filing  was  '^within 
thirty  days  after  the  work  was  done,  or  the  materials 
furnished  by  him'^  (Stats.  1855,  c.  130,  sec.  3;  and 
Stats.  1856,''c.  134,  sec.  2).  Under  Stats.  1850,  c.  87, 
sec.  7,  the  time  for  all  lien-claimants  was  ^^  sixty 
days  after  the  completion  of  the  building  or  repairs. 
....  Upon  his  failure  to  do  so  the  lien  shall  be  lost. ' ' 
Where  there  is  no  original  contractor,  or  where  the 
original  contract  is  void,  every ,  lien-claimant  is  em- 
braced in  this  class,  and  must  file  his  notice  of  claim 
of  lien  within  the  time  and  in  the  manner  prescribed 
Southern  California  Lumber  Co.  v.  Schmitt,  74  Cal. 
625,  627,  16  Pac.  516;  Willamette  etc.  Co.  v.  Los  An- 
geles College  Co.,  94  Cal.  229,  237,  29  Pac.  629;  Davis 
V.  MacDonough,  109  Cal.  547,  42  Pac.  450. 

19  Materials  Furnished  About  Mining  Claim.— No 
time  is  set  in  the  statute  for  filing  a  notice  of  lien 
claim  in  case  of  a  person  furnishing  materials  to  be 
used,  and  which  have  been  used,  about  a  mining 
claim.  But  this  case  seems  to  be  within  the  reason- 
able intendment  of  the  rule  which  prescribes  a  period 
of  thirty  days  after  the  performance  of  any  labor 
about  a  mining  claim  within  which  to  file  a  claim  of 
lien  therefor,  for  as  the  work  about  a  mining  claim  is 
usually  in  its  nature  continuous,  to  say  in  either  case 
that  the  lien  could  not  be  secured  until  after  the 
completion  of  the  improvement  would  in  many  cases 
forbid  it  entirely. 

20  To  be  Filed  at  Any  Time  After  the  Completion 
of  the  Original  Contract.— '*  The  amount  of  all  the 
claims  of  all  the  subcontractors  can  be  ascertained 
only  after  all  the  work  and  materials  have  been  fur- 
nished, and  after  the  building  has  been  completed,  so 
far    as    the    contractor    is    required    to    complete    the 

same When     the     contractor     has     furnished, 

through   himself   or   his  subcontractors,   all  the   work 


026  mechanics'  liens.  §  569 

there  is  no  such  contract  at  any  time  after 
the  completion  of  the  improvement,^^  but  in 
either  instance  before  the  expiration  of  thirty 
days  after  the  filing  of  the  notice  of  completion 
or  cessation  from  labor. 

570.     Time   of   Filing   Notice   When   Notice   of 
Completion  of  Cessation  not  Filed. 

If  the  notice  of  completion  or  cessation  from 
labor  is  not  duly  filed,  the  time  within  which  a 
notice  of  claim  of  lien  may  be  filed  is  in  every 
case  prolonged  until  ninety  days  have  expired 
after  the  completion  of  the  improvement.^^ 

and  material  which  he  has  agreed  to  furnish,  then 
the  building  is  completed  so  far  as  he  is  concerned, 
and  is  also  completed  so  far  as  all  the  subcontractors 
under  him  are  concerned;  and  the  contractor  and  each 
of  the  subcontractors  may  then  file  their  respective 
statements  for  liens":  Perry  v.  Brainard  (Oal.),  8 
Pac.  882;  Eovlance  v.  San  Luis  Hotel  Co.,  74  Cal.  273, 
278,  20  Pac.  573. 

21  To  be  Filed  After  Completion  of  Improvement. 
Where  a  person  undertook  an  improvement  without 
the  intervention  of  an  original  contractor  for  the  en- 
tire work,  a  materialman  from  whom  he  bought  goods 
from  time  to  time  cannot  file  his  claim  of  lien  until 
after  the  completion  of  the  entire  improvement,  but 
must  then  include  in  one  claim  his  entire  demand,  and 
must  not  file  a  separate  claim  for  materials  furnished 
under  each  of  several  contracts:  Pacific  Mutual  Life 
Ins.  Co.  V.  Fisher,  106  Cal.  224,  236,  39  Pac.  758. 

22  Time  of  Filing  Prolonged  Until  Ninety  Days 
have  Expited.— Code  of  Civil  Procedure,  section  1187, 
second  sentence,  and  last  clause  of  fourth:  ''In  case 
any  such  owner  neglect  to  file  said  notice  as  Jierein 


§  570  PERFECTING  THE  LIEN.  927 

required,  then  the  said  owner  and  all  persons  de- 
raigning  title  from  him,  and  all  persons  claiming  an 
interest  in  said  property,  shall  be  estopped  in  any 
proceedings  brought  to  foreclose  any  mechanics'  lien 
or  liens  provided  for  in  this  chapter,  from  maintain- 
ing a  defense  therein  based  on  the  ground  that  said 
lien  or  liens  have  not  been  filed  within  the  time  pro- 
vided in  this  chapter Provided,  however,  that 

in  any  event  all  claims  of  lien  must  be  filed  within 
ninety  days  after  the  completion  of  said  building,  im- 
provement, or  structure,  or  the  alteration,  addition 
to,  or  repair  thereof/'  New  provisions,  in  effect 
May  27,  1897. 

The  Code  Construed.— ^^  It  is  claimed  that  the  effect 
of  the  failure  of  the  owner  to  file  and  record  the  no- 
tice of  cessation  of  labor  was  to  indefinitely  postpone 
the  time  within  which  the  claim  of  lien  could  be  filed. 
We  do  not  so  construe  the  section.  After  stating 
that  the  owner  failing  to  give  notice  shall  be  estopped 
from  maintaining  a  defense  on  the  ground  that  the 
lien  was  not  filed  within  the  time  provided  for  in  the 
chapter,  it  is  expressly  provided  Hhat  in  any  event 
all  claims  of  lien  must  be  filed  within  ninety  days 
after  the  completion  of  said  building.'  The  statute 
then  provides  what  is  equivalent  to  and  shall  be 
deemed  completion.  The  proviso  should  be  read  in 
connection  with,  and  as  a  part  of,  the  sentence  in  re- 
gard to  the  owner  being  estopped  to  claim  that  the 
lien  was  not  filed  in  time.  The  construction  gives  ef- 
fect 'to,  and  makes  all  parts  of  the  section  consistent. 
It  enlarges  the  time  of  thirty  days,  formerly  given 
the  materialman  to  file  his  claim  of  lien,  and  gives 
him  thirty  days  after  the  filing  o*f  notice  of  cessa- 
tion of  labor  by  the  owner,  or,  in  case  the  owner  does 
not  file  such  notice,  then  one  hundred  and  twenty 
days  after  such  cessation  from  labor.  The  construc- 
tion contended  for  by  plaintiff  would  prolong  the  time 
within  which  a  claim  of  lien  could  be  filed  for  years, 
in  case  the  owner  failed  to  file  and  record  the  notice. 
Such  could  not  have  been  the  intention  of  the  legis- 
lature": Buell  V.  Brown,  131  Cal.  158,  161,  63  Pac. 
167. 


928  mechanics'  liens.  §  571 

571.  Original  Contract  as  Evidence  of  Comple- 
tion. 

An  original  contract,  although  void,  may  be 
used  as  a  test  of  completion  to  determine  the 
time  of  filing  the  notice  of  claim  of  lien,^^ 

572.  Matters   Treated   as   Completion   for  Pur- 
poses of  Filing  Notice.^'* 

(1)  The  oecnpation  or  nse  of  an  improvement 
by  the  contracting  owner  or  his  representative 
in  a  manner  inconsistent  with  the  continnanoe 
work  thereon,^^  or 

23  Although  the  original  contract  is  ^^whoUy  voicV 
because  not  filed,  it  may  be  used  as  evidence  to  de- 
termine the  character  of  the  building  to  be  erected, 
and  hence  as  a  test  of  completion:  Barker  v.  Doherty, 
97  Cal.  10,  12,  31  Pac.  1117;  Joost  v.  Sullivan,  111 
Cal.  286,  292,  43  Pac.  896. 

24  Code  of  Civil  Procedure,  section  1187,  last 
clause:  ^^And  |^  97m  }>  [a]  in  every  case^  m97  ^  ,  (1) 
the  occupation  or  use  of  a  building,  improvement,  or 
structure,  by  the  owner,  or  his  representative,  or  (2) 
the  acceptance  by  said  owner  or  his  agent  of  said 
building,  improvement,  or  structure  [97o]  [bj,  and 
(3)  cessation  from  labor  for  thirty  days  upon  any 
[97v]  [c]  contract,  or  upon  any  [97v]  [c]  building, 
improvement,  or  structure,  or  the  alteration,  addition 
to,  or  repair  thereof,  shall  be  deemed  equivalent  to  a 
completion  thereof  for  all  the  purposes  of  this  chap- 
ter. As  enacted,  in  effect  May  15,1887;  amended,  in 
effect  May  27,  1897. 

(a)  Former  reading:   '^In  case  of  contracts.'' 

(b)  Here  was  inserted:  '* Shall  be  deemed  conclu- 
sive evidence  of  completion.'' 


§  572  PERFECTING  THE  LIEN.  929 

(c)   Here  was  inserted:   ^ ^ Unfinished. ' ' 

Historical.— This  section  was  not  applicable  before 
the  amendments  of  1897  except  ^  ^  in  cases  of  contracts. ' ' 
So  *  ^  if  there  was  no  original  contract  for  its  construc- 
tion, or  if  the  one  which  had  been  actually  entered 
into  had  become  ^wholly  void/  the  condition  which 
"  the  statute  has  prescribed  for  the  exception  would 
not  exist,  and  the  claim  could  not  be  filed  until  after 
the  actual  completion  of  the  building,  or  until  after 
there  had  been  a  cessation  from  labor  for  thirty  days 
upon  the  unfinished  building^ ^:  Willamette  etc.  Co. 
V.  Los  Angeles  College  Co.,  94  Cal.  229,  240,  29  Pac. 
629;  Jones  v.  Kruse,  Cal.,  March  13,  1903.  In  Giant 
Powder  Co.  v.  San  Diego  Flume  Co.,  78  Cal.  193, 
196,  197,  20  Pac.  419,  the  court,  however,  had  held 
that  although  the  contract  was  void  because  not  filed, 
it  nevertheless  was  a,  ^case  of  contract'  within  the 
meaning  of  the  statute;  but  this  decision  was  criti- 
cised in  Kellogg  v.  Howes,  81  Cal.  170,  178,  22  Pac. 
509. 

The  amendment  of  1897  above  does  not  apply  to 
work  done  under  contracts  made  before  its  enact- 
ment, although  the  contingency  to  which  this  statu- 
tory provision  is  applicable  did  not  arise  until  after 
the  amendment  took  effect:  Jones  v.  Kruse,  Cal.^ 
March  13,  1903. 

25  Exclusive  Use  Treated  as  Completion.— ^' The 
occupation  or  use,  however,  which,  under  the  statute 
is  to  be  deemed  conclusive  evidence  of  completion^ 
must  be  open,  entire,  and  exclusive,  and  not  of  such 
a  character  as  would  be  consistent  with  a  continuance 
by  the  contractor  in  the  completion  of  his  con- 
tract; and  whether  in  any  particular  case  there  has 
been  such  occupation  or  use  must  be  determined  by 
the  facts  of  that  case,  as  in  the  ordinary  case  must 
be  determined  the  fact  of  actual  completion.  The 
owner  must  be  shown  to  have  acted  toward  the  con- 
tractor and  in  reference  to  the  building  in  such  a  way 
as  by  necessary  implication  to  give  notice  that  the 
building  had  been  accepted  by  him  in  satisfaction  of 
the  contract.  A  continuance  by  the  contractor  in 
Liens— 59 


S'SO  MECIIATs'ICS'    LIEXS.  §    572 

(2)  the  acceptance  of  the  improvement  by  the 
contracting  owner  or  his  agent,^^  or 

(3)  cessation  from  labor  for  thirty  days  upon 
any  contract  or  improvement^^'' 

the  work  of  completing  his  contract,  while  the  build- 
ing or  a  portion  thereof  should  be  occupied  by  the 
owner,  or  even  used  by  him  for  the  purpose  for  which 
it  was  intended,  would  prevent  such  occupation  or 
use  from  being  regarded  as  conclusive  evidence  of 
completion  ^^  Willamette  etc.  Co.  v.  Los  Angeles  Col- 
lege Co.,  94  Cal.  229,  239,  29  Pac.  629;  Orlandi  v. 
Gray,  125  Cal.  372,  374,  58  Pac.  15. 

Presumption  of  Completion,— llh.Q  occupation  and  use 
of  a  building  is  prima  facie  evidence  of  its  comple- 
tion: Joost  V.  Sullivan,  111  Cal.  286,  292,  43  Pac.  896. 

26  Acceptance  Illustrated.— A  day  or  two  after  an 
original  contractor  had  become  unable  to  go  on  with 
his  work,  his  contracting  owner  made  an  arrange- 
ment by  which  such  contractor  was  to  be  absolved 
from  his  obligation  under  the  contract,  the  same 
being  abrogated,  and  such  owner  was  to  pay  a  certain 
portion  of  the  contractor's  debts,  and  to  have  and 
retain  certain  of  his  property.  The  owner  thereupon 
took  possession  and  control  of  the  uncompleted  im- 
provements and  proceeded  to  complete  them.  Held, 
when  such  owner  released  the  contractor,  took  his 
work  and  some  of  his  property,  and  agreed  to  pay 
some  of  his  debts,  this  was  an  acceptance  of  the  im- 
provement in  the  sense  of  the  section  so  that  within 
the  proper  period  thereafter  liens  for  material  and 
labor  furnished  to  the  contractor  might  properly  be 
filed:  Giant  Powder  Co.  v.  San  Diego  Flume  Co.,  88 
Cal.  20,  24,  25,  25  Pac.  976.  See,  also,  Giant  Powder 
Co.  V.  San  Diego  Flume  Co.,  78  Cal.  193,  194,  195,  20 
Pac.  419. 

27  Cessation  must  be  Open.— The  words  '^cessation 
from  labor  for  thirty  days''  ''certainly  do  not  mean 
a  mere  clandestine  stopping  of  actual  work  for  thirty 


§  572  PERFECTING  THE  LIEN.  931 

days,  and  then  beginning  it  again  without  any  indicia 
to  the  world  that  it  had  been  stopped  for  thirty  days. 
They  were  not  contrived  as  a  means  for  defeating 
lienholders.  The  cessation  should  certainly  be  of 
such  a  character  as  to  carry  some  charge  of  notice 
to  a  careful  person'^:  Marble  Lime  Co.  v.  Lordsburg 
Hotel  Co.,  96  Cal.  332,  337,  31  Pac.  164. 

Provision  Mmidatori/.  — This  provision  is  not  in- 
tended merely  to  make  it  possible  for  a  materialman 
to  file  a  claim  of  lien  before  the  actual  completion  ot 
the  building,  but  is  designed  to  make  it  necessary 
so  to  do.  ^^  Whenever  there  has  been  a  cessation 
from  labor  for  thirty  days  upon  any  unfinished  build- 
ing, the  time  within  which  a  materialman  or  laborer 
must  file  his  claim  of  lien  at  once  begins  to  run": 
Kerckhoff-Cuzner  etc.  Lumber  Co.  v.  Olmstead,  85 
Cal.  80,  83,  84,  24  Pac.  648,  per  the  Court;  Works  and 
Thornton,  JJ.,  dissenting;  Mar  chant  v.  Hayes,  120 
Cal.  137,  138,  52  Pac.  154. 

^'It  is  immaterial  whether  the  building  is  subse- 
quently completed  by  the  owner  or  not,  or,  if  com- 
pleted, .whether  such  completion  is  affected  by  the 
owner  directly  or  through  a  contract  with  another; 
for  the  purposes  of  creating  a  lien  thereon  through 
the  terms  of  the  unfinished  contract,  the  cessation 
from  labor  under  the  contract  for  thirty  days  is  a 
statutory  completion  of  the  building,  which  sets  the 
time  running  within  which  the  claim  of  lien  must  be 
filed'':  Johnson  v.  La  Grave,  102  Cal.  324,  326,  36 
Pac.  651. 

The  abandonment  of  work  by  the  original  con- 
tractor, the  work,  however,  being  pushed  to  comple- 
tion by  the  owner  without  thirty  days'  cessation  from 
labor,  does  not  amount  to  a  completion,  and  the  time 
for  filing  liens  runs  from  the  date  of  completion,  and 
not  from  thirty  days  after  cessation  in  respect  to  lien 
claims  accruing  to  persons  employed  under  such  aban- 
doned contract:  Pierce  v.  Birkholm,  115  Cal.  657,  662, 
47  Pac.  681;  Marchant  v.  Hayes,  120  Cal.  137,  138,  52 
Pac.  154. 

Whether  there  is  a  cessation  from  labor  or  a  con- 
tinuance of  work  is  a  question  of  fact:  Marble  Lime 


932  mechanics'  liexs.  §  572 . 

must  he  treated  for  the  purpose  of  filing  the  no- 
tice of  claim  of  lien  as  an  actual  completion.-^ 

573.     Trivial  Imperfection  to  be  Disregarded. 

JSTo  trivial  imperfection  in  the  performance  of 
any  work  can  be  deemed  such  a  lack  of  comple- 
tion as  to  prevent  the  filing  of  a  valid  notice  of 
claim  of  lien;^^  or  the  enforcement  of  the  lien 
which  may  be  secured  thereby.^^ 

Co.  V.  Lordsburg  Hotel  Co.,  96  Cal.  332,  334,  31  Pac. 
164. 

Before  the  enactment  of  this  provision,  the  court 
held  that  an  owner,  by  stopping  short  the  construc- 
tion of  a  building,  could  not  deprive  the  claimant  of 
the  right  to  perfect  a  lien  thereon:  Schwartz  v. 
Knight,  74  Cal.  432,  434,  16  Pac.  235;  Harmon  v.  Ash- 
mead,  68  Cal.  321,  323,  9  Pac.  183. 

28  Treated  as  Completion.— ^  ^  The  words  [in  the 
code]  ^ shall  be  deemed  equivalent  to  a  completion' 
mean  shall  be  equal  in  legal  effect  to  a  completion; 
that  is,  shall  be  treated,  for  the  purpose  of  filing  a 
lien,  as  an  actual  completion'':  Kerckhoff-Cuzner  etc. 
Lumber  Co.  v.  Olmstead,  85  Cal.  80,  84,  24  Pac.  64S. 
See,  also,  McDonald  v.  Hayes,  132  Cal.  490,  494,  495, 
64  Pac.  850. 

29  Code  of  Civil  Procedure,  section  1187,  first 
clause  of  last  sentence:  ''Any  trivial  imperfection  in 
the  said  work,  or  in  the  construction  of  any  building, 
improvement,  or  structure,  or  of.  the  alteration,  addi- 
tion to,  or  repair  thereof,  shall  not  be  deemed  such  a 
lack  of  completion  as  to  prevent  the  filing  of  any 
lien.''     JNew  provision,  in  effect  May  15,  1887. 

Substantial  Performance  is  Sufficient.— ^^  In  con- 
tracts for  the  construction  or  repair  of  buildings,  a 
substantial  performance  of  his  contract  is  sufficient 
to  entitle  the  contractor  to  compensation  for  the  work 
done  by  him  under  the  contract.     If  there  has  been 


§  573  PEKFECTIXG  THE  LIEN.  933 

no  willful  departure  from  its  provisions,  and  no  omis- 
sion of  any  of  its  essential  parts,  and  the  contractor 
has  in  good  faith  performed  all  of  its  substantive 
terms,  he  will  not  be  held  to  have  forfeited  his  right 
to  a  recovery  by  reason  of  trivial  imperfections  or 
defects  in  the  work  performed.  If  the  omission  or  im- 
perfection is  so  slight  that  it  cannot  be  regarded  as 
an  integral  or  substantive  part  of  the  original  con- 
tract, and  the  other  party  can  be  compensated  there- 
for by  a  recoupment  for  damages,  the  contractor  does 
not  lose  his  right  of  action^':  Harlan  v.  Stufflebeem, 
87  Cal.  508,  511,  512,  25  Pac.  686;  Willamette  etc. 
Co.  V.  Los  Angeles  College  Co.,  94  Cal.  229,  237,  238, 
29  Pac.  629.  See,  also,  American  Type  Founders' 
Co.   V.   Packer,   130   Cal.   459,   462,   463,   62   Pac.   744. 

Meaning  of  Trivial  Imperfection.—^'  ^Trivial  imper- 
fection, as  used  in  the  code,  relates  to  the  question 
whether  or  not  there  has  been  an  actual  completion 
of  the  building.'  (Marble  Lime  Co.  v.  Lordsburg 
Hotel  Co.,  96  Cal.  332  [336,  31  Pac.  164].)  .... 
The  trivial  imperfections'  mentioned  in  the  above 
section  refer  to  imperfect  or  defective  performance 
of  the  work  upon  a  building  which  is  claimed  to  have 
been  completed,  and  not  to  a  case  in  which  the  build- 
ing is  admittedly  incompleted,  and  workmen  are  still 
engaged  in  constructing  substantial  portions  thereof. 
Neither  is  the  question  whether  an  omitted  portion 
of  the  building  is  a  trivial  imperfection,  or  is  a  sub- 
stantial failure  in  its  completion,  to  be  determined 
by  its  relative  cost  to  that  of  the  entire  building. 
If  the  omissions  are  so  substantial  that  the  con- 
tractor would  not  have  a  right  of  recovery  upon  his 
contract,  he  cannot  enforce  a  lien  therefor":  Bian- 
chi  V.  Hughes,  124  Cal.  24,  27,  56  Pac.  610. 

What  constitutes  a  trivial  imperfection  is  a  ques- 
tion of  fact:  Harlan  v.  Stufflebeem,  87  Cal.  508,  512, 
25  Pac.  686;  Willamette  Steam  Mills  v.  Kremer,  94 
Cal.  205,  208,  29  Pac.  633;  Willamette  etc.  Co.  v. 
Los  Angeles  College  Co.,  94  Cal.  229,  238,  29  Pac. 
629;  Marble  Lime  Co.  v.  Lordsburg  Hotel  Co.,  96  Cal. 
332,  334,  31  Pac.  164;  Bianchi  v.  Hughes,  124  Cal.  24, 


^34  MECHANICS'    LIENS.  §    573 

27,  56  Pac.  610;  Coss  v.  MacDonough,  111  Cal.  662,  44 
Pac.  325. 

Trivial  Imperfection  Illustrated.— Where  a  contract 
was  made  for  raising  a  two-story  frame  building  and 
converting  it  into  three  fiats,  its  completion,  except 
for  putting  on  the  rim  of  a  bathtub  and  a  door  knob, 
is  but  a  trivial  imperfection:  Joost  v.  Sullivan,  111 
gal.   286,    292,   43   Pac.    896. 

"Where  a  contract  for  painting  was  substantially 
complied  with,  but  some  small  places  in  the  house 
were  not  properly  grained  and  finished,  and  the  cost 
of  properly  finishing  them  would  not  exceed  five 
dollars,  a  court  properly  gave  judgment  for  the  con- 
tract price  less  five  dollars:  Harlan  v.  Stuff! ebeem, 
87  Cal.   508,   512,  25  Pac.   686. 

Evidence  held  sufficient  to  sustain  a  finding  of 
substantial  completion:  Santa  Clara  Val.  etc.  Lum- 
ber Co.  V.  Williams,  31  Pac.  1128  j  Ward  v.  Crane, 
118  Cal.  676,  50  Pac.  839,  840B: 

But  when  it  is  shown  that  notwithstanding  the 
trivial  character  of  the  uncompleted  work  at  a  cer- 
tain time,  the  work  actually  continued  thereafter 
and  was  finished  a  few  days  afterward,  a  finding  that 
the  work  was  completed  at  the  latter  date  is  sus- 
tained: Joost  V.  Sullivan,  111  Cal.  286,  292,  43  Pac. 
896. 

Marble  steps  by  which  the  basement  of  a  building 
is  to  be  reached  may  be  considered  a  substantial 
portion  of  the  building,  instead  of  a  trivial  imper- 
fection: Bianchi  v.  Hughes,  124  Cal.  24,  27  56  Pac. 
610. 

Conceding  that  an  elevator  in  a  building  is  a  mere 
convenience,  and  that  the  building  might  have  been 
used  without  it,  when  provided  for  by  the  plans  and 
specifications,  it  is  an  integral  part  thereof,  and  the 
building  could  not  be  said  to  be  complete  without  it: 
Coss  V.  MacDonough,  111  Cal.  662,  44  Pac.  325. 

30  Trivial  Imperfection  Cannot  Prevent  Enforce- 
ment of  Lien.— ^^  If  the  lien  can  be  *  filed'  notwith- 
standing such  imperfection,  it  must  follow  that  the 
claimant  can  foreclose  his  lien,  and  that  the  'trivial 


§    574  PERFECTIXG    TTIE    LIEN.  935 

574.  Notice   of  Claim  of  Lien  cannot  be  Re- 
formed or  Amended. 

A  notice  of  claim  of  lien  must  be  complete  in 
itself,  and  cannot  be  reformed  or  amended.^^ 

575.  Substantial   Observance    of   Requirements 
Essential. 

The  notice  of  claim  of  lien  must  be  filed  with- 
in the  limits  of  time  prescribed  in  section  569,^'^ 

imperfection  in  the  work'  is  no  defense  to  the  ac- 
tion'':  Harlan  v.  Stnfflebeem,  87  Cal.  508,  512,  25 
Pac.  686. 

31  Goss  V.  Strelitz,  54  Cal.  640,  644;  Fernandez  v. 
Burleson,  110  Cal.  164,  167,  52  Am.  St.  Eep.  75,  42 
Pac.  566.  ^^The  notice  of  lien  which  is  filed  for  rec- 
ord must  be  complete  in  itself  at  that  time  in  order 
to  authorize  its  enforcement,  and  is  not  capable  of 
being  amended  or  reformed'':  Madera  Flume  etc.  Co. 
V.  Kendall,  120  Cal.  182,  183,  65  Am.  St.  Eep.  177,  52 
Pac.   304. 

32  Notice  Must  be  Filed  Within  Limits  of  Time 
Prescribed. 

Thus  premature  filing  is  unavailing:  Perry  v. 
Brainard  (Cal.),  8  Pac.  882;  Eoylance  v.  San  Luis 
Hotel  Co.,  74  Cal.  273,  276,  20  Pac.  573;  Schwartz  v. 
Knight,  74  Cal.  432,  433,  16  Pac.  235;  WiHamette 
etc.  Co.  V.  Los  Angeles  CoUege  Co.,  94  Cal.  229,  237, 
29  Pac.  629;  Davis  v.  MacDonough,  109  Cal.  547,  550, 
42  Pac.  450;  Santa  Monica  etc.  Co.  v.  Hege,  119  Cal. 
376,  378,  51  Pac.  555;  Marchant  v.  Hayes,  120  Cal. 
137,  52  Pac.  154;  Jones  v.  Kruse,  Cal.,  March  13,  1903. 

Filing  after  the  expiration  of  the  prescribed  time 
is  likewise  nugatory:  Walker  v.  Hauss-Hijo,  1  Cal. 
183;  Johnson  v.  La  Grave,  102  Cal.  324,  325,  36  Pac. 
651;  McLaughlin  v.  Perkins,  102  Cal.  502,  36  Pac. 
839;  Beatty  v.  Mills,  113  Cal.  312,  45  Pac.  468. 


936  MECHAXICS'    LIEXS.  §    575 

must  siibstantiallY  conform  in  form  and  contents 
to  each  of    the    requirements  of    section  56'8^^^ 

Illustration.— ^Oy  in  case  of  a  claim  of  lien  accruing 
under  section  556,  where  the  original  contract  pro- 
vided that  the  work  should  be  done  'Ho  the  satis- 
faction of  the  superintendent  of  streets  of  said  city 
and  county/'  and  the  notice  was  not  filed  until  after 
the  expiration  of  sixty  days  from  the  completion  of 
the  work,  but  within  sixty  days  after  the  time  a 
certificate  was  given  by  the  superintendent  stating 
that  the  ^'w^ork  had  been  done  to  my  satisfaction,'' 
the  claim  was  recorded  too  late  and  gave  no  lien,  as? 
the  contract  and  the  certificate  pursuant  to  it  could 
not  alter  the  statutory  time:  Beatty  v.  Mills,  113  Cal» 
312,  45  Pac.  468. 

''The  giving  of  credit  for  a  longer  period  would, 
not  affect  the  time  within  which  the  notice  of  lien 
must  be  filed":  Knowles  v.  Baldwin,  125  Cal.  224, 
226,  57  Pac.  988. 

33  Notice  must  Substantially  Conform  to  Statutory 
Requirements. 

"The  statute  is  a  remedial  statute,  and,  for  the 
purpose  of  carrying  into  effect  the  object  for  w^hich 
it  was  enacted,  is  to  receive  a  liberal  construction, 
and  the  notices,  which,  under  its  provisions,  are  re- 
quired to  be  given,  have  regard  to  substance  rather 
than  form":  McGinty  v.  Morgan,  122  Cal.  103.  104, 
105,  54  Pac.  392;  Macomber  v.  Bigelow,  126  Cal.  5, 
16,   58   Pac.   312. 

Yet  it  must  be  borne  in  mind  that  the  notice  of 
claim  of  lien  is  "a  prerequisite  to  the  maintenance 
of  a  proceeding  which  gives  a  plaintiff  an  extraor- 
dinary remedy,  to  secure  which  he  must  comply  with 
the  terms  on  which  the  statute  extends  to  him  the 
statutory  relief":   Goss  v.   Strelitz,   54  Cal.   640,   644. 

A  substantial  observance  of  the  provisions  of  sec- 
tion 568  is  thus  necessary:  Wood  v.  Wrede,  46  Cal. 
637;  Phelps  v.  Maxwell's  Creek  Gold  Min.  Co.,  49 
Cal.  336,  339;  Hooper  v.  Flood,  54  Cal.  218,  221: 
Euss  Lumber  etc.  Co.  v,  Garrettson,  87  Cal.  589,  595, 


§    575  PERFECTIXG    THE    LIEX.  937 

and  must  in  all  essential  particulars  be  true;^'* 
otherwise  it  does  not  avail  in  the  least  toward  se- 
curing a  lien.     Yet  the  notice  need  not  set  forth 

25  Pac.  747;  Wagner  v.  Hansen,  103  Cal.  104,  107, 
37  Pac.  195;  San  Francisco  Paving  Co.  v.  Fairfield, 
134  Cal.  220,  224,  66  Pac.  255. 

So  where  the  precise  words  of  the  statute  have  not 
been  followed  in  stating  the  claim  of  lien,  but 
other  and  substantially  equivalent  expressions  have 
been  resorted  to,  it  will  be  deemed  a  sufficient  compli- 
ance with  the  law:  Ascha  v.  Fitch  (Cal.),  46  Pac.  298, 
299A. 

But  the  total  failure  to  make  any  of  the  requisite 
statements,  or  to  observe  any  other  requirement  ren- 
ders the  notice  wholly  ineffective:  Wood  v.  Wrede, 
46  Cal.  637;  Phelps  v.  Maxwell's  Creek  Gold  Min. 
Co.,  49  Cal.  336,  339;  Hooper  v.  Flood,  54  Cal.  218, 
222;  Pacific  Mutual  Life  Ins.  Co.  v.  Fisher,  106  Cal. 
224,  234,  235,  39  Pac.  758;  Ascha  v.  Fitch  (Cal.),  46 
Pac.  298,  298B;  Santa  Monica  Lumber  etc.  Co.  v. 
Hege,  119  Cal.  376,  379,  51  Pac.  555;  Madera  Flumo 
etc.  Co.  V.  Kendall,  120  Cal.  182,  65  Am.  St.  Eep.  177, 
52  Pac.  304. 

34  Notice  must  in  All  Essential  Particulars  be 
True. 

As  the  lienor  is  required  to  verify  his  statement, 
it  must  in  all  essential  particulars  be  true:  Wagner 
V.  Hansen,  103  Cal.  104,  107,  37  Pac.  195;  Santa 
Monica  Lumber  etc.  Co.  v.  Hege,  119  Cal.  376,  381, 
51  Pac.  555;  Wilson  v.  Nugent,  125  Cal.  280,  284, 
57   Pac.    1008. 

So  where  a  notice  of  claim  of  lien  stated  that 
the  contract  was  to  erect  and  furnish  materials,  and 
left  it  uncertain  whether  for  one  or  two  buildings, 
and  the  proof  showed  that  the  work  actually  per- 
formed was  to  raise  up,  move  back,  and  repair  two 
houses  and  furnish  the  materials  therefor,  the  lien 
cannot  be  sustained:  Eaton  v.  Malatesta,  92  Cal. 
75,    28    Pac.    54. 


938  mechanics'  liexs.  §  575 

anything  not  required  by  such  section,^^  and  an 
error  in  the  statement  of  unnecessary  facts  is  im- 
material.^^ 

Where  the  amount  stated  in  the  notice  of  claim 
of  lien  as  the  price  did  not  include  within  it  pay- 
ments made  on  account,  the  notice  is  fatally  de- 
fective: Santa  Monica  Lumber  etc.  Co.  v.  Hege,  119 
Cal.  376,  381,   51   Pac.  555. 

Likewise  the  averments  in  the  complaint  must 
agree  with  the  statements  in  the  notice  of  claim  of 
lien;  otherwise  the  complaint  is  open  to  demurrer 
on  the  ground  of  ambiguity:  Malone  v.  Big  Flat 
Gravel  Min.  Co.,  76  Cal.  578,  581,  18  Pac.  772. 

Thus  where  some  of  the  averments  of  the  com- 
plaint are  inconsistent  with  the  statements  in  the 
notice  of  claim  of  lien  which  had  been  filed,  it  is 
subject  to  demurrer  for  ambiguity  and  uncertainty: 
Frazer  v.  Barlow,  63  Cal.  71. 

35  Notice  Need  not  Set  Forth  Anything  not  Re- 
quired. 

On  the  other  hand,  '^the  steps  which  are  requi- 
site to  the  enforcement  of  a  mechanic's  lien  are 
entirely  of  statutory  creation,  and  the  same  rule 
which  makes  it  essential  that  all  the  statutory  re- 
quirements be  complied  with  in  order  to  perfect  the 
lien  renders  it  unnecessary  to  take  any  other  step 
than  is  thus  required.  In  order,  therefore,  to  de- 
termine whether  a  notice  of  lien  is  sufficient,  it  is 
only  necessarj^  to  compare  its  terms  with  the  terms 
of  the  statute  which  provides  for  the  notice'':  Cor- 
bett  V.  Chambers,  109  Cal.  178,  180,  41  Pac.  873; 
Davies-Henderson  Lumber  Co.  v.  Gottschalk,  81  Cal. 
641,  646,  22  Pac.  860.  Thus  it  is  not  necessary  to 
state  facts  showing  a  performance  of  the  contract, 
or  other  facts  necessary  to  complete  the  cause  of 
action:  Jewell  v.  McKay,  82  Cal.  144,  152,  23  Pac. 
139;  Slight  v.  Patton,  96  Cal.  384,  387,  31  Pac.  248. 
See,  also,  Harmon  v.  Ashmead,  68  Cal.  321,  323,  324, 
9  Pac.  183. 

36  Error  in  Statement  of  Unnecessary  Fact  Im- 
material. 


§  576  PERFECTING  THE  LIEN.  939 

576.     Filing  Fraudulent  Notice  Works  Forfeiture 
of  Lien. 

Any  lien-claimant  who  willfully  includes  in  his 
notice  of  claim  of  lien  a  statement  of  work  or 
materials  not  performed  upon  or  furnished  for 
the  property  described  in  such  claim  forfeits  his 
lien.^'' 

x\s  the  notice  of  lien  claim  is  not  required  to  state 
the  date  upon  which  the  contract  was  entered  into, 
a  variance  of  two  years  in  such  time  between  the 
claim  and  the  proof  does  not  of  itself  invalidate 
the  lien:  Pacific  Mutual  Life  Ins.  Co.  v.  Fisher,  109 
Cal.  566,  568,  569,  42  Pac.   154. 

37  See  Code  of  Civil  Procedure,  section  1202,  sec- 
ond sentence.  New  provision,  in  effect  March  18, 
i885.  A  substantially  similar  provision  was  con« 
tained  in  Stats.  1862,  c.  297,  sec.  25,  in  effect,  June 
25,   1862,   repealed   March   30,   1868. 

Section  to  he  Strictly  Construed.— ^^  It  is  penal  in* 
its  character,  and  not  only  must  be  strictly  con- 
strued, but  the  evidence  under  which  it  is  invoked 
should  be  clear  and  convincing  that  the  violation 
Avas  willful  and  intentionaP^:  Schallert-Ganahl  Lum- 
ber Co.  V.  Neal,  91  Cal.  362,  365,  27  Pac.  743; 
Pacific  Mutual  Life  Ins.  Co.  v.  Fisher,  106  Cal.  224, 
235,    39    Pac.    758. 

^'A  recorded  lien,  good  in  other  respects,  cannot 
be  rejected  because  the  amount  claimed  is  somewhat 
larger  than  can  be  sustained  by  the  proofs,  unless 
it  is  so  willfully  false  as  to  amount  to  a  fraud^': 
Snell  V.  Payne,  115  Cal.  218,  222,  46  Cal.  1069; 
(Stats.  1862)  Barber  v.  Reynolds,  44  Cal.  519,  533. 
See,  also,  Schallert-Ganahl  Lumber  Co.  v.  Neal, 
91  Cal.  362,  365,  366,  27  Pac.  743;  Harmon  v.  San 
Francisco  etc.  E.  E.  Co.,  86  C?l.  617,  618,  619,  25 
Pac.    124. 


940  mechanics'  liexs.  §  577 

577.     Claimant    Who    Files    Joint    Claim    must 
Segregate  Separate  Amounts  Claimed.^^ 

Any  lien-claimant  mentioned  in  sections  551;, 
552,  and  553  above,^®  ma}^  claim  in  a  single  no- 

38  Code  of  Civil  Procedure,  section  1188:  * 'In  every 
case  in  which  one  claim  is  filed  against  two  or  more 
buildings,  mining  claims  or  other  improvements  owned 
by  the  same  person,  the  person  filing  such  claim 
must,  at  the  same  time,  designate  the  amount  due 
to  him  on  each  of  such  buildings,  mining  claims,  or 
other  improvements,  otherwise  the  lien  of  such  claim 
is  postponed  to  other  liens.  The  lien  of  such  claim- 
ant does  not  extend  beyond  the  amount  designated, 
as  against  other  creditors  having  liens  by  judgment, 
mortgage  or  otherwise  upon  either  of  such  buildings 
or  other  improvements,  or  upon  the  land  upon  which 
the  same  are  situated.''     As  enacted  1872. 

Stats.  1867-68,  c.  448,  sec.  7,  provided  substantially 
the  same,  but  adding  the  proviso,  '^  provided  that 
no  joint  claim  shall  be  filed  upon  two  or  more  build- 
ings unless  they  are  contiguous  to  or  adjoining  each 
other.'' 

39  Section  Applies  Only  to  Liens  Mentioned  in 
Sections  551,  552  and  553. — Code  of  Civil  Procedure, 
section  1188,  does  not  apply  to  liens  authorized  by 
section  1191.  '' Section  1191  gives  to  the  contractor 
a  lien  upon  the  Hot'  for  his  work  done,  while  sec- 
tion 1183  gives  him  a  lien  upon  the  building  or 
other  improvement.'  ....  The  'buildings,  mining 
claims,  or  other  improvements'  named  in  section 
3188  have  the  same  significance  as  in  section  1183, 
and  the  clause  in  section  1191  giving  to  the  con- 
tractor a' lien  upon  the  'lot'  which  he  grades  or  fillM, 
or  'otherwise  improves,'  refers  to  some  improve- 
ment of  the  'lot'  upon  which  the  lien  is  given, 
rather  than  to  the  'improvements'  upon  the  lot  re- 
ferred to   in  section   1188 In  the  present   case 

the  plaintiffs  made  a  single  contract  for  the  grading 


§  577  PERFECTIXG  THE  LIEN.  941 

tice  of  claim  of  lien  a  lien  under  each  of  several 
original  contracts  executed  by  the  same  contract- 
ing owner^  or  against  each  of  several  separate  and 
distinct^^  parcels  of  property  owned  by  the  same 
person,  even  if  the  lien  arises  under  different 
contracts  ;^^  but  in  every  such  case  must-desig- 

of  the  two  blocks  at  a  fixed  price,  and,  as  it  appears 
that  the  character  of  the  two  blocks  was  such  that 
the  earth  taken  from  one  was  to  be  used  in  filling 
up  the  other,  and  that  the  compensation  for  the  en- 
tire work  was  fixed  at  Hen  cents  per  cubic  yard 
for  filling,'  it  is  evident  that  there  could  be  no 
separate  'amount  chargeable  against  either  blockj 
and  that,  while  the  grading  had  the  effect  to  im- 
prove the  land,  it  did  not  constitute  such  improve- 
ments' to  the  different  blocks  as  are  contemplated 
in  section  1188,  or  for  which  separate  liens  were 
authorized'':  Warren  v.  Hopkins,  110  Cal.  506,  510, 
511,  42  Pac.   986. 

40  Must  be  Separate  and  Distinct  Parcels  of  Prop- 
erty.— Where  persons  who  performed  labor  upon  a 
dwelling-house  situated  upon  a  certain  mining  claim, 
and  also  in  a  tunnel  therein,  filed  a  claim  of  lien 
which  did  not  designate  separately  the  amounts  due 
upon  the  dwelling  and  upon  the  tunnel,  the  court 
held  that  their  liens  were  not  postponed,  on  the 
ground  that  this  section  ^^  applies  only  to  cases  in 
Avhich  one  claim  is  filed  against  two  or  more  separate 
and  distinct  ^buildings,  mining  claims,  or  other  im- 
provements owned  by  the  same  person,'  and  not  to 
a  case  where,  as  here,  all  of  the  work  was  performed 
upon  one  and  the  same  piece  of  property,  although 
upon  different  portions  of  it":  Dickenson  v.  Bolyer, 
55  Cal.  285. 

41  * 'While  section  1188  requires  the  claimant  who 
files  a  lien  against  two  or  more  buildings,  or  other 
improvements,  to  designate  the  specific  amount  for 
which  he  claims  a  lien  upon  each  of   such  ^improve- 


942  mechanics'   liens.  §  577 

nate  in  his  joint  claim  of  lien  the  specific  amount 
claimed  under  each  original  contract^  or  against 
each  parcel  of  property  when  in  fact  there  is  a 
specific  amount  owing  upon  each  parcel  of  prop- 
erty; otherwise  the  lien  which  may  be  perfected 
through  the  joint  claim  is  postponed  to  all  other 
encumbrances  against  the  same  property.'*^ 

ments/  it  does  not  require  him  to  make  such  desig- 
nation unless  there  is  in  fact  a  specific  amount  due 
him  on  each  of  such  improvements;  and  it  might 
frequently  happen  that  a  contractor  would  construct 
several  buildings  under  one  contract,  and  there 
would  not  be  any  specific  amount  due  to  him  on 
each  of  such  buildings '':  Warren  v.  Hopkins,  110 
Cal.  506,  510,  42  Pac.  986. 

Under  this  section  a  joint  lien  for  labor  done  and 
materials  furnished  may  be  filed  against  two  sep- 
arate buildings  erected  on  the  same  lot  under  differ- 
ent unrecorded  contracts  between  the  owner  and 
the  same  original  contractor,  although  erected  at 
different  times:  Booth  v.  Pendola,  88  Cal.  36,  40 
(23  Pac.   200,   24  Pac.   714),   25  Pac.   1101. 

''It  has  been  common  in  this  state  to  consolidate 
two  or  more  mining  locations  into  one  claim,  and 
thereafter  to  treat  and  work  them  as  one  claim. 
After  such  a  consolidation  the  different  locations 
cease  to  constitute  different  claims,  and  become  in 
law,  as  they  are  in  fact,  only  parts  of  one  claim.'' 
In  such  a  case  this  section  is  inapplicable:  Tredin- 
nick  V.  Bed  Cloud  etc.  Mining  Co.,  72  Cal.  78,  84, 
13    Pac.    152. 

43  Lien  is  Postponed.— The  only  effect  of  the  fail- 
ure of  the  claimant  to  state  how  much  labor  was 
furnished  on  one  building  and  how  much  on  the  other, 
is  to  postpone  his  lien  and  give  precedence  to  the 
liens  of  others.  Whether  these  facts  are  stated  sep- 
arately is  no  concern  of  the  owner:  Booth  v.  Pen- 
dola,  88  Cal.  36,  40,  41,  23  Pac.  200  (24  Pac.  714), 
25   Pac.   1101. 


§    578  THE    PERFECTED   LIEN.  943 

Subdivision   2,     Time    of   AUadiment   of   Liens. 

578.  Contractor's  Lien  Attaches  at  Commence- 
ment of  Work  on  Contract .^^ 

The  lien  of  any  contractor  attaches  as  of  the 
time  of  the  commencement  of  the  work  npon  his 
contract.^^ 

579.  Laborer's  Lien  at  Commencement  of  Labor. 

The  lien  of  a  laborer  attaches  as  of  the  time  of 
the  commencement  of  his  labor.^^ 

43  Code  of  Civil  Procedure,  section  1186,  first 
clause:  '^The  liens  provided  for  in  this  chapter  are 
preferred  to  any  lien,  mortgage,  or  other  encum- 
brance which  may  have  attached  subsequent  to  the 
time  when  the  building,  improvement,  or  structure 
was  commenced,  work  done,  or  materials  were  com- 
menced  to  be  furnished."     As   enacted   1872. 

nistorical.—'By  previous  statutes  the  liens  attached 
as  under  the  present  provision,  except  that  Stats. 
1862,  c.  287,  sec.  3,  provided  that  where  the  origi- 
nal contract  was  recorded  all  liens  thereunder 
should  attach  from  the  time  of  such  recordation: 
See  Stats.  1850,  c.  89,  sec.  9;  Stats.  1855,  c.  130,  sec. 
5;  Stats.  1856,  c.  134,  sees.  3  and  4;  and  Stats.  1867- 
68,  c.  448,  sec.  3. 

44  The  lien  of  an-  original  contractor  attaches,  by 
relation,  from  the  date  of  the  commencement  of 
work  upon  his  contract:   Soule  v.  Dawes,  7  Cal.  575. 

45  Laborer's  Lien  Attaches  at  Commencement  of 
Labor:  Tuttle  v.  Montford,  7  Cal.  358;  CroweH  v.  Gil- 
more,   13   Cal.   54;    18    Cal.   370. 

Historical.— lJnd.eT  the  statute  of  1862,  where  there 
was  no  valid  original  contract,  the  same  was  true: 
Barber   v.   Eeynolds,   44   Cal.   519,    533. 


944  mechanics'  liens.  §  580 

580.     Materialman's  Lien  at   Commencement  of 
Furnishing  Materials. 

The  lien  of  a  materialman  attaches  as  of  the 
time  when  he  commenced  to  furnish  materials, 
and  includes  all  that  he  may  thereafter  furnish 
for  the  same  structure^  whether  furnished  under 
an  express  contract  in  which  the  terms  and  quan- 
tity are  fixed^  or  under  a  contract  implied  from 
their  purchase  and  use  in  the  structure  from 
time  to  time  as  needed.'*^  The  materials  are 
furnished  within  the  meaning  of  this  section,  not 
when  delivered  at  the  structure  in  the  course 
of  work  upon  which  they  are  used,  hut  when  the 
materialman  has  delivered,  or  has  ready  for  de- 
livery, the  materials  at  the  place  where  he  has 
agreed  to  deliver  them  under  his  contract.^'' 

46  Pacific  Mut.  Life  Ins.  Co.  v.  Fisher,  106  Cal. 
224,  236,  39  Pac.  758;  (Stats.  1856)  Tibbetts  v. 
Moore,  23  Gal.  208,  214;  (Stats.  1856)  McCrea  v. 
Craig,   23    Cal.   522. 

See,  also,  Germania  Bldg.  etc.  Assn.  v.  Wagner, 
61  Cal.  349,  354;  Avery  v.  Clark,  87  Cal.  619,  627,  22 
Am.    St.    Eep.    272,    25   Pac.    919. 

Historical.— JJndeY  the  statute  of  1862,  where  there 
was  no  valid  original  contract,  the  same  was  true: 
Barber  v.  Eeynolds,  44  Cal.  519,  533. 

47  Thus  where  materials  were  furnished  to  be  used 
and  were  used  in  the  construction  of  a  quartz-mill, 
but  were  to  be  delivered  at  a  foundry  some  dis- 
tance from  such  mill,  the  lien  attaches  from  the 
time  of  their  delivery  at  the  found^:  Tibbetts  v. 
Moore,  23  Cal.  208,  214. 


§    581  THE   PERFECTED  LIEN.  945 

Subdivision  S.     Operation  of  Perfected  Lien. 

581.     Notice  Compels  Contracting  Owner  to  Re- 
tain Certain  Moneys.'*^ 

A  notice  of  claim  of  lien  having  been  filed,  the 
contracting  owner  must  withhold  from  the- orig- 
inal contractor  in  the  execution  of  whose  contract 
the  labor  or  material  has  been  furnished  sufficient 
money  of  that  already  due  the  contractor  but 
neither  paid  him  nor  assigned  by  him  to  a  bona 
fide  assignee  for  value,^^  and  of  that  thereafter 
to  become  due,  to  satisfy  the  lien  which  may  be 
enforced  in  virtue  of  the  notice. 

48  ;see  section  585. 

See  Code  of  Civil  Procedure^  section  1193,  in  part; 
^^In  an  cases  where  a  lien  shall  be  filed,  under  this 
chapter,  for  work  done  or  materials  furnished  to 
any  contractor,  he  shall  defend  any  action  brought 
thereon  at  his  own  expense;  and  during  the  pend- 
ency of  such  action,  the  owner  may  withhold  from 
the  contractor  the  amount  of  money  for  which  such 
lien   is   filed. ' ' 

Historical.—StSits.  1855,  c.  130,  sec.  4,  Stats.  1856, 
c.  134,  sec.  3,  and  Stats.  1867-68,  c.  448,  sec.  11,  pro- 
vide   substantially   the    same. 

As,  however,  the  lien-claimant  is  also  entitled  to 
recover  costs  and  counsel  fees,  it  should  seem  that 
the  owner  should  also  be  directed  to  withhold  them 
as  he  is  by  section  495  when  the  lien-claimant  gives 
him  a  notice   of  his  claim. 

49  See  section  585,  note  12. 

Liens— 60 


946  mechanics'  liens.  §  582 

Subdivision   J/-.     Assignment   of   Lien. 

682.     Assignment  of  Lien. 

The  [written]  ^^  assignment  of  a  demand  se- 
cured by  an  improvement  lien  assigns  the  lien.^* 

50  Assignment  must  be  Written.—^ '  Under  our 
statute,  every  conveyance  whereby  real  estate  is 
aliened,  mortgaged,  charged,  or  affected  must  be  in 
writing.  A  mechanic's  lien  is  in  the  nature  of  a 
mortgage,  and  is  a  charge  on  the  land.  In  the 
former  decisions  of  this  court  it  has  been  held  that 
a  mortgage  is  a  mere  incident  to  the  debt,  and  will 
not  pass,  except  by  an  assignment  of  the  note  or 
debt.  Applying  this  rule  to  the  present  case,  the 
lien  would  not  pass,  except  by  a  transfer  of  the  ac- 
count; and  as  the  account  carries  with  it  the  lien, 
which  is  an  encumbrance  upon  the  land,  or  an  estate, 
or  interest,  it  must  be  in  writing'':  Ritter  v.  Steven- 
son, 7  Cal.  388. 

The  statute  apparently  referred  to  in  this  quota- 
tion is  Stats.  1850,  p.  249,  c.  101,  sees.  1  and  36; 
Hittell's  Gen.  Laws,  sees.  643,  678,  in  effect  April 
16,  1850.  '*  Conveyances  of  land,  or  of  any  estate 
or  interest  therein,  may  be  made  by  deed,  signed 
by  the  person  from  whom  the  estate  or  interest  is 
intended  to  pass,  being  of  lawful  age,  or  by  his 
lawful  agent  or  attorney,  and  acknowledged  or 
proved   and   recorded   as   hereinafter    directed. 

''The  term  'conveyance,'  as  used  in  this  act,  shall 
be  construed  to  embrace  every  instrument  in  writ- 
ing by  which  any  real  estate  or  interest  in  real  es- 
tate is  created,  aliened,  mortgaged,  or  assigned,  ex- 
cept wills,  leases  for  a  term  not  exceeding  one  year, 
executory  contracts  for  the  sale  or  purchase  of  lands, 
and   powers   of   attorne^'-s. " 

See,  also.  Patent  Brick  Co.  v.  Moore,  75  Cal.  205» 
211,  16  Pac.  890,  which  assumes  without  question 
that  the  assignment  must  be  written. 


§    582  THE   PERFECTED   LIEX.  947 

There  is,  however,  no  code  provision  which  is 
comparable  to  the  statute  above  quoted.  Civil  Code, 
section  1091  (see,  also,  Code  of  Civil  Procedure,  sec- 
tions 1971  and  1972)  is  comparable  to  Stats.  1850, 
p.  249,  c.  101,  sec.  1;  but  Civil  Code,  section  1215, 
which  resembles  section  36  most  closely,  has  no  ref- 
erence to  the  matter  in  hand. 

There  seems  then  to  be  no  requirement  that  the 
assignment  should  be  in  writing  under  the  present 
law. 

SI  *'A  perfected  lien  may  be  assigned,  or  rather 
it  passes  with  an  assignment  of  the  demand  for 
which  it  stands  as  security'':  Eauer  v.  Fay,  110  Cal. 
361,    367,    42    Pac.    902. 

See,  also.  Pacific  Mutual  Life  Ins.  Co.  v.  Fisher, 
109  Cal.  566,  570,  42  Pac.  154. 


948  mechanics'   liens.  §  583 


AETICLE  6. 

EQUITABLE    SUBEOGATION   TO  MONEYS  OWING 
ORIGINAL    CONTRACTOR.! 

583.  Certain  lien-claimants  may  give  notice  of  their 

claims    to    the    contracting  owner. 

584.  Method   of   giving   notice. 

585.  Notice  compels  contracting  owner  to  retain  cer- 

tain   moneys. 

586.  Fraudulent  notice  works  forfeiture  of  lien. 

587.  Right    to    give   notice   unassignable. 

588.  Right   to   give  notice   a   cumulative   remedy. 

589.  Action    to    enforce    this    liability    an    equitable 

proceeding. 

583.     Certain  Lien-Claimants    may  Give  Notice 
of  their  Claims  to  the  Contracting  Owner.'^ 

Any  lien-claimant  (except  for  certain  city 
street  and  other  improvements  as  set  forth  in  sec- 

1  This  article  is  founded  upon  an  amendment  to 
the  latter  part  of  section  1184  of  the  Code  of  Civil 
Procedure  which  took  effect  May  17,   1885. 

Historical.— The  mechanic's  lien  statutes  of  1850, 
1856,   and   1862,   provided   for   a   similar   notice. 

'^The  proceedings  under  this  notice  are  in  the 
nature  of  a  garnishment,  whereby  there  is  impounded 
specific  money  due,  or  thereafter  to  become  duo,  to 
the  contractor":  Sweeney  v.  Meyer,  124  Cal.  512, 
514,  57  Pac.  479. 

2  Where  the  original  contract  is  void,  there  being 
no  contract  and  no 'payments  to  stop,  this  notice  is 
useless:  Davies-Henderson  Lumber  Co.  v.  Gottschalk, 
81  Cal.  641,  644,  22  Pac.  860. 


§    583  NOTICE     TO     STOP     PAYMEXTS.  949 

tion  556)^  not  contracting  directly  with  the  con- 
tracting owner'*  may,  at  any  time,  give  to  the  con- 
tracting owner  a  written  notice  sufficient  to  in- 
form him.  about  or  to  put  him  on  inquiry  con- 
cerning^ 

(1)  the  fact  that  such  lien-claimant  has  fur- 
nished or  has  agreed  to  furnish,  labor  or  ma- 
terial or  both  to  any  contractor  or  other  person 
acting  by  authority  of  the  contracting  owner,^ 

3  Lien-claimants  for  Certain  City  Street  and  Other 
Improvements  cannot  Give  this  Notice. 

^^This  right  to  garnishee  the  moneys  of  the  con- 
tractor in  the  hands  of  the  owner  is  limited  by  the 
terms  of  the  section  to  'the  persons  mentioned  in 
section  1183^  '':  Bianchi  v.  Hughes,  124  Cal.  24,  28, 
56    Pac.    610. 

4  Lien-claimants  not  Contracting  Directly  with 
Contracting  Owner  may  Give  Notice.— Code  of  Civil 
Procedure,  section  1184,  fifth  sentence,  provides: 
''Any  of  the  persons  mentioned  in  section  1183, 
except  the  contractor,''  may  give  it;  but  as  it 
would  be  absurd  for  anyone  contracting  directly 
with  the  owner  to  give  the  owner  notice  not  to  pay 
himself,  this  section  evidently  refers  to  persons  not 
contracting   directly   with   the   contracting   owner. 

5  Notice  must  be  Sufficient  to  Inform  or  Put  on 
Inquiry.— Code  of  Civil  Procedure,  section  1184, 
seventh  sentence:  "No  such  notice  shall  be  invalid 
by  reason  of  any  defect  of  form,  provided  it  is 
sufficient  to  inform  the  }■  87n  j-  reputed  ■{  n87  ] 
owner  of  the  substantial  matters  herein  provided 
for,  |^87n  [  or  to  put  him  on  inquiry  as  to  such  mat- 
ters ^  n87  j  .''  New  provision,  in  effect  May  17, 1885; 
amended,  in   effect  March   15,   1887. 

6  Code  Language.— "That  they  have  performed 
labor   or   furnished   materials,    or   both,   to    the    con- 


950  mechanics'  liens.  §  583 

(2)  the  kind  of  labor  and  material,  in  general^ 

(3)  the  name  of  the  person  to  or  for  whom  the 
labor  or  material  was  furnished  or  agreed  to 
be  furnished,^  and 

(4)  the  value  of  that  already  furnished,  and  of 
the  whole  agreed  to  be  furnished.^ 

584.     Method  of  Giving  Notice. 

Such  notice  is  given 

(1)  by  delivering  it  to  the  contracting  owner 
personally,  or 

(2)  by  leaving  it  at  his  residence  or  place  of 
business  with  some  person  in  charge,  or 

(3)  by  delivering  it  to  his  architect,  or 

(4)  by  leaving  it  at  the  architect's  residence  or 
place  of  business  with  some  person  in  charge, 
or 

tractor,   or   other  person  acting  by  authority  of   the 
}■  87n  ]■    reputed    ]  n87  ]     owner,    or    that    they   have 
agreed   to    do    so.'' 

7  Code  Language.— '^Stating  in  general  terms  the 
kind   of   labor   and   materials.'' 

8  Code  Language.— *  ^  The  name  of  the  person  to 
or  for  whom  the  same  was  done  or  furnished,  or 
both."  Evidently  it  was  also  intended  that  the 
name  of  the  person  to  or  for  whom  the  labor  or 
materials  were  agreed  to  be  furnished  should  like- 
wise be  stated,  though  this  is  omitted  from  the  code. 

9  Code  Language.— ^  ^  The  amount  in  value,  as  near 
as  may  be,  of  that  already  done  or  furnished,  and  of 
the  whole  agreed  to  be  done  or  furnished,  or  both." 


§    584  NOTICE     TO     STOP     PAYMENTS.  951 

(5)  by  posting  it  in  a  conspicuous  place  upon  the 
mining  claim  or  improvement.-*^^ 

585.     Notice  Compels  Contracting  Owner  to  Re- 
tain Certain  Moneys.  ^^ 

Such  notice  being  given,  the  contracting  owner 
must  withhold  from  the  original  contractor  in  the 
execution  of  whose  contract  the  labor  or  material 

10  See  Code  of  Civil  Procedure,  section  1184,  sixth 
sentence.  New  provision,  in  effect  May  17,  1885; 
amended   March    15,    1887. 

11  Code  of  Civil  Procedure,  section  1184,  last  sen- 
tence: ^'Upon  such  notice  being  given,  it  shall  be 
the  duty  of  the  |-  87f  )■  [a]  person  who  contracted 
with  the  contractor  -|  f87^  to,  and  he  shall  with- 
hold from  his  contractor,  or  from  the  person  act- 
ing under  such  ]■  87n  j-  reputed  -j  n87  ]  owner,  and 
to  whom  by  said  notice  the  said  labor  or  materials, 
or  both,  have  been  furnished,  or  agreed  to  be  fur- 
nished, }■  87f  J-  [b]  sufficient  money  due,  or  that 
may  become  due  to  such  contractor,  or  other  per- 
son ]  f  87  ]  ,  to  answer  such  claim  and  any  lien  that 
may  be  filed  therefor  for  record,  under  this  chapter, 
including  J-  87m  \  [c]  counsel  fees  not  exceeding 
one  hundred  dollars  in  each  case,  beside  reasonable 
costs  provided  for  in  this  chapter  \  m87^  .  New 
provision,  in  effect  May  17,  1885;  amended,  in  effect 
March    15,    1887. 

(a)  Former  reading:   ''Owner.'' 

(b)  Former  reading:  ''AH  money  due  or  that  may 
become  due  to  such  contractor,  or  other  person,  or 
sufficient    of^  such    money." 

(c)  Former  reading:  "Costs  and  counsel  fees  pro- 
vided for  in  this  chapter,  until  such  notice  is  by 
writing  withdrawn;  and  all  money  paid  thereafter 
by  the  owner  to  the  contractor,  or  such  other  per- 
son, while  such  notice  is  in  force,  shall,  for  the  pur- 


952  mechanics'  liens.  §  585 

has  been  furnished^  or  agreed  to  be  furnished, 
sufficient  money  of  that  already  due,  but  neither 
paid  to  such  person  nor  assigned  by  him  to  a 

poses  of  all  liens  of  all  persons,  except  the  con- 
tractor, be  deemed  a  payment  prior  to  the  time  the 
same  was  due  within  the  meaning  of  and  subject  to 
the    provisions    of    this    section/^ 

This  notice  must  be  given  in  time  to  intercept  the 
monev  in  the  hands  of  the  contracting  owner;  other- 
wise the  payment  of  it  to  the  original  contractor  in 
accordance  with  the  terms  of  the  original  contract, 
which  may  be  made '  to  suit  the  parties  thereto  when 
the  contract  price  does  not  exceed  one  thousand  dol- 
lars, will  operate  as  a  complete  discharge  so  far  as 
the  contracting  owner  is  concerned:  Kerckhoff-Cuz- 
ner  etc.  Lumber  Co.  v.  Cummings,  86  Cal.  22,  25,  26, 
24  Pac.  814. 

Historical.— Frior  to  the  addition  of  this  provision 
to  the  code,  such  a  notice  did  not  put  the  contract- 
ing owner  under  any  obligation  to  withhold  any 
amount:   McCants  v.  Brush,  70  Cal.  125,  11  Pac.  601. 

In  line  with  this  decision  the  court  in  Kennedy- 
Shaw  Lumber  Co.  v.  Priet,  113  Cal.  291,  293,  45 
Pac.  336,  held  that  creditors  of  an  original  contractor 
who  perfect  no  lien  upon  the  improvement  and  do 
not  give  this  notice,  but  merely  obtain  a  personal 
judgment  against  the  original  contractor,  are  not 
entitled  to  a  judgment  directing  that  the  remainder 
of  the  fund  due  from  the  contracting  owner  to  the 
contractor,  after  the  payment  of  liens,  shall  be  dis- 
tributed   between    them. 

Stats.   1850,  c.  87,   sees.  3  and  4,  were  similar. 

Stats.  1862,  c.  297,  sees.  5,  6,  and  7,  provide  that 
upon  notice  being  given,  the  contracting  owner  must 
withhold  from  the  amount  due  the  original  con- 
tractor sufficient  to  satisfy  the  demands  made.  If 
the  claims  of  the  lienors  are  admitted  by  the  origi- 
nal contractor,  the  owner  must  pay  them;  if  con- 
tested, must  pay  the  amount  claimed  into  court,  and 


§    585  NOTICE     TO     STOP    PAYMENTS.  953 

bona  fide  assignee  for  value/^  and  of  that 
thereafter  to.  become  diie/^  to  answer  such  de- 
mand, together  with  counsel  fees  not  exceeding 

a  scheme  of  procedure  is  provided  for  determining 
the  rights  of  the  parties.  If  the  amount  in  the  hands 
of  the  owner  is  not  sufficient  to  satisfy  the  claims 
in  full,  they  must  be  satisfied  pro  rata.  Compare 
Stats.  1862,  sec.  23,  and  amendment  thereto  by  Stats. 
1863-64,  c.  262,  sec.  1. 

13  Money  Already  Due,  but  Neither  Paid  nor  As- 
signed to  a  Bona  Fide  Assignee  for  Value  to  be  Re- 
tained.— The  effect  of  this  notice  upon  payments  that 
have  matured  before  it  is  given,  but  have  not  been 
made,  is  to  be  determined  by  the  rights  of  the  con- 
tractor in  respect  to  them:  Newport  Wharf  etc.  Co. 
V.  Drew,  125  Cal.  585,  589,  58  Pac.  187. 

The  assignment  by  the  original  contractor  to  a 
bona  fide  assignee  for  value  of  an  amount  already  due 
is  free  from  the  latent  equities  of  third  persons,  such 
as  the  person  who  may  give  this  notice:  First  Nat. 
Bank  v.  Perris  Irr.  Dist.,  107  Cal.  55,  62,  64,  40  Pac. 
45;  Perry  v.  Parrott,  135  Cal.   238,  245,  67  Pac.  144. 

And  the  same  is  true  where  the  contracting  owner 
is  a  public  corporation,  as  a  board  of  insane  asylum 
trustees  or  of  school  trustees:  Newport  Wharf  etc. 
Co.,  125  Cal.  585,  589,  58  Pac.  187;  Long  Beach  School 
Dist.  V.  Lutge,  129  Cal.  409,  413,  414,  62  Pac.  36. 

The  assignment,  however,  by  the  original  contractor 
of  his  contract,  either  by  way  of  substitution,  or  to 
a  mere  volunteer,  or  to  a  trustee,  or  to  a  purchaser 
with  actual  notice,  or  without  rendering  value  does 
not  affect  such  right:  First  Nat.  Bank  v.  Perris  Irr. 
Dist.,  107  Cal.  55,  63,  64,  40  Pac.  45. 

13  Money  Thereafter  to  Become  Due  to  be  Re- 
tained.— '^It  seems  reasonable  to  say  that  no  assign- 
ment made  by  the  contractor  of  the  amount  to  be- 
come afterward  due  to  him  in  the  course  of  the  per- 
formance of  the  contract  could,  before  the  arrival  of 


954  mechanics'  liens.  §  585 

one  hundred  dollars^  and  the  cost  of  filing  and 
recording  the  notice  of  claim  of  lien  whenever  a 
lien  is  obtainable  thereby.^^ 

586.  Fraudulent  Notice  Works    Forfeiture    of 

Lien. 

Any  lien-claimant  who  willfully  gives  a  false 
notice  of  his  claim  to  the  contracting  owner  for- 
feits his  lien.^^ 

587.  Right  to  Give  Notice  Unassignable. 

The  right  to  give  such  notice  of  claim  and  to 
secure  the  resulting  benefits  is  a  personal  privi- 
lege of  the  lien-claimant^  and  unassignable.^^ 

the  time  of  payment,  defeat  the  right  of  the  material- 
man to  give  the  notice  in  question  and  obtain  the 
benefit  thereof:  First  Nat.  Bank  v.  Ferris  Irr.  Dist., 
107  Cal.  55,  61,  63,  40  Fac.  45;  Newport  Wharf  etc. 
Co.  V.  Drew,  125  Cal.  585,  589,  58  Fac.  187. 

14  When  No  Lien  can  be  Perfected,  Costs,  etc., 
cannot  be  Recovered.— Where,  however,  the  person 
giving  this  notice  could  not  obtain  a  lien,  because 
the  work  or  material  was  bestowed  on  a  public  build- 
ing, he  could  not  be  allowed  any  expense  incurred  in 
attempting  to  secure  one,  as  for  filing  a  notice  of  lien 
or  for  counsel  fees.  The  statute  does  not  provide  for 
counsel  fees  except  in  cases  of  lien:  Bates  v.  County  of 
Santa  Barbara,  90  Cal.  543,  548,  27  Fac.  438. 

15  See  Code  of  Civil  Frocedure,  section  1202,  first 
sentence.  New  provision,  in  effect  March  18,  1885. 
A  similar  provision  was  found  in  Stats.  1862,  c.  297, 
sec.  11. 

This  provision,  being  penal  in  its  character,  not 
only  must  be  strictly  construed,  but  the  evidence  un- 
der which  it   is  invoked   should   render  it   clear  and 


§  588         NOTICE  TO  STOP  PAYMENTS.  955 

t 

588.     Rig^ht  to  Give  Notice  a  Cumulative  Rem- 
edy. 

The  right  to  give  this  notice  is  a  cumulative 
and  additional  remedy,  neither  prerequisite  to, 
nor  necessarily  concurrent  with,  the  remedy  by 
lien/''   and    may   be    availed    of    by  a   person 

convincing  that  the  violation  is  willful  and  inten- 
tional: Schallert-Ganahl  Lumber  Co.  v.  Neal,  91  Cal. 
362,  365,  27  Pac.  743. 

16  McCrea  v.  Johnson,  104  Cal.  224,  37  Pac.  902. 
This  conclusion  is  based  on  the  same  reasoning  as 

that  on  which  section  563  is  based. 

17  A  Cumulative  Remedy.— ^  ^  This  right  to  gar- 
nishee the  moneys  of  the  contractor  in  the  hands 
of  the  owner  ....  is  but  a  cumulative  or  additional 
remedy  given  for  the  purpose  of  enforcing  in  another 
mode  the  right  for  which  by.  section  1183  a  lien  is  au- 
thorized upon  the  property  upon  which  the  labor  has 
been  performed,  or  for  which  th  materials  were  fur- 
nished'':  Bianchi  v.  Hughes,  124  Cal.  24,  28,  56  Pac. 
610;  Bates  v.  County  of  Santa  Barbara,  90  Cal.  543, 
547,  27  Pac.  438;  Weldon  v.  Superior  Court  Los  An- 
geles Co.,  138  Cal.  427,  71  Pac.  502.  See,  also,  Davies 
Henderson  Lumber  Co.  v.  Gottschalk,  81  Cal.  641, 
644,  645,  22  Pac.  860;  French  v.  Powell,  135  Cal.  636, 
640,  642,  68  Pac.  92. 

^'The  remedy  provided  ....  for  intercepting  the 
contract  price  in  the  hands  of  the  owner  is  not  de- 
pendent upon  proceedings  to  enforce  a  lien  against 
the  property  affected  by  the  contract^':  First  Nat. 
Bank  V.  Perris  Irr.  List.,  107  Cal.  55,  65,  40  Pac.  45. 

Historical— Vnder  the  statutes  of  1850,  1855,  1850, 
and  1862  a  similar  notice  was  an  essential  prerequi- 
site to  a  lien. 

Thus,  under  Stats.  1850,  c.  87,  sees.  2,  3,  and  4,  sub- 
contractors, materialmen  and  laborers  not  contract- 
ing directly  with  the  contracting  owner  are  required, 


956  mechanics'   liexs.  §  588 

« 

otherwise  a  lien-claimant  wlio^  on  grounds  of  j^ub- 
lic  policy  and  public  necessity,  is  not  permitted  to 
obtain  a  lien  against  a  public  building. ^^ 

as  a  prerequisite,  to  the  right  to  a  lien,  to  serve  a 
notice  upon  the  contracting  owner  setting  forth  *^[1] 
the  amount  of  his  claim,  and  [2]  the  service  rendered, 
for  which  his  employer  is  indebted  to  him,  and  [3] 
that  he  holds  the  said  owner  or  owners  responsible 
for  the  same/'  In  Cahoon  v.  Levy,  6  Cal.  295,  65 
Am.  Dec.  515,  it  was  said  that  the  statute  of  1850 
''was  designed  for  two  classes  of  laborers  and  con- 
tractors: First,  master  builders,  mechanics,  lumber 
merchants,  and  all  other  persons  furnishing  labor  or 
materials  by  contract  with  the  owner  of  the  building 
himself;  and,  second,  subcontractors,  journeymen,  etc., 
performing  labor  or  furnishing  materials  by  contract 
with  the  master  builders  or  contractors,  and  between 
whom  and  the  owner  there  is  no  privity  of  contract 

whatever [The   first   class]    have,   by  the  first 

section  of  the  act,  a  lien  on  the  building The 

second  class  are  provided  for  by  the  second,  third,  and 

fourth  sections  of  the  act The  act  intended  to 

provide  an  actual  lien,  existing  from  the  commence- 
ment of  the  work  until  sixty  days  after  its  comple- 
tion, for  those  enumerated  in  the.  first  .section,  leaving 
all  others  their  remedy  by  notice  to  the  owner;  and 
no  time  being  fixed  when  such  notice  shall  be  given, 
that  their  lien  attaches  only  upon  the  service  thereof; 
that  this  mode  of  procedure  was  intended  to  prevent 
litigation,  by  substituting  a  procedure  in  the  nature 
of  an  attachment  or  garnishment;  and  this  class  of 
cases  is  put  on  the  same  footing  as  ordinary  attach- 
ments in  which  the  rule,  first  in  time  first  in  right, 
prevails. ' ' 

In  Knowles  v.  Joost,  13  Cal.  620,  and  McAlpin  v. 
Duncan,  16  Cal.  126,  decided  under  the  act  of  1856 
with  the  amendment  of  1858,  it  was  held  that  as  to 
the  claims  of  subcontractors  and  materialmen  the 
legislature  did  not  intend  to  make  the  contracting 
owner   responsible,    except   upon   notice   being   served 


§    589  NOTICE     TO     STOP    PAYMENTS.  957 

589.     Action  to  Enforce  this  Liability  an  Equi- 
table Proceeding.    . 

An  action  to  enforce  the  liability  created  by 

duly  filing  this  notice  is  a  proceeding  in  equity; 

hence  the  superior  court  has  original  jurisdiction 

thereof,  although  the  amount  of  the  demand  is 

less  than  three  hundred  dollars. ^^ 

upon  such  owner,  or  to  a  greater  extent  than  the 
sum  due  to  the  contractor,  at  the  date  of  the  notice. 

Under  Stats.  1862,  c.  297,  sees.  5,  8,  and  12,  mate- 
rialmen and  laborers  not  contracting  directly  with 
the  contracting  owner,  or  their  assigns,  were  required 
as  a  prerequisite  to  the  right  to  a  lien  to  serve  a 
written  notice  personally  upon  such  owner,  or  where 
personal  service  is  impossible  by  posting,  stating  ^  ^  the 
nature  and  extent  of  his  claim  against  the  original 
contractor,  or  his  assigns,  over  and  above  all  pay- 
ments and  offsets  for  work  and  labor  done,  or  agreed 
to  be  done,  or  materials  furnished,  or  agreed  to  be 
furnished,  for  such  construction  or  repair.^'  But  the 
particular  nature  of  work  and  materials  furnished 
need  not  be  stated  in  the  notice:  See  Davis  v.  Living- 
ston, 29  Cal.  283,  287. 

IS  Notice  Effective  in  Case  of  Public  Building: 
Bates  V.  County  of  Santa  Barbara,  90  Cal.  543,  547, 
27  Pac.  438;  French  v.  Powell,  135  Cal.  636,  642,  68 
Pac.  92. 

19  Action  to  Enforce  Liability  Equitable  Proceed- 
ing.—^^  Section  1184  of  the  Code  of  Civil  Procedure 
is  a  part  of  the  legislative  scheme  devised,  pursuant 
to  the  constitutional  provision,  to  provide  security  to 
mechanics,  laborers,  materialmen,  and  others  men- 
tioned, for  their  labor  bestowed  or  materials  in  the 
erection  or  improvement  of  buildings.  The  giving  of 
the  statutory  notice  does  not  establish  a  lien  on  the 
fund  in  the  owner's  hands  in  the  sense  that  the  re- 
corded lien  is  established  on  the  buildings  and  land, 
under  section  1183,  but  it  does  not  follow  that  no  sort 
of   equitable   lien   may  not   be   enforced   against   the 


958  mechanics'  liens.  §  589 

fund    referred    to    in    section    1184 The    effect 

that  may  be  given  to  this  section  does  not  depend 
upon  the  lien  provided  for  in  section  1183.  Whether 
the  notice  may  result  in  establishing  an  equitable 
garnishment  or  assignment,  or  confers  an  equitable 
lien,  or  is  a  form  of  equitable  subrogation  regulated 
by  statute,  as  it  has  been  variously  termed,  this  court 
has  said  ^the  right  to  control  and  direct  the  funds 
remaining  in  the  hands  of  the  owner  is  as  distinct 
and  independent  as  the  right  to  file  and  enforce  a 
lien.  It  is  a  remedy  entirely  disconnected  from  and 
additional  to  the  remedy  by  lien  upon  the  building.* 
....  Doubtless  Swinford,  '  the  materialman,  might 
have  brought  his  action  on  the  law  side  of  the  court, 
against  Weldon,  the  contractor,  and  served  the  ordi- 
nary garnishment  on  the  owner,  Maher,  but  he  was 
not  restricted  to  this  remedy.  An  action  at  law 
would  not  lie  against  the  owner  alone,  for  his  liabil- 
ity would  depend  on  the  liability  of  the  contractor 
being  first  determined.  Where  the  action  is  by  the 
materialman  against  both  the  owner  and  contractor, 
the  owner  might  defend  by  showing  that  there  were 
other  claimants  to  the  fund,  who  had  served  like 
notice  on  him,  in  excess  of  the  amount  in  his  hands, 
and  this  would  necessitate  an  accounting  and  an  ap- 
portionment among  the  several  claimants  of  the  fund, 
after  the  liability  of  the  contractor  had  been  fixed. 
In  most  cases  this  very  situation  would  arise.  But 
such  an  action  (and  this  is  in  fact  such  a  one,  except 
there  is  but  one  claimant)  would  clearly  be  equitable. 
That  the  court  should  permit  such  proceeding  to  be 
brought  and  thus  determine  in  one  action  the  rights 
of  the  parties  and  secure  to  the  materialman  the 
fruits  of  his  notice,  and  compel  the  owner  to  perform 
the  duty  imposed  upon  him  by  statute,  we  feel  quit© 
clear.''  Thus,  where  a  notice  is  served  on  the  owner 
for  eighty-four  dollars  under  Code  of  Civil  Procedure, 
section  1184,  although  no  lien  is  perfected,  and  not- 
withstanding the  demand  is  for  less  than  three  hun- 
dred dollars,  the  action  thereon  may  be  maintained 
in  the  superior  court,  being  an  equitable  action: 
Weldon  v.  Superior  Court  of  Los  Angeles  Co.,  13S 
Cal.    427,    71    Pac.    502. 


590  AMOUNTS    OF    LIENS.  969 


AETICLE  7. 

AMOUNTS  OF  LIENS. 

590.  Maximum  amount  of  individual  lien. 

591.  Maximum    amount   of   liens   in   aggregate   when 

contract  price  fixed. 

592.  Amount    of    lien   not     reduced    by   contracting 

owner's  equities. 

593.  Liens  enforceable  to  full  amount  when  contract 

price  not  fixed. 

594.  Amounts    of   liens  when   original   contract   non- 

conformable    to    statutory    requirements, 

595.  Amount    applicable    to    liens    in    case    of    stop- 

page of  work  on  original  contract. 

596.  Amount   of  original   contractor's  lien. 

597.  Original  contractor  liable  to  owner  for  amount 

beyond  contract  price  which  he  is  compelled 
to  pay. 

598.  Lien   likewise   enforceable  when   contract   price 

payable  in  property. 

590.     Maximum  Amount  of  Individual  Lien. 

The  maximum  amount  recoverable  upon  any 
lien  cannot  exceed  the  amount  designated  in  the 
notice  of  claim  of  lien/  nor  that  owing  and  re- 
maining unpaid  the  lienor  at  the  time  of  the  en- 
forcement of  his  lien.^ 

1  See  section  568,  subdivisions  3  and  6,  section  574, 
and  section  5^,  especially  note  34. 

2  The  phrase  ''for  the  value/'  referring  to  the 
amount  for  which  a  lien  is  authorized,  (twice)   found 


960  mechanics'  liens.  §  591 

591.     Maximum  Amount  of  Liens  An  Aggregate 
When  Contract  Price  Fixed.^ 

Whenever  a  contracting  owner  makes  any  valid 
contract  with  a  fixed  contract  price^  the  aggre- 
gate amount  recoverable  from  the  owner  by  all 

in  section  1183  of  the  code,  '*is  not  used  in  contra- 
distinction from  ^ price ^  or  ^agreed  value.'  It  can- 
not possibly  have  been  the  intention  that  a  contractor, 
materialman,  or  laborer,  who  agrees  for  a  certain 
sum,  can  have  a  lien  for  a  greater  sum  upon  the 
ground  that  the  value  of  what  he  furnished  is 
greater.  It  is  probably  true  that  where  a  subcon- 
tractor, materialman,  or  laborer  agrees  with  the  origi- 
nal contractor  for  more  than  he  is  entitled  to,  upon 
the  understanding  that  it  shall  be  m.ade  out  of  the 
property,  there  would  be  such  a  fraud  as  would  viti- 
ate the  claim.  But  aside  from  such  a  case,  we  think 
that  the  word  ^ value'  in  the  above  provision  is  to  be 
construed  so  as  to  mean  'agreed  value'  in  cases  where 
there  is  an  agreed  value":  Jewell  v.  McKay,  82  Cal. 
144,  150,  23  Pac.  139.  (This  quotation  presumably 
refers  to  the  phrase  the  earlier  time  it  is  used  ia 
the  code  section.) 

3  When  the  contract  price  is  fixed,  the  amount  for 
which  the  contracting  owner  can  be  rendered  liable 
is  limited  by  the  terms  of  the  contract,  unless  statu- 
tory or  equitable  requirements  are  violated;  and  the 
legislature  has  no  power  to  increase  the  owner's  lia- 
bility: Knowles  v.  Joost,  13  Cal.  620;  McAlpin  v. 
Duncan,  16  Cal.  126;  Bowen  v.  Aubrey,  22  Cal.  566, 
571;  Dore  v.  Sellers,  27  Cal.  588,  593;  Whittier  v. 
Wilbur,  48  Cal.  175;  Eenton  v.  Conley,  49  Cal.  185; 
Wells  V.  Cahn,  51  Cal.  423;  Dingley  v.  Green,  54  Cal. 
333;  Eosecranz  v.  Wagner,  62  Cal.  151,  154;  Latson 
V.  Nelson  (Cal.),  11  Pac.  C.  L.  J.  589  (construed  in 
Kellogg  V.  Howes,  81  Cal.  170,  177);  Whittier  v.  Hol- 
lister,  64  Cal.  283,  30  Pac.  846;  Turner  v.  Strenzel,  70 
Cal.  28,   30,   11  Pac.   389;   Wiggins  v.  Bridge,   70  Cal. 


r 


■^\  b  ^.  A  H 
OF  THE 


f    UNIVERSITY  j 

§    591  AMOUNTS    OF    LIE^S.  OF  96^ 

lienors  other  than  the  original  contractor  upon 
all  liens  enforceable  thereunder  cannot  exceed 
a  fund  consisting  of  that  portion  of  the  contract 
price  already  due  the  contractor^  but  neither  paid 

437,  11  Pac.  754;  Walsh  v.  McMenomy,  74  Cal.  356, 
359,  16  Pac.  17;  Kellogg  v.  Howes,  81  Cal.  170,  177, 
6  L.  E.  A.  588,  22  Pac.  509;  Grieg  v.  Eiordan,  99  Cal. 
316,  319,  33  Pac.  913;  McDonald  v.  Hayes,  132  Cal. 
490,  495,  64  Pac.  850:  Stimson  Mill  Co.  v.  Braun, 
136  Cal.  122,  124,  125,  89  Am.  St.  Eep.  116,  68  Pac. 
481.  See,  also,  Harmon  v.  San  Francisco  etc.  E.  E. 
Co.,  86  Cal.  617,  620,  25  Pae.  124;  O^Donnel  v.  Kra- 
mer, ^^  Cal.  353,  4  Pac.  204. 

Averment. — Thus  an  averment  is  necessary  that 
some  money  is  due,  or  to  tecome  due,  the  contractor 
from  the  owner:  Whittier  v.  Hollister,  64  Cal.  283, 
30  Pac.  846. 

So  the  provision  added  to  the  Code  of  Civil  Pro- 
cedure, section  1183,  by  amendment  of  April  15,  1880, 
reading:  ^^This  lien  shall  not  be  affected  by  the  fact 
that  no  money  is  due,  or  to  become  due,  on  any  ac- 
count made  by  the  owner  with  any  other  party, '^  was 
declared  unconstitutional  in  Latson  v.  Nelson  (Cal.), 
11  Pac.  C.  L.  J.  589. 

Code  of  Civil  Procedure,  section  1183,  as  enacted, 
in  effect  May  17,  1885;  and  amended,  in  effect  March 
15,  1887,  provides:  *^In  case  of  a  contract  for  the 
work  between  the  }-87n|-  reputed  ^n87^  owner 
and  his  contractor,  the  lien  shall  extend  to  the  entire 
contract  price,  and  such  contract  shall  operate  as  a 
lien  in  favor  of  all  persons,  except  the  contractor, 
to  the  extent  of  the  whole  contract  price;  and  after 
all  such  contracts  are  satisfied,  then  as  a  lien  for  any 
balance  of  the  contract  price  in  favor  of  the  con- 
tractor.'' 

Previous  enactments  are  found  in  the  Code  of  1183 
as  enacted  1872  and  repealed  May  29,  1874,  in  Stats. 
1862,  c.  297,  sec.  1,  and  in  Stats.  1855,  c.  130,  sec.  3. 
Liens— 61 


1)62  mechanics'   liens.  §  591 

him  nor  assigned  by  him  to  a  bona  fide  assignee 
for  value^'*  together  with  that  portion  thereafter 
to  become  due  [but  deducting  in  case  the  con- 
tract price  does  not  exceed  one  thousand  dollars 
any  premature  payments  which  may  actually  have 
been  made],^  the  amount  of  the  fund  to  be  de- 

4  Neither  Paid,  nor  Assigned  to  a  Bona  Fide  As- 
signee for  Value:  See  section  585,  note  12. 

5  Deducting,  When  the  Contract  Price  does  not 
Exceed  One  Thousand  Dollars,  any  Premature  Pay- 
ments.— Where  the  contract  price  ot  an  original  con- 
tract which  was  in  writing  was  less  than  one  thou- 
sand dollars,  the  court  held  ^'the  payment  of  install- 
ments is  subject  to  change  by  the  agreement  of  the 
owner  and  contractor,  both  as  to  time  and  amount,  as 
in  the  case  of  private  contracts  relating  to  other  mat- 
ters. If  it  were  otherwise— if  the  provisions  as  to 
the  time  and  amount  of  payments,  and  the  penalty 
imposed  upon  the  owner  for  having  anticipated  pay- 
ments, were  intended  to  apply  to  contracts  where  the 
price  is  less  than  one  thousand  dollars — we  may 
safely  assume  that  the  statute  would  have  required 
them  to  be  in  writing  and  recorded,  or,  in  other 
words,  would  have  made  no  distinction  based  upon 
the  amount  of  the  contract  price' ^:  Southern  Califor- 
nia Lumber  Co.  V;  Jones,  133  Cal.  242,  65  Pac.  378, 
in  department.  So,  where  a  contract  in  which  the 
contract  price  was  less  than  one  thousand  dollars  pro- 
vided that  the  price  was  payable  in  four  installments, 
and  after  three  had  become  due  and  had  been  paid 
and  before  the  final  payment  had  become  due,  notice 
of  a  lien-claim  was  given  the  contracting  owner,  but 
such  final  payment  had  been  prematurely  made  be- 
fore such  notice  w^as  given,  the  notice  created  no  lia- 
bility  on  the  part   of   the   contracting   owner. 

This  conclusion  seems,  however,  to  disagree  with 
at  least  three  earlier  cases,  one  of  them  being  decided 
in  bank,   and   two   of   them   by  the  former   supreme 


§    591  AMOUNTS    OF    LIENS.  963 

termined  as  soon  as  the  aggregate  amount  re^ 
quired  to  be  withheld  in  consequence  of  liens 
Avhich  have  been  perfected  and  of  equitable  sub- 
rogations of  lien-claimants  to  moneys  in  the  con- 
tracting   owner^s    possession    equal    the    moneys? 

court.  These  cases  were  decided  before  the  enact- 
ment of  the  presejit  section  1184  of  the  Code  of  Civil 
Procedure,  when  all  original  contracts  were  on  the 
same  basis  as  contracts  in  which  the  contract  price 
does  not  exceed  one  thousand  dollars  are  at  present. 
In  Walsh  v.  McMenomy,  74  Cal.  354,  359,  16  Pac.  17, 
in  bank,  the  court  says:  ^'When  a  contract  is  made 
by  the  owner  for  the  construction  of  a  building,  by 
the  terms  of  which  a  pert  of  the  contract  price  is 
not  due  until  after  the  building  is  completed,  and 
when  materials  have  been  furnished  for  and  used  in 
the  construction,  presumably  in  view  of  such  con- 
tract, and  when  thereafter,  and  with  notice  thereof, 
the  owner  pays  his  orioinal  contractor  before  the 
'building  is  completed  and  before  the  money  is  due, 
he  must  be  held  liable  to  the  materialman  to  the  ex- 
tent of  the  money  prematurely  paid.  To  hold  other- 
w^ise  would  be  to  enable  the  owner  to  practice  a 
fraud,  and  the  contract,  instead  of  a  chart  for  the 
direction  of  materialmen,  subcontractors,  and  labor- 
ers under  the  original  contract,  would  become  a  de- 
lusion and  a  fraud.  We  think  that  this  conclusion  is 
fairly  deducible  from  Eenton  v.  Conley,  49  Cal.  185, 
Quale  V.  Moon,  48  Cal.  478,  and  other  adjudicated 
cases.  ^' 

Where  a  materialman  perfected  a  lien  for  mate- 
rials furnished  an  original  contractor,  the  court  sus- 
tained a  demurrer  of  the  answer  of  the  contracting 
owner  on  the  ground,  among  others,  that  ^Hhe  an- 
swer does  not  aver  ....  that  the  sum  paid  by  the 
defendant  [the  owner]  to  the  builder,  before  the 
abandonment  by  him  of  his  work  and  contract,  was 
due  when  the  same  was  paid'^:  Stats.  1868)  Quale 
V.  Moon,  48  CaL  478,  482. 


964  mechanics'   liens.  §  591 

which  should  thereby  be  intercepted.  Where, 
however,  the  owner  of  the  liened  property  eon- 
tests  the  foreclosure  action  without  reasonable 
cause,  the  necessary  incidents  of  the  judgment  es- 
tablishing the  liens  may  be  allowed  over  and 
above  the  amount  of  this  fund.^ 

592.     Amount   of   Lien   not    Reduced    by    Con- 
tracting Owner's  Equities. 

'No  lien  of  any  subcontractor,  materialman,  or 
laborer  can  be  defeated  or  diminished 
(1)  by  any  premature  payment  upon  the  con- 
tract price  of,  or  alteration  of,  any  original 
contract  [in  which  the  contract  price  exceeds 
one  thousand  dollars],®  nor 

'^  Where  the  owner  had  made  payments  to  the  con- 
tractor in  good  faith,  under  and  in  pursuance  of  the 
contract,  before  receiving  notice,  either  actual  or 
constructive,  of  the  liens,  the  materialmen  and  labor- 
ers could  not  charge  the  buildings  with  liens,  ex- 
ceeding the  balance  of  the  contract  price  remaining 
unpaid  when  notice  of  the  lien  was  given' ^:  (Stat. 
1868)  Eenton  v.  Conley,  49  Cal.  185,  188. 

6  Where  the  contracting  owner  retains  the  money 
remaining  unpaid  on  the  contract  price  in  his  own 
possession  (instead  of  depositing  it  in  court),  and 
without  cause  or  right  raises  a  contest  on  every  point 
and  fights  the  case  through  to  the  end,  thereby  de- 
laying the  lienors  in  recovering  money  to  which  they 
were  justly  entitled,  and  putting  them  to  unnecessary 
expense,  the  lienors'  costs  and  counsel  fees  are  prop- 
erly allowed  and  made  payable  out  of  the  property 
ordered  to  be  sold  beyond  and  in  addition  to  the 
amount  of  the  fund  remaining  unpaid  in  the  contract- 
ing owner's  hands:  De  Camr)  Lumber  Co.  v.  Tolhurst, 
98  Cal.  631,  635,  34  Pac.  438. 


§    592  AMOUNTS    OF    LIENS.  965 

7  Not  Defeated  by  Premature  Pajrment  or  Altera- 
tion.— Code  of  Civil  Procedure,  section  1184,  second 
and  third  sentences:  ^^No  payment  made  prior  to 
tlie  time  when  the  same  is  due,  under  the  terms  and 
conditions  of  the  contract,  shall  be  valid  for  the  pur- 
pose of  defeating,  diminishing,  or  discharging  any 
lien  in  favor  of  any  person,  except  the  contractor, 
but  as  to  such  liens,  such  payment  shall  be  deemed 
as  if  not  made,  and  shall  be  applicable  to  such  liens, 
notwithstanding  that  the  contractor  to  whom  it  was 
paid  may  thereafter  abandon  his  contract,  or  be  or 
become  indebted  to  the  }-  87n  |^  reputed  -|  n87  -j  owner 
in  any  amount  for  damages  or  otherwise,  for  nonper- 
formance of  his  contract  or  otherwise No  al- 
teration of  any  such  contract  shall  affect  any  lien  ac- 
quired under  the  provisions  of  this  chapter.'^  New 
provision,  in  effect  May  17,  1885;  amended  in  effect 
March  15,  1887. 

A  provision,  substantialy  similar  to  the  former 
part  of  this  was  found  in  Stats.  1862,  c.  297,  sec.  10, 
in  effect  June  25,  1862,  repealed  March  30,  1868,  and 
was  applied  in  Davis  v.  Livingston,  29  Cal.  283,  290, 
and  Shaver  v.  Murdock,  36  Cal.  293,  298. 

This  provision  is  universal  in  its  application,  and 
is  not  dependent  upon  notice  having  been  given 
under  article  6,  sections  583  through  589,  above: 
Sweeney  v.  Meyer,  124  Cal.  512,  513,  514,  57  Pac. 
579;  Ganahl  v.  Weir,  130  Cal.  237,  238,  239,  62  Pac. 
512. 

It  is  also  applied  in  Eeed  v.  Norton,  .90  Cal.  590, 
602,  26  Pac.  767,  27  Pac.  426. 

Arermenf. — Where  the  lienor  claims  that  a  prema- 
ture payment  has  been  made,  an  averment  in  his 
foreclosure  complaint  that  there  is  now  due  from  the 
owner  under  the  contract  a  certain  sum,  and  that  the 
same  has  not  been  paid,  being  a  statement  of  the  ulti- 
mate fact,  is  sufficient  to  raise  an  issue  as  to  the  pro- 
mature  character'  of  certain  payments.  The  reason 
why  it  is  now  due  and  has  not  been  paid  need  not 
be  stated  in  the  complaint:  Ganahl  v.  Weir,  130  Cal. 
237,  238,  62  Pac.  512. 

s  This  Provision  is  Open  to  Some  Doubt:  See  sec- 
tion 591,  note  5. 


966  mechanics'  liens. 


592 


(2)  by  any  prior  or  subsequent  indebtedness,  off- 
set, or  counterclaim  in  favor  of  the  contract- 
ing owner  and  against  the  original  contractor.'^ 

593.     Liens  Enforceable  to  Full  Amount  When 
Contract  Price  not  Fixed. 

Whenever  a  contracting  owner  makes  any  con- 
tract without  a  fixed  contract  price,  the  full 
amount  of  each  demand  secured  by  a  lien  en- 
forceable thereunder  may  be  recovered  from  tho 


9  Not  Defeated  by  Offset  in  Favor  of  Contracting 

Owner.— Code  of  Civil  Procedure,  section  1184,  third 
sentence,  first  clause:  ^^As  to  all  liens,  except  that 
of  the  contractor,  the  whole  contract  price  .... 
shall  not  be  diminished  by  any  prior  or  subsequent 
indebtedness,  offset,  or  counterclaim  in  favor  of  the 
}-  87n  \-  reputed  ^  n87  ■{  owner,  and  against  the  con- 
tractor. ^'  New  provision,  in  effect  May  17,  1885; 
amended,  in  effect  March  15,  1887. 

10  Code  of  Civil  Procedure,  section  1183,  first  sen- 
tence: ^^ Mechanics,  [etc.],  ....  shall  have  a  lien 
upon  the  property  upon  which  they  have  bestowed 
labor,  or  furnished  materials,  for  the  value  of  such 
labor  done  and  materials  furnished  .  .  .  .  ;  and  any 
person  who  performs  any  labor  in  any  mining  claim 
or  claims  has  a  lien  ....  for  the  work  or  labor  done^ 
or  materials  furnished.''  New  provision,  in  effect 
May  17,  1885. 

Code  of  Civil  Procedure,  section  1191:  '^Any  per- 
son who  [does  certain  city  street  or  other  improve- 
ments] ....  has  a  lien  ....  for  his  work  done  and 
materials  furnished,''     As  enacted  1872, 

Historical.— The  phraseology  of  previous  statutes 
has  in  all  cases  been  broad  enough  to  cover  this  case. 


§    594  AMOUNTS    OF    LIENS.  967 

594.  Amounts  of  Liens  When  Original  Contract 
Nonconformable  to  Statutory  Require- 
ments.^^ 

(1)  If  an}^  original  contract  is  void  on  any  of  the 
grounds  specified  in  section  547  above,  or 

(2)  if  the  terms  of  such  contract  and  every  alter- 
ation thereof  do  not  substantially  conform  to 
the  requirements  of  section  544  as  to  time  and 
manner  of  paying  the  contract  price, 

11  Code  Provisions.— Code  of  Civil  Procedure,  sec- 
tion 1183,  last  clause:  ^^In  such  case,  the  labor  done 
and  materials  furnished  by  all  persons  aforesaid,  ex- 
cept the  contractor,  shall  be  .deemed  to  have  been 
done  and  furnished  at  the  personal  instance  of  the 
owner,  and  then  shall  have  a  lien  for  the  value 
thereof.^'     New  provision  in  effect  May  17,  1885. 

Code  of  Civil  Procedure,  section  1202,  last  clause, 
provides  substantially  the  same.  New  provision  in 
effect  March  18,  1885. 

Code  of  Civil  Procedure,  section  1184,  fourth  sen- 
tence: ^^  }-87f  1^  [a]  In  case  such  contracts  and  altera- 
tions thereof  ■{  f 87  ■{  do  not  conform  substantially  to 
the  provisions  of  this  section,  [87o]  [b]  the  labor  done 
and  materials  furnished  by  all  persons  except  the 
contractor  shall  be  deemed  to  have  been  done  and 
furnished  at  the  personal  instance  |-87f  )■  [c]  and  re- 
quest of  the  person  who  contracted  with  the  con- 
tractor ^  f 87  \  ,  and  they  shall  have  a  lien  for  the 
value  thereof.^'  New  provision,  in  effect  May  17, 
1885;  amended  in  effect  March  15,  1887. 

(a)  Former  reading:  ^^All  such  contracts  and  alter- 
ations thereof  as. '^ 

(b)  Here  followed:  ^^ Shall  be  wholly  void,  and 
no  recovery  shall  be  had  thereon  by  either  party 
thereto;   and  in  such   case. ^^ 


968  mechanics'  liens.  §  594 

the  amount  of  the  lien  of  each  subcontractor/" 
materialman  and  laborer  is  the  value^^  of  the 
personal  services  or  materials,  or  both,  furnished 
by  him  respectively  less  payments  and  credits  re- 
ceived. 

(c)  Former  reading:  '^Of  the  owner.''  The  amend- 
ment seems  to  have  improved  the  original  con- 
tractor's position,  for  as  the  original  contract  is  no 
longer  declared  void  he  is  now  entitled  to  a  lien;  the 
penalty  declared  in  favor  of  the  other  lien-claimants 
is  not  affected. 

C on stitiitionaUty.— In  a  case  where  the  contract  had 
not  been  filed  for  record,  the  court  said:  *^It  has  been 
held,  ....  and  very  properly,  that  where  there  is  a 
valid  contract  the  owner  cannot  be  compelled  to  pay 
more  than  he  has  contracted  to  pay,  unless  he  is  noti- 
fied of  the  claims  of  subcontractors  before  payment 
to  the  contractor.  But  that  is  not  this  case.  Here 
there  was  no  contract.  If  the  legislature  has  power 
to  say  to  the  owner,  ^If  you  pay  the  contactor  after 
notice  irom  the  subcontractor  of  his  claim,  you  shall 
still  be  liable  to  the  latter,'  it  has  the  undoubted 
right  to  say  to  him,  ^If  you  do  not  execute  your  con- 
tract in  a  certain  form,  and  file  it  in  the  recorder's 
office,  you  shall  be  liable  to  materialmen  and  laborers 
for  the  value  of  their  material  and  labor.'  There  is 
no  hardship  in  this  provision.  The  owner  is  only 
compelled  to  pay  once  for  what  he  receives  and  re- 
tains the  benefit  of.  He  is  not  bound  and  has  no 
right,  as  between  himself  and  subcontractors,  to  pay 
the  contractor":  Kellogg  v.  Howes,  81  Cal.  170,  177, 
6  L.  E.  A.  588,  22  Pac.  509. 

In  the  Kellogg  case,  page  177,  the  court  states  that 
the  clause  of  section  1183  above  quoted  means  that 
''the  subcontractors,  laborers,  and  materialmen  shall 
have  their  lien  precisely  as  if  no  contract  had  ever 
been  made  between  the  owner  and  contractor,  and  the 
material  had  been  furnished  and  work  done  for  the 
owner  at  his  special  instance  and  request." 


§    594  AMOUNTS    OF    LIENS.  969 

12  Concerning  Amount  of  Subcontractor's  Lien.— 

Where  a  subcontractor  files  a  claim  of  lien  in  whicli  lie 
includes  the  value  of  work  done  by  his  employees, 
and  his  employees  also  file  claims  of  liens,  the  court 
Avill  render  its  foreclosure  judgment  in  favor  of  each 
employee  who  has  perfected  a  lien  for  the  amount  eacn 
is  entitled  to  receive,  and  deduct  the  amounts  of  the 
liens  so  allowed  from  that  of  the  subcontractor's  lien: 
Maeomber  v.  Bigelow,  126  Cal.  9,  15,  58  Pac.  312. 

13  Amount  of  Lien  is  Value  of  Work  or  Materials. 
*^The  extent  of  the  materialman's  recovery  is  not 
measured  by  the  terms  of  the  contract.  On  the  con- 
trary, the  statute  provides,  in  express  terms,  that, 
where  the  contract  is  not  recorded,  the  materialman 
shall  have  a  lien  for  the  value  thereof.  In  case  the 
contract  is  not  recorded,  the  statute,  and  not  the 
contract,  measures  the  extent  of  his  recovery'':  Kel- 
logg V.  Howes,  81  Cal.  170,  178,  6  L.  E.  A.  588,  22 
Pac.  509;  Davies-Henderson  Lumber  Co.  v.  Gottschalk, 
81  Cal.  641,  645,  646,  22  Pac.  860.  Tn  the  Kellogg  case, 
page  178,  what  was  said  in  Giant  Powder  Co.  v.  San 
Diego  Flume  Co.,  78  Cal.  193,  196,  20  Pac.  419,  as  to 
the  original  contract  remaining  to  mark  the  recovery 
of  the  lienholders,  when  the  contract  is  void  because 
not  recorded,  is  overruled. 

Where  the  original  contract  is  void,  the  price  at 
which  a  lienor  agrees  to  furnish  materials  to  the  con- 
tractor is  prima  facie  evidence  of  their  value:  Booth 
V.  Pendola,  88  Cal.  36,  41  (23  Pac.  200),  25  Pac.  1101 ; 
Joost  V.  Sullivan,  111  Cal.  286,  296,  43  Pac.  896; 
Bringham  v.  Knox,  127  Cal.  40,  44,  59  Pac.  198.  Com- 
pare Carpenter  v.  Furrey,  128  Cal.  665,  669,  61  Pac. 
369.  Nevertheless,  ^'the  property  is  subject  to  a  lien 
for  only  the  ^ value'  of  the  Avork  done"  by  employees 
of  a  subcontractor;  and  if  the  subcontractor  has  em- 
ployed them  at  a  higher  rate  than  he  could  enforce 
against  the  property,  he  must  stand  the  loss:  Ma- 
comber  V.  Bigelow,  126  Cal.  9,  15,  58  Pac.  312. 


970  mechanics'  liens.  §  595 

595.     Amount   Applicable   to   Liens   in   Case   of 
Stoppage  of  Work  on  Original  Contract. ^^ 

If  an  original  contractor  fails  to  perforin  his 

14  See  Code  of  Civil  Procedure,  section  1200.  New 
section,  in  effect  March  18,  1885. 

The  court  seems  to  hold  that  this  section  is  not 
applicable  where  the  contract  price  is  less  than  one 
thousand  dollars.  In  Denison  v.  Burrell,  119  Cal. 
180,  51  Pac.  1  (compare  Southern  Cal.  Lumber  Co.  v. 
Jones,  133  Cal.  242,  244,  65  Pac.  378),  where  the  con- 
tract price  was  less  than  one  thousand  dollars,  and 
the  original  contractor  abandoned  the  work  when  half 
completed,  and  a  lienor  sought  to  cause  one-half  of 
the  contract  price  to  be  applied  to  the  discharge  of 
liens,  the  court  said:  ''The  contract  price  being  less 
than  one  thousand  dollars,  the  provisions  of  section 
1184  of  the  Code  of  Civil  Procedure  relative  to  the 
time  and  mode  of  payment,  and  the  withholding  of  a 
percentage  of  the  contract  price,  are  not  applicable. 
It  was  permissible  for  the  parties  to  contract  for 
the  payment  of  the  whole  amount  to  the  contractor 
before  the  commencement  of  the  work,  or,  as  was 
done  in  this  case,  to  contract  that  payment  should 
not  be  made  until  the  whole  building  was  completed. 
....  The  cases  upon  which  respondent  [the  lien- 
claimant]  relies,  and  which  he  contends  oppose  this 
construction,  are  those  of  Dunlop  v.  Kennedy,  102 
Cal.  443  [36  Pac.  765],  and  Golden  Gate  Lumber  Co. 
V.  Sahrbacher,  105  Cal.  114  [38  Pac.  635],  but  these 
cases  both  had  to  do  with  contracts  where  the  price 
exceeded  one  thousand  dollars,  and  they  are  there- 
fore inapplicable.''  The  reasoning  of  the  court  rests 
on  the  assumption  that  this  section  can  only  be  ap- 
plied when  the  time  and  mode  of  payment  of  the  con- 
tract price  are  regulated  by  Code  section  1184,  which 
admittedly  is  not  the  case  when  the  contract  price 
does  not  exceed  one  thousand  dollars;  but  the  true 
view  seems  to  be  that  this  section  can  be  rendered 
applicable    whenever    the    owner    has    not    paid    the 


§    595  AMOUNTS    OF    LIENS.  971 

contractor  the  full  amount  proportionate  to  the  work 
and  materials  furnished,  estimated  by  the  standard 
of  the  whole  contract  price.  In  Gibson  v.  Wheeler, 
110  Cal.  243,  42  Pac.  810,  where  the  contract  was 
abandoned  and  the  owner  paid  out  in  the  completion 
of  the  building  more  than  the  balance  o$  the  contract 
price  (the  contract  price  being  less  than  one  thousand 
dollars),  a  materialman  was  not  permitted  to  re- 
cover, no  reference,  however,  being  made  to  this  sec- 
tion. ' 

In  Golden  Gate  Lumber  Co.  v.  Sahrbacher,  105 
Cal.  114,  118,  38  Pac.  635,  the  question  was  raised,  but 
left  undetermined,  whether  this  section  was  appli- 
cable when  the  original  contractor  had  a  right  to  stop 
work  as  well  as  when  he  wrongfully  abandoned  work. 

Rule  Before  Adoption  of  Section.— Where  an  original 
contractor  abandons  his  contract  without  cause,  and 
the  contracting  owner  afterward  completes  the  con- 
tract for  himself  for  less  than  the  balance  of  the 
contract  price  remaining  in  his  hands,  materialmen 
of  the  original  contractor  can  have  no  lien  upon  that 
part  of  the  contract  price  still  remaining  in  the  own- 
er ^s  possession.  When  the  original  contractor  aban- 
doned his  contract  he  forfeited  all  his  rights  there- 
under, and  upon  the  extension  of  his  claim,  the  claims 
of  all  persons  claiming  under  him  were  likewise  ex- 
tinguished: (Stats.  1862)  Blythe  v.  Poultnev.  31  Cal. 
233;    (Code  1874)   Dmgley  v.  Green,  .54  Cal.*^  333,  335. 

Where  an  original  contractor  for  the  erection  of  a 
building  abandons  the  work  before  its  completion,  af- 
ter being  paid  in  full  by  the  contracting  owner  for 
the  work  already  done,  a  materialman  is  not  entitled 
to  a  lien  on  the  im.provement  for  the  materials  fur- 
nished the  original  contractor  for  its  construction,  un- 
less the  contracting  owner  afterward  completes  it  for 
a  less  amount  than  the  balance  of  the  contract  price 
in  his  lands:  Wiggins  v.  Bridge,  70  Cal.  437,  11  Pac. 
754. 


072  mechanics'  liens.  §  595 

contract  in  fiill^  or  abandons^^  the  same  before 
eonipletion,  there  nevertheless  is  applicable  to 
the  liens  of  persons  other  than  the  contractor 
that  portion  of  the  contract  price  remaining  after 
the  amount  of  the  contract  price  then  lawfully 
due  and  actually  paid  is  deducted  from  the  value, 
•  estimated  as  near  as  may  be  by  the  standard  of 
the  whole  contract  price^  of  the  work  already 
done  and  materials  already  furnished  at  the  time 
of  such  failure  or  abandonment^,  including  ma- 
terials then  actually  delivered  or  on  the  ground 
which  shall  thereupon  belong  to  the  owner. 

596.     Amount   of   Original   Contractor's   Lien.^^ 

The  amount  recoverable  upon  a  lien  by  an 
original  contractor  is  the  amount  which  remains 

15  What    Amounts    to     Abandonment.— Where    the 

original  contractor  leaves  the  work  without  cause 
it  is  an  abandonment:  Golden  Gate  Lumber  Co.  v. 
Sahrbacher,  105  Cal.  114,  116,  38  Pac.  1635. 

A  finding  that  the  contractor  ^ '  entirely  ceased  labor 
thereon  without  completing  said  building  ^^  shows  an 
abandonment  within  the  meaning  of  this  section: 
McDonald  v.  Hayes,  132  Cal.  490,  495,  64  Pac.  850. 

16  Code  of  Civil  Procedure,  section.  1193,  in  part: 
" '  The  contractor  shall  be  entitled  to  recover  upon  a 
lien  filed  by  him  only  such  amount  as  may  be  due  to 
him  according  to  the  terms  of  his  contract,  after  de- 
ducting all  claims  of  other  parties  for  work  done 
and  materials  furnished,  as  aforesaid;  and  in  all  cases 
Avhere  a  lien  shall  be  filed,  under  this  chapter,  for 
work  done  or  materials  furnished  to  any  contractor, 
he  shall  defend  any  action  brought  thereon  at  his  own 
expense;  ....  and  in  case  of  judgment  against  the 


§    590  AMOLNTS    OF    LIENS.  973 

after  deducting  the  gross  amount^''  (mclnding 
costs  and  counsel  fees)  recovered  b}^  all  lienors 
furnishing  work  or  materials  to  such  contractor, 
together  with  the  expenses  incurred  by  the  owner 
in  defending  the  actions  in  which  their  liens  were 
foreclosed    (except  where  the  ov/ner  had  agreed 

owner  or  his  property,  upon  the  lien,  the  said  owner 
shall  be  entitled  to  deduct  from  any  amount  due  or 
to  become  due  by  him  to  the  contractor  the  amount 
of  such  judgment  and  costs/'  New  section,  in  ef- 
tect  May  29,  1874.  Stats.  1867-68,  c.  448,  sec.  11,  in 
effect  March  30,  1868,  repealed  by  code,  read  the 
same. 

Code  of  Civil  Procedure,  section  1183,  second  sen- 
tence: ^^In  case  of  a  contract  for  the  work  between 
the  )■  87n  j-  reputed  ■{  n87  -|  owner  and  his  contractor, 
the  lien  shall  extend  to  the  entire  contract  price,  and 
such  contract  shall  operate  as  a  lien  in  favor  of  all 
persons,  except  the  contractor,  to  the  extent  of  the 
whole  contract  price;  and  after  all  such  liens  are 
satisfied,  then  as  a  lien  for  any  balance  of  the  con- 
tract price  in  favor  of  the  contractor.  ^^  New  provi- 
sion, in  effect  May  17,  1885;  amended,  in  effect  March 
15,  1887.     Also,  see  Stats.  1850,  c.  87,  sec.  5. 

See  section  548,  above,  especially  note  23. 

Under  Stats.  1855,  c.  130,  sec.  4,  and  Stats.  1856,  c. 
134,  sec.  3,  the  amount  of  the  liens  of  other  persons 
than  the  contractor,  were,  when  established,  to  be  a 
*  ^  valid  offset  against  the  amount  due ' '  him. 

17  Amount  Recovered  by  Lienors  to  be  Deducted.— 
In  case  of  a  judgment  in  behalf  of  a  materialman 
employed  by  an  original  contractor  against  the  con- 
tracting owner  and  his  property,  the  latter  is  entitled 
to  deduct  from  any  sum  due  such  contractor  the 
amount  of  such  judgment:  (Stats.  1868)  Whittier  v. 
Wilbur,  48  Cal.  175. 


974  MECHANICS'    LIEXS.  §    596 

with  the  original  contractor  to  pay  such  lien- 
ors)/^ from  the  amount  remaining  due  and  un- 
paid him  according  to  his  contract. 

597.  Orig^inal  Contractor  Liable  to  Owner  for 
Amount  Beyond  Contract  Price  Which  He 
is  Compelled  to  Pay. 

If  the  amount  recovered  on  foreclosure  judg- 
ments rendered  against  the  contracting  owner 
for  personal  services  or  materials  furnished  an 
original  contractor,  with  costs  thereon  added,  ex- 
ceeds the  amount  coming  to  the  contractor  from 
the  owner,  or  if  the  owner  has  settled  with  the 
contractor  in  full,  the  ovrner  is  entitled  to  recover 
back  from  the  contractor  the  amount  so  paid  in 
excess  of  the  contract  price. ^^ 

38  Where  an  original  contractor  gave  his  subcon- 
tractor an  order  upon  the  contracting  owner  tor  the 
amount  due  the  su]' contractor,  which  order  the  own- 
er refused  to  pay,  the  original  contractor  must  bear 
the  expenses  incurred  by  the  owner  in  defending  a 
foreclosure  action  brought  by  the  subcontractor.  The 
contractor  cannot  split  his  demand  and  impose  upon 
the  owner  without  his  consent  the  duty  of  paying  an 
assignee  of  a  part  of  it:  Clancv  v.  Plover,  i07  Cal. 
272/275,  276,  40  Pac.  394. 

But  where  the  agreed  method  of  payment  was  by 
orders  issued  by  the  contractor  on  the  owner,  which 
the  owner  refused  to  pay,  the  owner  must  himself 
bear  the  expenses  of  foreclosure  actions  brought  by 
such  lienors:  Adams  v.  Burbank,  103  Cal.  646,  650,  651, 
37  Pac.  640. 

19  See  Code  of  Civil  Procedure,  section  1193,  latter 
clause:  New  provision,  in  effect  May  29,  1874.  Stats. 
1867-68,  c.  448,  sec.  11,  latter  part,  prov'des  the  same. 


§    593  AMCLNTS    CF    LIEXS.  975 

59?.     lien  likewise  Enforceable  When  Contract 
Price  Payable  in  Property .^^ 

Xotwithstanding  the  contract  price  of  a  valid 
contract  with  the  contracting  owner  is  payable  in 
something  other  than  money,  the  contractor  may, 
upon  breach  of  payment  thereof  [when  the  dam- 
Where,  however,  liens  are  filed  by  persons  working 
under  an  original  contractor  in  a  sum  in  excess  of 
the  contract  price  of  a  valid  contract,  and  the  owner 
pays  them  without  the  request  of  the  contractor,  he 
cannot  recover  the  excess  from  the  contractor  or  his 
sureties:  Brill  v.  De  Turk,  130  Cal.  241,  243-245,  ^2 
Pac.  462. 

20  Code  of  Civil  Procedure,  section  1184,  in  part; 
'^As  to  all  liens,  except  that  of  the  contractor,  the 
whole   contract  price   shall  be  payable   in  money.'' 

^^The  exception  in  favor  of  the  contractor,  in  the 
provision  of  the  code  above  quoted,  indicates,  if  it 
does  not  imply,  that  he  may  contract  and  have  a  lien 
for  the  value  of  his  work  payable  otherwise  than  in 
money;  and  this  is  in  perfect  accord  with  section 
1183,  which  provides  that  he  shall  have  a  lien  for  the 
value  of  the  labor  done  and  materials  furnished'': 
Baird  v.  Peall,  92  Cal.  235,  237,  28  Pac.  285. 

^'Eespondent  claims  that  section  ....  1184,  above 
cited,  relate [s]  only  to  cases  where  the  contract  price 

exceeds    one   thousand    dollars After    carefully 

reading  the  opinions  in  the  cases  referred  to,  we  fail 
to  see  how  they  can  be  said  to  sustain  respondent's 
contention":  Schmid  v.  Busch,  97  Cal.  184,  188,  31 
Pac.  893. 

The  code  provision  above  quoted  cannot  be  inter- 
preted to  render  void  a  contract  a  part  of  the  contract 
price  of  which  is  payable  in  property,  as  such  a  pro- 
vision would  be  unconstitutional  as  unreasonably  re- 
straining the  right  of  contract:  Stimson  Mill  Co.  v. 
Braun,  136  Cal.  122,  89  Am.  St.  Eep.  116,  68  Pac.  481. 


976  mechanics'   liens.  §  598 

ages  are  liquidated  and  certain,  if  not  in  every 
case],^^-  and  every  lienor  claiming  under  him  may 
in  every  case,^^  enforce  each,  respectively,  his 
lien  to  the  same  extent  as  though  the  contract 
price  was  payable  in  money. 

21  Where  an  original  contractor  contracted  to  do 
some  painting  at  a  fixed  money  price,  a  specified  por- 
tion of  which  (one  hundred  and  fifty  dollars)  was  to 
be  paid  in  land,  upon  a  breach  of  the  agreement  to 
pay  one  hundred  and  fiftj^  dollars  in  land,  the  dam- 
ages being  liquidated  and  certain,  precisely  the  same 
as  in  case  of  the  breach  of  an  agreement  to  pay 
ntoney,  the  contractor  may  enforce  his  lien  for  the 
balance  due  him. 

''Had  the  plaintiff  [original  contractor]  contracted 
to  do  the  work  in  consideration  that  defendant  should 
convey  to  him  certain  land  or  personal  property, 
without  fixing  the  money  price  or  value  of  the  work, 
perhaps  he  would  not  have  been  entitled  to  a  lien^^: 
Baird  v.  Peall,  92  Cal.  235,  237,  28  Pac.  285. 

22  Other  I-ienor  in  Every  Case.— ''The  laborer  [em- 
ployed by  an  original  contractor],  in  our  opinion, 
may  enforce  a  lien,  notwithstanding  the  contract  price 
v/as  to  be  paid  in  something  other  than  money,  it 
not  having  in  fact  been  paid  when  the  claim  of  lien 
was  filed  and  the  action  commenced'':  Schmid  v. 
Busch,  97  Ca\  184,  188,  189,  31  Pac.  893. 


599  PRIORITY.  977 


AETICLE  8. 

PEIOEITY    OF    IMPEOVEMENT    LIENS    AMONG 
THEMSELVES. 

599.     Eank    of    liens. 

599.     Rank  of  Liens. 

Improvement  liens  have  priority  in  the  follow- 
ing order: 

(1)  liens  of  persons  performing  manual  labor, 

(2)  of  materialmen, 

(3)  of  subcontractors, 

(4)  of  original  contractors. 

The  court  must,  in  its  judgment,  declare  the 
rank  of  each  lien,  and  the  proceeds  of  the  sale  of 
the  property  subject  to  the  liens  must  be  applied 
to  the  satisfaction  of  each  class  of  liens  in  the 
order  of  its  rank.^ 

1  Code  of  Civil   Procedure,   section   1194,  first  por- 
tion: ^^In  every  case  in  which  different  liens  are  as- 
serted against  any  property,  the  court  in  the  judgment 
must  declare  the  rank  of  each  lien,  or  class  of  liens, 
j-73-4n  l^  which   shall  be  in  the  following  order,  viz.: 
[  85m  [  [a]    1.   All   persons   performing   manual   labor 
in,  on  or  about  the  same;   2.  Persona  furnishing  ma- 
terials;    3.  Subcontractors;    4.    -{  m85 -j    Original    con- 
tractors -\  n73-4  ]  .    And  the  proceeds  of  the  sale  of  the 
Liens— 62 


978  mechanics'   liens.  §  599 

property  must  be  applied  to  each  lien  or  class  of  liens 
in  the  order  of  its  rank.  ^'  As  enacted  1872;  amended, 
in  effect  May  29,  1874,  and  May  17,  1885. 

(a)  Former  reading:  ''First.  All  persons  other  than 
the  original  contractors  and  subcontractors;  Second. 
The   subcontractors;   Third.  The. '^ 

Historical.— JJnder  the  earlier  statutes,  Stats.  1850, 
c.  87,  sec.  9,  Stats.  1855,  1856,  and  1862,  c.  297,  sec. 
3,  all  lien-claimants  were  divided  into  two  classes, 
original  contractors  and  subcontractors  constituting 
one,  and  laborers  and  materialmen  the  other,  the  lat- 
ter class  having  priority,  and  in  case  of  a  deficiency  of 
proceeds  being  entitled  to  a  pro  rata  distribution: 
See  (jStats.  1850)  Moxley  v.  Shepard,  3  Cal.  64,  and 
(Stats.  1856)  Crowell  v.  Gilmore,  18  Cal.  370.  By 
Stats.  1867-68,  c.  448;  sec.  10,  second  subdivision,  the 
order  of  priority  was:  1.  Laborers  and  materialmen; 
2.  Subcontractors;  3.  Original  contractors.  The  code 
as  enacted  1872  made  a  division  into:  1.  Persons  con- 
tracting directly  with  the  contracting  owner;  and  2. 
All  other  persons,  the  latter  (called  'subcontractors' 
by  the  statute),  being  given  priority.  On  May  29, 
1874,  a  return  was  made  to  the  provisions  of  the  stat- 
ute of  1868. 


600  A    CUMULATIVE    REMEDY.  979 


AKTICLE  9. 

3MPE0VEMENT   LIEN   A    CUMULATIVE    SECUE- 
ITY. 

600.     Improvement    lien   a   cumulative   security. 

600.     Improvement  Lien  a  Cumulative  Security. 

An  improvement  lien  is  an  additional  and 
cumulative  security,  which  may  be  availed  of  by 
those  authorized  to  obtain  it  without  impairing 
or  affecting  any  right  of  action  otherwise  avail- 
able; nor  is  an  improvement  lien  waived  by  re- 
course to  other  remedies.^ 

1  Code  of  Civil  Procedure,  section  1197:  ''Nothing 
contained  in  this  chapter  j-  73-4f  j.  shall  ]  f  73-4  ]  be 
construed  to  impair  or  affect  the  right  of  any  person 
of  whom  any  debt  may  be  due  for  work  done  or  ma- 
terials furnished  to  maintain  a  personal  action  to  re- 
cover such  debt  against  the  person  liable  therefor 
[o73-4o].  As  enacted  1872;  amended,  in  effect  July 
1.. 

The  code  as  enacted  1872,  and  Stats.  1867-68,  c.  448, 
sec.  13,  contained  a  further  provision  that  where  the 
holder  of  a  mechanic's  lien  resorted  to  remedies  in 
personam,  he  might  take  out  an  attachment,  notwith- 
standing his  claim  was  secured  by  a  valid  lien. 

Stats.  1867-68,  also  added  a  proviso  that  there  could 
be   but   one  satisfaction   of   the   secured   obligation. 

See,  also,  Stats.  1850,  c.  87,  sec.  13;  Stats.  1855,  c. 
130,  sec.  9;  Stats.  1856,  c.  134,  sec.  8;  Stats.  1862, 
c.  297,  sec.  14,  amended  1863-64,  c.  262,  sec.  2. 


980  MECHANICS'    LIENS.  §    600 

There  is,  however,  no  personal  liability  on  the  part 
of  the  contracting  owner  to  persons  contracting  with 
the  original  contractor  v»^here  the  original  contract  is 
void  and  the  original  contractor  is  deemed  the  con- 
tracting owner  ^s  agent.     See  section  549,  ahove. 

'^The  right  to  a  money  judgment  against  the  per- 
son who  employs  the  mechanic  or  purchases  the  ma- 
terials is  not  lost  or  waived  by  a  proceeding  to  en^ 
force  the  lien,  or  recover  from  the  owner  the  balance 
of  the  contract  price  remaining  in  his  hands,  ^^  under 
Code  of  Civil  Procedure,  section  1184:  Bates  v.  County 
of  Santa  Barbara,  90  Cal.  543,  547,  548,  27  Pac.  438. 

Nor  is  the  lien  waived  by  commencing  and  prose- 
cuting a  personal  action  upon  the  secured  claim  to 
judgment,  so  long  as  the  judgment  remains  unsatis- 
fied: (Stats.  1856)  Brennan  v.  Swasey,  16  Cal.  140, 
76  Am.  Dec.  507;  Germania  Bldg.  etc.  Assn.  v.  Wag- 
ner, 61  Cal.  349,  355. 

No  judgment  against  the  parties  personally  liable 
is  necessary  to  support  the  lien:  Euss  Lumber  etc.  Co. 
V.  Garrettson,  87  Cal.  589,  596,  25  Pac.  747;  Yancy 
V.  Morton,  94  Cal.  558,  560,  29  Pac.  1111. 


§    601  ENFORCEMENT   THEREOF.  9^1 


AETICLE  10. 

ENFOECEMENT  OF  IMPEOVEMENT  LIEN. 

601.  Method    of    enforcement. 

602.  Time    of    commencing    action. 

603.  Foreclosure   actions   against   the    same   property- 

may  be  united. 

604.  Costs   and   counsel  fees  are  necessary  incidents 

of   foreclosure   judgment. 

601.  Method  of  Enforcement.^ 

All  improvement  lien  may,  when  performance 
of  the  obligation  secured  thereby  becomes  due,"* 
be  enforced  by  a  foreclosure  action. 

602.  Time  of  Commencing  Action.^ 

Every  action  to  foreclose  an  improvement  lien 

1  See  Code  of  Civil  Procedure,  section  1190,  as 
quoted  section  602,  below. 

2  Secured  Obligation  Must  be  Due.— A  foreclosure 
complaint  averring  that  the  plaintiffs,  who  were  ma- 
terialmen, were  to  be  paid  ^^upon  the  completion  of 
the  building,'^  and  that  at  the  time  of  the  commence- 
ment of  the  action  the  building  was  not  completed, 
does  not  state  a  cause  of  action,  as  ^Hhere  can  be  no 
foreclosure  of  a  lien  until  the  debt  for  which  the 
lien  is  made  and  held  as  security  has  become  pay- 
able.^' If  the  agreement  had  been  varied  or  ter- 
minated by  any  of  the  modes  made  known  to  the 
law,  it  should  have  been  stated  by  suitable  averments: 
Harmon  v.  Ashmead,  60  Cal.  438. 

3  Code  of  Civil  Procedure,  section  1190:  '*No  lien 
provided  for  in  this  chapter  binds  any  building,  min- 


982  mechanics'   liens.  §  602 

must  be  commenced*  within  ninety  days  after  the 
filing  of  the  claim  of  lien;  or,  if  credit  be  given, 
then  within  ninety  days  after  the  expiration  of 
such  credit ;  but  no  agreement  to  give  credit  can 
continue  any  lien  in  force  for  a  longer  period 
than  two  years  after  the  completion  of  the  work. 

ing  claim,  improvement,  or  structure,  for  a  longer 
period  than  ninety  days  after  the  same  has  been 
filed,  unless  proceedings  be  commenced  in  a  proper 
court  within  that  time  to  enforce  the  same,  or,  if  a 
credit  be  given,  then  ninety  days  after  the  expira- 
tion of  such  credit;  but  no  lien  continues  in  force  for 
a  longer  time  than  two  years  from  the  time  the  work 
is  completed,  by  any  agreement  to  give  credit/'  As 
enacted  1872. 

Historical.— The  provision  in  Stats.  1867-68,  c.  448, 
sec.  8,  is  substantially  the  same.  Under  Stats.  1855, 
c.  130,  sec.  7,  Stats.  1856,  c.  134,  sec.  6,  and  Stats. 
1862,  c.  297,  sec.  19,  the  time  was  six  months  in- 
stead of  ninety  days,  and  under  Stats.  1850,  c.  87, 
sec.  8,  one  year.  Under  Stats.  1855,  c.  130,  sec.  7, 
credit  could  not  be  given  to  exceed  one  year,  and 
a  marginal  note  must  be  made  on  the.  record  of  the 
lien-claim  stating  the  length  of  time  for  which  credit 
was  given. 

Where  the  action  to  foreclose  the  lien  is  not  brought 
until  after  the  expiration  of  the  time  prescribed  by 
statute,  the  lien  is  lost:  (Stats.  1856)  Green  v.  Jack- 
son Water  Co.,  10  Cal.  374;  (Code)  Bradford  v.  Dor- 
sey,  63  Cal.  122. 

4  When  Action  is  Commenced.— Code  of  Civil  Pro- 
cedure, section  405:  ^^  Civil  actions  in  the  courts  of 
this  state  are  commenced  hy  filing  a  complaint.'' 

Under  the  statutes  of  1855  and  1856,  the  action  was 
not  commenced  until  the  summ.ons  was  issued  on  the 
ground  that  'Hhe  filing  of  the  complaint  and  the  is- 
suing  of    the   summons   are   required  by   the   General 


§    603  ENFORCI^IENT   THEREOF.  983 

603.     Foreclosure   Actions    Against    the    Same 
Property  may  be  United.^ 

Any  number  of  lienors  against  the  same  prop- 
erty^ may  join  in  one  action  to  foreclose  their 

Practice  Act;  and  the  provision  in  the  General  Limita- 
tion Act,  that  the  filing  of  the  complaint  shall  be 
deemed  a  commencement  of  the  suit,  applies  to  that 
act  only,  and  not  to  the  Mechanics'  Lien  Law": 
Flandreau  v.  White,  18  Cal.  639;  Green  v.  Jackson 
Water  Co.,  10  Cal.  374. 

Under  the  amendment  of  1861,  the  action  was  com- 
menced by  filing  a  petition:  Yan  Winkle  v.  Stow,  23 
Cal.  457,  459. 

5  Code  of  Civil  Procedure,  section  1195,  first  sen- 
tence: '^Any  number  of  persons  claiming  liens  may 
join  in  the  same  action,  and  when  separate  actions 
are  commenced,  the  court  may  consolidate  them." 
Enacted  as  code  section  1196  in  1872;  became  part  of 
section   1195   on   May   29,   1874. 

Where  a  materialman,  who  furnished  materials  both 
to  an  original  contractor  and  to  the  owner,  was  made 
a  party  defendant  in  an  action  to  foreclose  certain 
liens,  and  filed  an  answer  which  united  a  cause  of 
action  to  foreclose  a  lien  for  the  materials  furnished 
the  contractor  with  one  to  foreclose  a  lien  for  the 
materials  furnished  the  owner,  there  is  no  misjoinder 
of  parties:    Quale  v.   Moon,  48   Cal.  478. 

Under  Stats.  1862,  c.  297,  sees.  6,  7,  and  9,  parties 
holding  several  separate  and  distinct  claims,  as  do 
tiiO  various  persons  employed  on  a  single  improvement, 
without  any  community  of  interest  in  the  claims 
themselves,  may  join  in  an  action  to  establish  and 
enforce  their  liens:  Barber  v.  Eeynolds,  33  Cal.  497, 
602;  44  Cal.  519,  532. 

c  Lienors  Against  the  Same  Improvement  may 
Join.— ^^  Section  1195  of  the  Code  of  Civil  Procedure 
provides  that  ^any  number  of  persons  claiming  liens 
may   join   in   the    same   action.'     This   provision   does 


984  mechanics'  ^liens.  §  603 

liens  thereagainst ;  and  when  separate  ac- 
tions are  commenced  the  court  may  con- 
solidate them  into  a  single  action.''  The 
various  parties  in  the  consolidated  action  become 
actors  against  one  another  as  well  as  against  the 
contracting  owner.^ 

not  say  whether  the  liens  must  all  be  upon  the  same 
I)roperty  or  simply  against  the  same  person.  We  in- 
cline to  the  former  construction'':  Malone  v.  Big 
Flat  Gravel  Min.  Co.,  76  Cal.  578,  582,  18  Pac.  772. 

For  the  purposes  of  this  section,  several  mining 
claims,  all  adjoining  each  other,  in  the  form  of  a 
strip  of  land  with  a  creek  as  a  backbone,  and  all 
owned  by  the  same  person,  and  used  and  operated 
as  one  mine,  may  be  considered  a  single  piece  of 
property.  Where  certain  of  the  liens  were  on  smaller 
portions  of  such  claim  while  others  covered  it  all, 
they  may  be  joined:  Malone  v.  Big  Flat  Gravel  Mm. 
Co.,  76  Cal.  578,  582,  583,  18  Pac.  772. 

7  May  be  Consolidated  into  a  Single  Action.— Af- 
ter the  consolidation  the  court  should  treat  the  var- 
ious actions  as  a  single  action  by  the  respective 
plaintiffs  against  the  defendants,  and  embody  its  de- 
cision in  a  single  set  of  findings,  upon  which  a 
single  judgment  shouid  be  rendered:  Willamette  etc. 
Co.  V.  Los  Angeles  College  Co.,  94  Cal.  229,  232,  29 
Pac.  629. 

8  All  Parties  Actors  Against  One  Another.— '^  Upon 
the  consolidation  of  the  various  actions,  the  plain- 
tiffs therein  became  actors  in  the  suit  against  each 
other,  as  well  as  against  the  owners,  and  each  was 
entitled  to  reduce  or  avoid  the  lien  of  either  of  the 
others  by  any  evidence  that  would  have  that  effect": 
Kennedy  &  Shaw  Lumber  Co.  v.  Dusenbery,  116  Cal. 
124,  126,  47  Pac.  1008. 


§    604  ENFORCEMENT   THEREOF.  985 

604:.     Costs  and  Counsel  Fees  are  Necessary  In- 
cidents of  Foreclosure  Judgment.^ 

The  money  paid  for  filing  and  recording  the 
claim  of  lien  and  liabilities  actually  incurred^^  for 

9  Code  of  Civil  Procedure,  section  1195,  second  sen- 
tence: ^'The  court  |^  85m  }-  [a]  must^m85^  also 
allow,  as  a  part  of  the  costs,  the  money  paid  for 
filing  and  recording  the  lien,  and  reasonable  attor- 
neys' fees  in  the  J- 85f  j-  superior  'jf85-j  and  su- 
preme courts,  j-85n}-  such  costs  and  attorneys'  fees 
to  be  allowed  to  each  lien-claimant  whose  lien  is 
established,  whether  he  be  plaintiff  or  defendant, 
or  whether  they  all  join  in  one  action  or  separate 
actions  are  consolidated  ■{  n85  ^  .  Enacted  1872,  as 
section  1193;  became  part  of  1195,  May  29,  1874; 
amended,  in  effect  May  17,  1885. 

(a)  Former  reading:  ^^May/'  Stats.  1867-68,  c. 
448,  sec.  10,  third  subdivision  reads  substantially  the 
same  as  the  section  enacted  1872. 

It  takes  but  a  cursory  examination  of  this  provi- 
sion to  determine  that  the  attorney's  fee  referred  to 
is  not  part  of  the  costs,  but  a  separate  and  distinct 
matter  therefrom.  Still,  it  bears  some  resemblance  to 
costs,  inasmuch  as  it  is  an  incident  of  the  judgment: 
Schallert-Ganahl  Lumber  Co.  v.  Neal,  94  Cal.  192,  193, 
29  Pac.  62Z. 

10  Liability  for  Counsel  Fees  must  be  Actually  In- 
curred.—Where  the  attorney  expressly  agrees  to  give 
his  services  for  nothing,  or  is  an  employee  of  the 
plaintiff  at  a  yearly  salary,  (probably)  the  plaintifT 
would  not  be  entitled  to  an  allowance  for  counsel 
fees:  Eapp  v.  Spring  Valley  Gold  Co.,  74  Cal.  532, 
535,  16  Pac.  325.  See  Bank  of  Woodland  v.  Tread- 
well,  55  Cal.  379,  cited  under  section  398,  above. 

Where,  however,  there  is  an  implied  agreement  for 
the  payment  of  the  attorney,  or  where  there  is  an 
agreement  for  such  fee  as  the  court  will  allow,  the 
plaintiff  is  entitled  to  counsel  fees:  Eapp  v.  Spring 
VaHey  Gold  Co.,  74  Cal.  532,  535,  16  Pac.  325. 


986  mechanics'  liens.  §  604 

counsei  fees  in  the  superior  and  supreme  courts 
are  necessary  incidents^^  of  a  judgment  foreclos- 
ing an  improvement  lien,  which  must  in  every 
case  be  allowed  by  the  superior  court^^  to  each 
lienor  whose  lien  is  established/^  in  an  amount 
to  be  determined  by  such  court  in  the  exercise 
of  a  sound  discretion/^ 

11  Necessary  Incidents.— Like  the  ordinary  right  to 
recover  costs,  the  right  to  recover  the  costs  of  filing 
the  claim  and  attorneys'  fees  are  necessary  incidents 
of  a  foreclosure  judgment:  Eapp  v.  Spring  Valley  Gold 
Co.,  74  Cal.  532,  533,  16  Pac.  325;  Mulcahy  v.  Buckley, 
100  Cal.  484,  490,  35  Pac.  144. 

The  right  to  these  incidents  does  not  depend  on  any 
averment  in  the  complaint,  except  such  as  is  suffi- 
cient to  establish  the  lien:  Mulcahy  v.  Buckley.  100 
Cal.  484,  490,  35  Pac.  144. 

The  fee  is  to  be  fixed  irrespective  of  any  averment 
in  the  complaint,  and  an  averment,  if  made,  does 
not  even  bind  the  person  making  it:  Pacific  Mutual 
Life  Ins.  Co.  v.  Fisher,  106  Cal.  224,  234,  39  Pac. 
758;  Clancy  v.  Plover,  107  Cal.  272,  274,  40  Pac.  394. 

Therefore,  an  issue  as  to  counsel  fees  is  immaterial, 
find  the  failure  of  the  court  to  find  upon  it  is  not 
error:  Clancy  v.  Plover,  107  Cal.  272,  274,  40  Pac. 
394. 

Thus  a  stipulation  between  certain  lienors,  plain- 
tiffs in  a  foreclosure  action,  and  the  owner  of  the 
property,  that  judgment  shall  be  entered  for  a  cer- 
tain sum,  does  not  exclude  the  allowance  of  counsel's 
fees  or  costs  of  filing  the  lien:  Eapp  v.  Spring  Valley 
Gold  Co.,  74  Cal.  532,  533,  16  Pac.  325. 

The  plaintiff  is  not,  however,  entitled  in  any  event 
to  recover  the  amount  expended  for  preparing  his 
notice  of  claim  of  lien:  Mulcahy  v.  Buckley,  100  Cal. 
484,  490,  35  Pac.  144. 

Where,  however,  the  claimant,  although  he  has 
perfected  a  lien,  brings  a  personal  action  against  tne 


§    004  ENFORCEMENT    THEREOF.  987 

owner  and  obtains  a  merely  personal  judgment,  he 
cannot  be  allowed  the  cost  of  filing  his  claim  of  lien 
nor  counsel  fees:  Central  Lumber  etc.  Co.  v.  Center, 
107  Cal.'193,  197,  40  Pac.  334. 

12  Must  be  Allowed  by  the  Superior  Court.— The 
matter  of  counsel  fees  in  both  superior  and  supreme 
courts  is  addressed  to  the  superior  court  exclusively: 
Schallert-Ganahl  Lumber  Co.  v.  Neal,  94  Cal.  192,  193, 
194,  29  Pac.  622;  San  Joaquin  Lumber  Co.  v.  Welton, 
115  Cal.  1,  5  (46  Pac.  737),  46  Pac.  1057;  Sweenev 
V.  Meyer,  124  Cal.  512,  517,  57  Pac.  479;  Williams 
V.  Gaston,  127  Cal.  641,  60  Pac.  427. 

Thus  it  seems  to  be  without  the  power  of  the  su- 
preme court  to  direct  the  superior  court  to  allow  a 
reasonable  fee;  and  such  an  order  would  not  be  bind- 
ing: Schallert-Ganahl  Lumber  Co.  v.  Neal,  94  Cal. 
192,  194,  29  Pac.  622  (in  which  case  such  a  direc- 
tion as  given  by  the  supreme  court  in  West  Coast 
Lumber  Co.  v.  Newldrk,  80  Cal.  275,  281,  22  Pac. 
231,  or  Smith  v.  Solomon,  84  Cal.  537,  539,  24  Pac. 
286,  is  criticised).  If,  after  an  appeal  to  the  su- 
preme court,  a  further  allowance  of  fees  becomes 
proper,  application  therefor  must  be  made  to  the 
superior  court:  San  Joaquin  Lumber  Co.  v.  Welton, 
115  Cal.  1,  5  (46  Pac.  737),  46  Pac.  1057.  Williams  v. 
Gaston,  127  Cal.  641,  60  Pac.  427. 

13  Can  Only  be  Recovered  by  Lienor  Whose  Lien 
is  Established.— Counsel  fees  being  an  incident  of  a 
judgment  of  foreclosure  of  the  lien,  there  can  be  no 
recovery  of  such  fees  when  the  plaintiff  fails  in  the 
foreclosure  proceedings.  The  fact  that  the  plaintiff 
was  successful  in  an  appeal  to  the  supreme  court  does 
not  entitle  him  to  a  fee  for  such  appeal  unless  he 
was  ultimately  successful:  Mclntyre  v.  Trautner,  78 
Cal.  449,  21  Pac.  15. 

14  Amount  of  Counsel  Fee  Rests  in  Discretion  of 
Court. — The  superior  court  is  authorized  to  exercise 
its  discretion  in  the  -allowance  of  these  fees,  and,  in 
the  absence  of  any  evidence  regarding  the  amount  of 
services,  its  judgment  cannot  be  reviewed:  Pacific  Mu- 


1)88  mechanics'  liexs.  §  604 

tual  Life  Ins.  Co.  v.  Fisher,  106  Cal.  224,  234,  39 
Pac.  758. 

The  limitation  imposed  upon  the  action  of  the  su- 
perior court  in  fixing  counsel  fees  is  that  it  shall  not 
abuse  the  discretion  committed  to  it  by  the  stat- 
ute; thus  the  failure  to  produce  evidence  on  the 
matter  does  not  affect  the  validity  of  the  judgment 
awarding  such  fees.  No  doubt  such  evidence  is  ad- 
missible and  may  properly  be  considered  by  the  court, 
but  its  absence  in  the  record  on  appeal  is  not  a  cir- 
cumstance requiring  a  reversal  unless  it  should  ap- 
pear from  an  inspection  of  the  record,  and  without 
evidence  to  sustain  it,  that  the  fee  fixed  by  the  court 
is  unreasonable:  Clancy  v.  Plover,  107  Cal.  272,  275, 
40  Pac.  394. 

'^What  is  a  reasonable  fee  is  a  matter  to  be  de- 
termined by  the  trial  court,  and  its  action  will  not 
be  disturbed  on  appeal  unless  it  appears  that  the 
sum  allowed  is  clearly  unreasonable. '^  Where  a  trial 
occupied  more  or  less  of  four  days  a  fee  of  seventy- 
five  dollars,  while  rather  small,  cannot  be  considered 
an  abuse  of  discretion:  Stimson  Mill  Co.  v.  Riley, 
42  Pac.   1072,   1075A. 

The  court  is  not  bound  by  a  stipulation  between 
the  attorney  and  his  client  as  to  the  amount  of  the 
fee,  but  must  allow  such  amount  as  is  reasonable: 
Eapp  V.  Spring  Valley  Gold  Min.  Co.,  -74  Cal.  532,  16 
Pac.  325. 


§    605  INDEMNITY     AGAINST     LIENS.  989 


ARTICLE  11. 

INDEMNITY    AGAINST    LIENS. 

605.  Owner  must  protect  sureties  on  indemnity  bona 

as  against  contractor. 

606.  Likewise  as  against  lienors. 

607.  Bond    valid    although    contract    void. 

608.  When    surety    also    lienor,    owner    entitled    to 

setoff. 

605.     Owner  must  Protect  Sureties  on  Indemnity 
Bond  as  Against  Contractor. 

A  contracting  owner  who  receives  from  an  orig- 
inal contractor  a  bond  executed  with  sureties  to 
indemnify  himself  against  any  liens  which  may  he 
filed  against  the  property  by  persons  claiming  un- 
der such  contractor/  and  without  the  consent  of 

1  But  where  a  bond  was  given  to  secure  the  faith- 
ful performance  of  the  building  contract,  but  did 
not  provide  that  the  building  should  be  delivered  up 
free  from  liens,  and  the  contractor  did  the  work  as 
contracted  for,  but  the  contract  was  void  because 
not  properly  recorded,  and  the  contracting  owner  was 
compelled  to  pay  a  sum  in  excess  of  the  contract 
price  in  discharge  of  valid  liens,  he  cannot  recover 
the  excess  paid  from  the  sureties  on  the  contractor's 
bond.  ^^The  fact  that  the  debts  due  by  Maloney 
[the  original  contractor]  became,  by  virtue  of  the 
statute,  liens  upon  plaintiff  ^s  [the  contracting  own- 
er ^s]  property,  did  not  make  the  sureties  liable.  They 
haa    not    agreed    to    pay    such    liens,    nor    to    be    re- 


990  mechanics'  liens.  §  605 

such  sureties  makes  a  pa3^ment  to  the  contractor 
not  authorized  by  law  or  the  original  contract, 
and  is  compelled  to  pay  a  sum  in  excess  of  the 
contract  price  of  his  contract  with  the  contractor 
in  satisfaction  of  liens  which  have  been  perfected, 
cannot  recover  such  sum  from  the  sureties;^  but 
if  a  premature  payment  unauthorized  by  law  is 
made  to  the  contractor  with  the  consent  of  the 
sureties,  and  the  owner  is  compelled  to  pay  a  sum 
in  excess  of  the  contract  price,  he  may  recover 
the  same  from  the  sureties.^ 

sponsible  therefor.  The  liability  of  plaintiff  for 
the  amount  of  the  liens  was  a  statutory  liability,  and 
not  by  virtue  of  his  contract  with  Maloney.  The 
bond  given  Dy  appellants  [the  sureties  on  the  bond] 
was  that  Maloney  would  comply  with  the  covenants 
of  his  contract.  There  is  no  covenant  in  the  contract 
that  the  building  shall  be  delivered  free  of  liens,  nor 
that  liens  shall  not  be  placed  upon  it^':  Boas  v. 
Maloney,   138   Cal.   105,   70  Pac.   1004,   1005A. 

2  Where,  notwithstanding  the  existence  of  valid 
liens,  the  owner  made  full  payment  to  the  original 
contractor,  and  was  afterward  compelled  to  pay  the 
liens,  he  cannot  recover  the  sum  so  paid  from  the 
sureties  on  the  contractor's  bond,  for  the  sureties 
had  a  right  to  look  to  this  fund  in  the  owner's  hand 
for  their  indemnity:  Kiessig  v.  Allspaugh,  91  Cal. 
231,  27  Pac.  655. 

3  Where  the  indemnity  bond  provided  that  the 
contracting  owner  and  the  original  contractor  might 
alter,  enlarge,  or  in  any  manner  change  the  original 
contract  without  in  any  way  affecting  the  bond,  but 
the  bond  was  to  remain  in  full  force  and  effect  the 
same  as  though  no  changes  had  been  made,  and  the 
contracting  owner  made  a  payment  which  was  pre- 
mature,  so  that  he  was  compelled  to  pay  to  certain 


§    006  INDEMNITY    AGAINST    LIENS.  991 

606.  Likewise  as  Against  Xienors. 

A  contracting  owner  who^  without  any  request 
from  the  original  contractor  or  duty  so  to  do^,  dis- 
charges liens  which  have  been  filed  against  his 
property  in  an  account  in  excess  of  the  contract 
price  of  a  valid  original  contract^  cannot  recover 
such  sum  from  the  sureties  on  the  bond.'* 

607.  Bond  Valid  Although  Contract  Void. 

Such  bond  continues  to  be  a  binding  under- 
taking on  the  part  of  the  sureties  although  the 
original  contract  is  void  because  nonconf  ormab]  o 
to  statute.^ 

lienors  a  sum  in  excess  of  the  balance  of  the  con- 
tract price  remaining  in  his  possession,  the  owner  may 
recover  such  sum  from  the  sureties,  as  such  payments 
were  valid  as  regards  the  original  contractor  whose 
engagement  the  bond  secured:  Ganahl  v.  Weir,  130 
Cal.  237,  239,  240,  62  Pac.  512. 

4  Brill  V.  De  Turk,  130  Cal.  241,  243-245,  62  Pac. 
462.  The  payment  on  the  part  of  the  owner  was 
merely  voluntary. 

5  Kiessig  v.  Allspaugh,  91  Cal.  234,  237,  238,  27 
Pac.  662;  Kiessig  v.  Allspaugh,  99  Cal.  452,  454,  455, 
34  Pacj.  106;  Blyth  v.  Eobinson,  104  Cal.  239,  241, 
37  Pac.  904;  McMenomy  v.  White,  115  Cal.  339,  344, 
47  Pac.  109;  Summerton  v.  Hayes,  117  Cal.  252,  49 
Pac.  135.  See,  also.  Union  Sheet  Metal  Works  v. 
Dodge,  129  Cal.  390,  395,  62  Pac.  41.  Schallert-Ganahl 
Lumber  Co.  v.  Neal,  90  Cal.  213,  215,  27  Pac.  192, 
holding  that  when  the  original  contract  was  void, 
such  bond  was  void,  was  overruled  in  these  cases. 


992  mechanics'  liens.  §  608 

608.  When  Surety  also  Lienor,  Owner  Entitled 
to  Setoff. 
In  an  action  brought  by  a  surety  on  a  con- 
tractor's bond  to  foreclose  an  improvement  lien 
to  indemnify  against  which  the  bond  was  given^ 
the  owner  of  the  liened  property  may  set  off  the 
amount  of  any  valid  demand  against  the  surety 
by  reason  of  the  liability  on  such  bond  against 
the  amount  claimed  by  him  upon  his  lien.^ 

6  Owner  may  Set  Off  Liability  of  Lienor  as  Surety 
by  Way  of  Defense:  Blyth  v.  Kobinson,  104  Cal.  239, 
242,  243,  37  Pac.  904;  Ganahl  v.  Weir,  130  Cal.  237, 
239,  240,  62  Pac.  512. 

The  lienor  is  not,  however,  estopped  from  maintain- 
ing an  action  to  foreclose  his  lien  by  reason  of  his 
liability  as  surety.  For  the  bond  is  simply  to  in^ 
demnify  the  owner  against  damage,  and  until  his  dam- 
age has  been  averred  and  ]3roved  in  some  appropriate 
way  can  avail  him  nothing.  If  he  had  not  been  dam- 
aged, he  has  no  right  of  action  upon  the  bond;  and 
if  no  right  of  action  upon  it,  it  is  valueless  to  him, 
even  for  the  purposes  of  an  estoppel.  If  the  owner's 
damage  is  nothing,  or  trifling  in  amount,  the  ma- 
terialman should  not  be  deprived  of  all  remedy;  or 
if  the  indemnity  bond  is  trifling  in  amount,  as  com- 
pared to  the  materialman's  claim  of  lien,  the  doors 
of  the  court  should  not  be  shut  against  him.  In 
other  words,  the  principle  of  estoppel  is  not  involved, 
but  it  is  rather  a  question  of  cross-complaint  or  set- 
off. The  owner  in  answer  to  the  materialman's  ac- 
tion to  foreclose  his  lien,  may  set  out  the  bond,  prove 
the  damage,  and  establish  the  materialman's  liability 
thereon,  and  the  rights  of  both  parties  be  thus  fully 
and  equitably  adjudged:  Blyth  v.  Torre  (Cal.),  639, 
640A  (a  rehearing  was  afterward  granted,  but  the 
case  never  came  to  judgment;  thus  this  decision  is 
not   authoritative,   but    its   reasoning  is   persuasive). 


CHAPTER   4. 

LIE^sF  FOR  ABATI^TQ-  INSECT  PEST  NUI- 

'     SA^CES.i 

609.  County  has  lien  claim  for  expense  incurred  for 

abating  nuisance. 

610.  Notice  of  claim  of  lien  to  fce  filed. 

611.  Time   of   commxcncing   action. 

612.  Disposition   of   proceeds    of   sale. 

609.     County    has    Lien-Claim  for  Ezpenr^e  In- 
curred for  Abating  Nuisance.- 

The  amount  disbursed  out  of  the  gen- 
eral    fund     of     any     county     in     payment     of 

1  See  Stats.  1897,  p.  244,  c.  183,  in  eflPect  March  31, 
1897. 

Constitutionality.— The  enforcement  of  this  lien  **is 
not  obnoxious  to  any  constitutional  inhibition": 
County  of  Los  Angeles  v.  Spencer,  126  Cal.  670,  77 
Am_.  St.  Eep.  217,  59  Pac.  202;  County  of  Eiversido 
V.  Butcher,  133  Cal.  324,  325,  65  Pac.  745. 

Historical.— A  similar  lien  was  given  by  Stats. 
1881,  p.  86,  c.  75,  sec.  2,  in  effect  March  14,  1881; 
with  amendments  thereto  of  Stats.  1889,  p.  413,  c. 
265,  sec.  2,  and  Stats.  1891,  p.  268,  c.  188,  sec.  1;  these 
statutes  being  repealed  by  the  present   enactment. 

2  Where  the  county  board  of  horticultural  com- 
missioners orders  an  insect  pest  nuisance  to  be  abated, 
and  the  owner  of  the  infected  premises  or  property 
cannot  be  found,   or  refuses  or  neglects  to   abate  it. 

Liens— 63 

(993) 


994  INSECT  PEST  NUISANCES.  §  609 

any  expense  which  may  be  incurred,  ac- 
cording to  law,  by  the  county  board  of 
horticultural  commissioners  in  the  abatement 
of  any  insect  pest  nuisances,  by  eradicating  or  de- 
stroying any  scale  insects  or  codlin  moth,  or  other 
pests  injurious  to  fruit,  plants,  vegetables,  trees, 
or  vines,  or  their  eggs  or  larvae,  constitutes  a 
lien-claim  in  favor  of  such  county  against  the 
premises  and  property  from  which  the  nuisance 
has  been  abated,  which  accrues  to  the  county  at 
the  time  of  the  payment  of  such  amount.^ 

610.    Notice  of  Claim  of  Lien  to  be  Piled. 

Within  thirty  days  after  the  accrual  of  such 
lien-daim,  a  notice  of  claim  of  lien  must  be  filed 
and  recorded  in  the  office  of  the  recorder  of  the 
county  in  which  the  property  to  be  affected  there- 
by is  situated,  and  thereupon  the  lien  is  per- 
fected.^ 

the  board  must  proceed  to  abate  it,  and  the  ex- 
penses incurred  in  abating  it  must  be  paid  out  of 
the  general  fund  of  the  county. 

3  Lien  accrues  to  the  county  at  time  of  payment 
of  amount  from  treasury:  County  of  Biverside  v. 
Butcher,  133  Cal.  324,  327,  65  Pac.  745. 

4  See  Stats.  1897,  p.  244,  c.  183,  sec.  2. 

^^The  notice  of  lien  was  sufficient  when  signed  and 
verified  by  the  members  of  the  board  of  commission- 
ers, stating  that  the  county  claimed  a  lien  for  the 
amount  of  expense.  It  contains  a  description  of  the 
premises,  the  nam^e  of  the  owner,  the  amount  claimed; 
that  it  is  for  labo?  bestowed  and  materials  fur- 
nished in  eradicating  insects  from  the  orchard  of  de- 


§    611  liS^SECT    PEST    NUISANCES.  995 

611.  Time  of  Comniencing  Action. 

An}^  action  to  foreclose  such  lien  must,  within 
ninety  days  after  the  filing  of  such  notice,  be 
brought  by  the  district  attorney  of  the  county  for 
the  benefit  of  which  the  lien  accrued.^ 

612.  Disposition  of  Proceeds  of  Sale. 

Upon  the  sale  of  the  property  affected  by  the 
lien,  sufficient  of  the  proceeds  thereof  must  be 
paid  into  the  county  treasury  of  the  county  to 
satisfy  the  lien  and  costs;  the  overplus,  if  any, 
must  be  paid  to  the  owner  of  the  property,  if 
known;  otherwise  into  court  for  his  use  when 
ascertained.^ 

fendant.  This  was  all  that  was  required  by  the  stat- 
ute. In  fact,  the  statute  is  entirely  silent  as  to  the 
form,  contents,  or  requisites  of  the  notice.  It  simply 
says,  a  'notice  of  such  lien  shall  be  filed  and  re- 
corded^ ^':  County  of  Eiverside  v.  Butcher,  133  Cal. 
324,  327,  65  Pac.  745. 

5  See  Stats.  1897,  p.  244,  c.  183,  sec.  2. 

6  See  Stats.  1897,  p.  244,  c.  183,  sec.  2. 


CHAPTER   5. 
LIENS  FOE  PAETITIOi^  FENCES.^ 

613.  Land  owner  inclosing  land  liable  for  one-half 
value  of  existing  boundary  fences. 

014.  Land  owner  must  pay  his  share  of  cost  of  par- 
tition   fence. 

615.  Lien  perfected  by  filing  notice  of  claim  of  lien. 

616.  Lien  a  cumnlative  remedy. 

613.     Land  Owner  Inclosing  Land  Liable  for  One- 
Half  Value  of  Existing  Boundary  Fences.^ 

Except  in  Colusa,  Glenn,  Placer,  Eiverside,  San 
Bernardino,  San  Diego,  San  Mateo,  Shasta,  Sis- 
Myou,  and  Trinity  counties,  and  Liberty  and 
Klamath  townships  and  Hoopa  Valley  Eeserva- 
tion  in  Humboldt  county,^  when  a  land  owner  has 

1  By  Political  Code,  section  19,  twenty-third  sub- 
division, all  acts  in  relation  to  lawful  fences  are  re- 
tained in  force. 

In  order,  therefore,  to  give  all  parts  of  the  law 
an  effect,  if  possible.  Civil  Code,  section  841,  must 
be  held  merely  to  be  applicable  in  counties  not  pro- 
vided for  by  acts  concerning  fences:  Gonzales  v. 
Wasson,  51  Cal.  295,  297. 

3  This  section  is  founded  on  Stats.  1855,  p.  154,  c. 
129,  sec.  5,  as  amended  Stats.  1860,  p.  141,  c.  173,  se^ 
1. 

3  Counties  Where  the  Lien  may  be  Claimed.— B;^. 
Stats.  1863-64,  p.  465,  c.  410,  it  was  enacted  that  the 

(996) 


§    613  LIENS    FOR   PARTITION    FENCES.  997 

erected  a  fence  on  the  line  of  his  land^  and  the 
owner  of  contiguous  land  himself  alone  or  con- 
jointly with  other  persons  thereafterward  makes 

statute  of  1855,  as  amended  in  1860,  was  not  appli- 
cable in  Amador,  Butte,  Colusa,  Glenn,  Nevada  (the 
statute,  just  previously,  by  Stats.  1863-64,  p.  318,  c. 
310,  had  been  made  applicable  to  Nevada  county), 
Placer,  Eiverside,  San  Bernardino,  San  Diego,  >Santa 
Barbara,  Shasta,  Siskiyou,  Trinity,  Tuolumne,  Ven- 
tura, and  Yuba  counties,  and  Klamath  and  Liberty 
townships  and  Hoopa  Valley  Eeservation,  Humboldt 
county. 

By  Stats.  1871-72,  p.  700,  c.  472,  sees.  3  and  4,  a 
lien,  precisely  similar  to  that  declared  by  Stats.  1855, 
as  amended  1860,  was  created  in  Butte  and  Yuba 
counties. 

A  slightly  different  enactment,  Stats.  1875-76,  p.  175, 
c.  172,  sees.  5  and  1,  superseded  this  enactment  in 
Contra  Costa,  El  Dorado,  Kings,  Sacramento,  San 
Luis  Obispo,  San  Mateo,  Solano,  Sutter,  Tulare,  and 
Yolo  counties,  and  that  part  of  San  Joaquin  county 
north  and  east  of  the  San  Joaquin  river,  and  also 
created  a  similar  lien  in  Amador,  Nevada,  Santa  Bar- 
bara, Tuolumne,  and  Ventura  counties.  (The  act  of 
1855,  as  amended  1860,  had  previously  been  super- 
seded as  to  Contra  Costa  county  by  Stats.  1857,  p. 
54,  c.  55,  which  was  in  turn  repealed  by  Stats.  1858,  p. 
40,  c.  66,  sec.  2,  and  Stats.  1861,  p.  277  c.  281,  sec.  2.) 

lij  Stats.  1877-78,  April  1,  p.  1019,  c.  658,  the  act 
of  1875-76,  was  repealed  as  to  San  Mateo  county. 

The  act  of  1855  was  re-enacted  as  to  MaTin  county 
by  Stats.  1858  p.  123,  c.  166. 

By  Stats.  1861,  p.  510,  c.  453,  sec.  2,  the  act  of  1855 
was  made  applicable  to  Butte  county. 

(A  previous  enactment  as  to  Tuolumne  county  did 
not  create  a  lien:  Stats.  1863-64,  p.  475,  c.  424.) 

(Another  aet,  establishing  a  similar  lien  in  San 
Mateo  county.  Stats.  1875-76,  p.  173,  c.  171,  sec.  1, 
seems  to  have  been  superseded  by  Stats.  1875-76,  p. 
175,  c.  172,  above.) 


998  LIENS    FOR   PARTITION   FENCES.  §    613 

an  inclosure'*  on  the  opposite  side  of  the  fence, 
so  that  the  fence  answers  for  the  purpose  of  in- 
closing his  ground  also^  such  owner  of  adjoining 
land  must  pay  the  owner  of  the  fence  already 
erected  one-half  the  value  of  so  much  thereof  as 
serves  as  a  partition  fence  between  them.  Such 
value  is  deemed  the  amount  with  interest  thereon 
to  which  the  builder  of  the  fence  was  entitled, 
except  in  Amador^  Butte,  Contra  Costa,  El  Do- 
rado, Kings,  Nevada,  Sacramento,  San  Luis 
Obispo,  Santa  Barbara,  Solano,  Sutter,  Tulare, 
Ventura,  and  Yolo  counties,  and  that  part  of  San 

The  effect  of  the  statute  of  1855,  as  amended  in 
1860,  may  have  been  somewhat  modified  in  Sonoma 
county  by  Stats.  1877-78,  p.  692,  c.  447,  sec.  2,  which 
provides  that  the  owner  of  any  land  in  Sonoma  county 
which  borders  on  land  in  an  adjoining  county  wherein 
lawful  fences  are  required  must  erect  one-half  the 
division  fence  the  distance  the  land  borders  on  the 
county  line,  and  creates  a  lien  against  the  land  of  a 
person  who  fails  to  construct  his  proportion  of  such 
fence  in  favor  of  the  coterminous  owner  who  has  duly 
constructed  his  portion  of  the  fence  and  by  which 
'^all  acts  and  part  of  acts  in  conflict  with  the  pro- 
visions of  this  act  are  hereby  repealed." 

4  **The  fact  that  the  defendant's  land  was,  by  an 
understanding  between  him  and  the  owners  of  other 
tracts  of  lands  lying  adjacent  to  his  tract,  inclosed 
in  one  field  by  a  common  inclosure,  does  not  make  the 
inclosure  any  less  an  inclosure  of  the  defendant's 
land  within  the  meaning  of  that  section.  Nor  was  it 
necessary,  in  order  to  make  such  inclosure,  for  the 
defendant  to  construct  a  fence  at  a  place  where  there 
was  a  natural  barrier  which  was  sufficient  for  the 
protection  of  his  land'':  Gonzales  v.  Wasson,  51  Cal, 
295. 


§    613  LIENS    FOR   PARTITION    FENCES.  999 

Joaquin  county  north  and  east  of  the  San  Joa- 
quin river,  where  the  value  is  determined  by  the 
agreement  of  the  parties  or  the  judgment  of 
viewers.^  This  demand,  together  with  interest 
thereon  at  the  rate  of  fifteen  per  cent  per  annum, 
constitutes  a  lien-claim  against  the  adjoining  land 
so  inclosed. 

614.     Land  Owner  must  Pay  His  Share  of  Cost 
of  Partition  Fence.^ 

Except  in  Colusa,  Glenn,  Placer,  Eiverside, 
San  Bernardino,  San  Diego,  San  Mateo,  Shasta, 
Siskiyou,  and  Trinity  counties,  and  Klamath  and 
Liberty  townships  and  Hoopa  Vallej^  Eeservation 
in  Humboldt  county,'''  when  two  or  more  persons 
own  adjoining  land  inclosed  by  one  fence,  and  it 
becomes  necessary  for  the  protection  of  the  rights 
and  interests  of  one  party  that  a  partition  fence 
should  be  made  between  them,  the  other  party, 
when  notified  of  such  fact,  must  erect  as  near  as 
practicable  on  the  division  line  one-half  such  par- 
tition fence.  If,  after  being  given  six  months^ 
notice,  or  in  Amador,  Butte,  Contra  Costa,  El 
Dorado,  Kings,  ISTevada,  Sacramento,  San  Luis 
Obispo,   Santa  Barbara,   Solano,   Sutter,  Tulare, 

5  stats.  1875-76,  p.  175,  c.  172,  sec.  5. 

O  This  section  is  founded  on  Stats.  1855,  p.  154, 
c.  129,  sec.  6,  as  amended  Stats.  1860,  p.  141,  c.  173, 
sec.   2. 

7  See  section   613,  note  3,  above. 


1000  LIENS   FOR   PARTITION  FENCES.  §    614 

Tuolumne,  Ventura,  and  Yolo  counties,  and  that 
part  of  San  Joaquin  county  north  and  east  of  the 
San  Joaquin  river,  where  viewers  are  appointed 
to  determine  the  particular  part  of  the  fence  to 
be  made  by  each  coterminous  owner,  within  six 
months  after  their  determination,^  the  person  to 
whom  the  notice  was  given  fails  to  proceed  to 
erect  one-half  of  the  partition  fence,  the  person 
giving  notice  may  then  erect  the  entire  partition 
fence  and  collect  by  law  one-half  the  cost  thereof 
from  the  other  party.  This  demand,  together 
with  interest  thereon  at  the  rate  of  fifteen  per 
cent  per  annum,  constitutes  a  lien-claim  against 
the  land  thus  partitioned  by  the  partition  fence. 

615.     Lien  Perfected  by  Filing  Notice  of  Claim 
of  Lien. 

The  lien-claimant  must  file  a  notice  of  claim 
of  lien  in  the  office  of  the  county  recorder  as  re- 
quired by  law  in  order  to  perfect  a  mechanic's 
lien,  and  thereupon  when  the  notice  is  duly  filed 
the  lien  is  perfected  and  becomes  enforceable.^ 

8  Stats.  1875-76,  p.  175,  c.  172,  sec.  1,  provides:  ''  If, 
after  notice  given  in  writing,  or  after  determina- 
tion of  the  viewers,  as  provided  in  section  6  hereof, 
either  party  shall  fail  to  proceed  to  erect,  or  cause  to 
be  erected  and  completed,  within  six  months'  time 
thereafter,  one-half  of  such  fence,  the  party  giving 
the  notice  may  proceed  to  erect,  or  cause  to  be 
erected,  the  entire  partition  fence,  and  collect  by 
law  one-half  of  the  costs  of  the  fence  from  the  other 
party. ' ' 


§    616  LIENS    FOR   PARTITION    FENCES.  1001 

616.     Lien   a  Cumulative  Eemedy. 

The  lien  herein  authorized  is  a  cumulative  and 
additional  remedy  in  no  manner  impairing  the 
right  of  action  otherwise  available  upon  the  se- 
cured obligation.^  ^ 

9  stats.  1855,  p.  154,  c.  129,  sec.  5,  as  amended  Stats. 
1860,  p.  141,  c.  173,  sec.  1,  provides:  *^ Notice  of  such 
lien  shall  be  filed  in  the  office  of  the  county  recorder 
of  the  county  as  provided  by  law  for  mechanics^ 
liens.  ^  ^ 

Stats.  1855  p.  154,  c.  129,  sec.  6,  as  amended  1860, 
p:  141,  c.  173,  sec.  2,  adopts  this  provision. 

Stats.  1875-76,  p.  175,  c.  172,  sec.  1,  in  part,  pro- 
vides: ^'}le  shall  be  entitled  to  a  lien  upon  the  land 
thus  partitioned,  as  provided  in  section  1  of  an  act 
entitled  '  An  act  amendatory  of  and  supplemental  to  an 
act  entitled  an  act  concerning  lawful  fences,  approved 
April  tliird,  eighteen  hundred  and  sixty.'  '' 

As  to  the  notice  of  claim  of  mechanic's  Jien,  see 
section  568  above. 

10  It  was  so  held  in  respect  to  the  lien  established 
by  the  act  of  1855  as  amended  1860  in  Gonzales  v. 
Wasson,  51  Cal.  295,  298. 


CHAPTER    6. 

MIXIXG  PASTXER^S  LIEN". 

617.  Nature    of    lien. 

618.  Who  bona   fide  purchaser. 

619.  Lien  does  not    entitle  lienor   to   possession. 

620.  Effect  of  sale  of  liened  interest. 

621.  Lien    nonwaivable. 

617.     Nature  of  Lien.^ 

Eaeh^  member  of  a  mining  partnership  has  a 
lien^  independent  of  possession,^  against  the  part- 
nership property,  valid  as  against  every  person 
except  a  bona  fide  purchaser  for  valne,'*  as  se- 
curity 

1  **It  is  apparent  this  lien  is  given  for  the  purpose 
of  enabling  him  [the  partner]  to  collect  from  his  co- 
partners their  proportion  of  the  indebtedness  which 
he  has  been  compelled  to  pay  in  full'':  Stuart  v.  Ad- 
ams, 89  Cal.  367,  371-372,  26  Pac.  970. 

2  Civil  Code,  section  2514,  first  sentence,  provides: 
^^Each  member  of  a  mining  partnership  has  a  lien  on 
the  partnership  property  for  the  debts  due  the  credi- 
tors thereof,  and  for  money  advanced  for  its  use." 

3  See  Morganstern  v.  Thrift,  66  Cal.  577,  6  Pac.  689, 
as  quoted  section  619,  note  6,  below. 

4  Civil  Code,  section  2517,  provides:  *^A  purchaser 
of  an  interest  in  the  mining  ground  of  a  mining  part- 
nership takes  it  subject  to  the  liens  existing  in  favor 
of  the  partners  for  debts  due  all  creditors  thereof,  or 

(1002).   ] 


§   617  MINING   PABTNER'S   LIEN.  1003 

(1)  for  the  payment  by  the  partnership  of  the 
debts  due  the  creditors  thereof,  and 

(2)  for  the  repayment  of  moneys  advanced  by 
him  for  its  use. 

618.  Who   Bona   Fide   Purchaser. 

A  purchaser  of  the  interest  of  a  partner  in  a 
mine  when  the  partnership  is  engaged  in  working 
it,  takes  with  notice  of  all  liens  resulting  from 
the  relation  of  the  partners  to  each  other  and  to 
the  creditors  of  the  partnership.^ 

619.  Lien  does  not  Entitle  Lienor  to  Possession. 

The  existence  of  a  mining  partner's  lien  doei^ 
not  entitle  the  holder  thereof  to  the  possession 
of  the  liened  property.^ 

advances  made  for  the  benefit  of  the  partnership,  un- 
less he  purchased  in  good  faith,  for  a  valuable  con- 
sideration, without  notice  of  such  lien.'^ 

5  Civil  Code,  section  2518. 

6  Lien  does  not  Entitle  Lienor  to  Exclusive  Posses- 
sion.— '*The  lien  of  a  partner,  mentioned  in  section 
2514  of  the  Civil  Code,  does  not  give  to  either  partner 
a  right  of  possession  to  the  partnership  property,  to 
the  exclusion  of  the  other  from  such  possession.  The 
lien  has  no  connection  with  the  possession.  It  exists 
independent  of  possession.  If  one  partner  is  in  act- 
ual possession  of  the  property  of  the  partnership, 
(Claiming  to  hold  it  against  the  other,  the  lien  still 
exists  in  favor  of  the  other  partner  out  of  possession, 
as  in  the  case  specified  in  the  section  above  cited'': 
Morganstern  v.  Thrift,  66  Cal.  577,  578,  579,  6  Pac.  689. 


1004  MiNixG    partner's   lien.  '§  62.0 

620.  Effect  of  Sale  of  Liened  Interest. 

Upon  a  sale  by  one  partner  of  his  interest  in 
partnership  property  affected  by  a  lien  in  favor 
of  another  partner,  made  to  a  person  bound  by 
the  lien,  the  liened  property  becomes  primarily 
liable  for  the  payment  of  the  secured  obligation 
and  the  retiring  partner  secondarily  liable  there- 
fore 

621.  Lien  Non waivable. 

A  mining  partner^s  lien  cannot  be  waived  by 
any  agreement  made  by  the  person  entitled  there- 
to.s 

7  Sale  of  Liened  Interest.— ^^  Ordinarily,  when  a 
partner  retires  from  a  firm  he  continues  personally 
liable  for  the  indebtedness,  unless  the  new  firm  has 
assumed  the  debt  and  the  creditor  has  taken  them  for 
it.  If,  in  the  case  of  a  mining  partnership,  the  retir- 
ing partner  still  continues  bound,  he  nevertheless  has 
parted  with  the  equity  to  have  the  partnership  debts 
paid  out  of  the  partnership  property.  The  purchaser, 
however,  having  taken  his  interest  subject  to  the 
debts,  has  no  claim  to  recover  against  his  vendor  for 
any  debts  which  may  be  paid  out  of  the  partnership 
assets.  The  former  partners,  therefore,  have  no  in- 
terest, except  consequentially,  in  this  proceeding,  and 
if  proper,  are  certain! v  not  necessary  parties  to  it^': 
Jones  V.  Clark,  42  Call  180,  194,  195. 

S  Civil  Code,  section  2514,  last  sentence. 


CHAPTER   7. 

LIEX  OF  ALIMO^^Y. 

622.     Nature  of  lien. 

622.     Nature  of  Lien. 

Where  a  divorce  is  granted  a  wife  for  an  of- 
fense of  her  hnshand,  any  alimony  which  may  be 
awarded  the  wife  by  the  court  in  which  the  di- 
vorce action  is  pending  may^  at  the  discretion 
and  by  the  order  of  the  courts,  be  constituted  a 
lien  against  the  community  property  of  the  par- 
ties, or  in  default  thereof  against  the  separate 
property  of  the  husband.^ 

1  Compare  the  following  sections  of  the  Civil  Code: 

Section  139:  ^^  Where  a  divorce  is  granted  fcrr  an 
offense  of  the  husband,  the  court  .may  compel  him  to 
provide  for  the  maintenance  of  the  children  of  the 
marriage,  and  to  m.ake  suitable  allowance  to  the  wife 
for  her  support.'^ 

Section  140:  ^^The  court  may  require  the  husband 
to  give  reasonable  security  for  providing  maintenance 
or  making  any  payments  required  under  the  provi- 
sions of  this  chapter,  and  may  enforce  the  same  by 
the  appointment  of  a  receiver,  or  by  any  other  rem- 
edy applicable  to  the  case.'' 

Section  141:   ^'In  executing  the  five  preceding  sec- 
tions the  court  must  resort. 
(1)  to  the  community  property;  then, 

(1005) 


1006  LIEN    OF    ALIMONY.  §    622 

(2)   to  the  separate  property  of  the  husband. 

^^The  statute  [that  is,  Civil  Code,  section  140] 
ought  not  to  be  construed  as  abridging  the  power 
exercised  by  courts  having  cognizance  of  matrimonial 
causes — commonly,  though  not  always,  as  a  branch 
of  their  chancery  jurisdiction — to  declare  a  lien  for 
securing  the  award  of  support  to  the  wife  in  such 
cases.'' 

^^  Moreover,  the  oivorce  being  upon  the  grounds  of 
extreme  cruelty,  the  court  was  authorized  to  assign 
the  community  property  to  the  parties  in  such  pro- 
portion as,  under  the  circumstances,  seemed  just  (Civil 
Code,  section  146);  under  this  section  it  had  the 
power  to  assign  to  the  wife  the  absolute  property  in 
the  land  in  question,  and  this  included  the  power  to 
charge  a  lien  on  the  same'':  Gaston  v.  Gaston,  114 
Cal.  542,  546,  55  Am.  St.  Eep.  86,  46  Pac.  609. 

Where  a  divorce  is  granted  a  wife  on  the  ground  of 
extreme  cruelty,  the  court  may  probably  declare  the 
alimony,  maintenance,  etc.,  granted  her  a  lien  upon 
the  separate  property  of  the  husband  which  the  hus- 
band has  fraudulentlv  conveyed:  Huellmantel  v. 
Huellmantel,  117  Cal.  407,  410,  49  Pac.  574. 


CHAPTER   8. 

JUDGMENT  LIE:N'S. 

SuhiUvision  1.    Lien  of  Superior   Court  Judgment  in 
County  Where  Judgment  Rendered, 

623.  Accrual  of,  lien. 

624.  Extinction  of  lien. 

SuMivision  2.    Lien   of   Superior   Court  Judgment  in 
Other  Counties, 

625.  Accrual  of  lien. 

626.  Extinction  of  lien. 

SuMivision  3.    Lien  of  Justice^ s  Court  Judgment. 

627.  Accrual  of  lien. 

628.  Extinction  of  lien. 

Subdivision  Jf.    Provisions  AppUcaUe  to  All  Judgment 
Liens. 

629.  Judgment   lien   not   provable   by  parol. 

630.  Computation  of  time   of  limitation  of  lien. 

631.  Lien  not  affected  by   division   of   county. 

632.  Property   not   twice  lienable   under    same   judg- 

ment. 

633.  Cannot  accrue  against  property  of  decedent  or 

bankrupt. 

634.  Liened    property    not    subject    to    independent 

levy. 

635.  Attachment  merged  into  judgment  lien. 

636.  Enforcement. 

(1007) 


1008  JUDGMENT    LIENS.  §    623 

S^h(Mvision   1,     Lien   of  S'Uperior   Court  Judg- 
ment in  County  Where  Judgment  Rendered, 

623.     Accrual  of    Lien.^ 

From  the  time  a  judgment  of  a  superior  court 
is  duly  docketed  in  the  docket^  kept  by  the  cleric, 
the  judgment,  if  docketed  during  the  lifetime  of 
the  judgment  debtor,  constitutes  a  lien  against 

1  Code  of  Civil  Procedure,  section  671,  provides  in 
part:  ^^Immediately  after  filing  the  judgment-roll,  the 
clerk  must  make  the  proper  entries  of  the  judgment, 
under  appropriate  heads,  in  the  docket  kept  by  him; 
and  from  the  time  the  judgment  is  docketed  it  be- 
comes a  lien  upon  all  the  real  property  of  the  judg- 
ment debtor  not  exempt  from  execution  in  the  county 
owned  by  him  at  the  time,  or  which  he  may  after- 
ward acquire,  until  the  lien  ceases/^ 

Practice  Act,  section  204,  in  part  provided  likewise. 

2  Judgment  Constitutes  Lien  from  Time  of  Docket- 
ing.— ^'No  judg-ment  lien  is  created  upon  real  prop- 
erty belonging  to  a  judgment  debtor  until  the  judg- 
ment be  docketed '':   Eby  v.  Foster,  61  Cal.  282,  286. 

The  purpose  of  docketing  a  judgment  is  only  to  fix 
a  lien  against  the  lienable  property:  Los  Angeles 
County  Bank  v.  Raynor,  61  Cal.  145,  147;  High  v. 
Bank  "of  Commerce,  95  Cal.  386,  389,  29  Am.  St.  ReD. 
121,  30  Pac.  556. 

In  entering  names  in  the  docket  ''it  was  evidently 
intended  that  the  surnames  should  precede  the  Chris- 
tian names,  and  the  omission  of  the  Christian  name 
of  the  defendant  Chipman  did  not  deprive  the  docket 
of  its  useful  function  of  directing  the  attention  of 
those  interested  to  the  existence  of  a  judgm.ent  and 
to  all  its  incidents.''  Thus  the  judgment  when  so 
docketed  constituted  a  lien:  Hibberd  v.  Smith,  50  Cal. 
511,  517,  518. 

(Toar> 


§  623  SUPERIOR  COURT.  lOOD 

all  his  immovable  property,^  subject  to  forced 
sale,'*  in  the  county  wherein  it  was  docketed, 
whether  owned  by  the  judgment  debtor  at  the 

3  Immovable  Property.— The  statutory  words  are 
^^real  i)ropcrtv/'  but  ^^the  words  'real  property'  are 
coextensive  with  lands,  tenements,  and  hereditaments 
....  and  include  amy  interest  in  land  held  by  the 
judgment  debtor' ':  Martinovich  v.  Marsicano,  137 
Cal.^  354,  356,  70  Pac.  459. 

4  Constitutes  Lien  -Against  Property  Subject  to 
Forced  Sale.— The  statutory  language  is  ''not  exempt 
from  forced  sale. '^  "The  lien  of  a  judgment  is 
purely  the  creature  of  statute,  and  in  this  state  the 
statute  only  provides  that  a  judgment  shall  become 
a  lien  from  the  time  it  is  docketed  upon  the  property 
of  the  judgment  debtor  'not  exempt  from  execution/ 
which  means,  upon  property  which  is  subject  to  forced 
sale'':  i^ckley  v.  Chamberlain,  16  Cal.  181,  183,  76 
Am.  Dec.  516. 

A  homestead,  not  being  subject  to  forced  sale,  can- 
not be  affected  by  a  judgment  lien:  Ackley  v.  Cham- 
berlain, 16  Cal.  181,  183,  76  Am.  Dec.  516;  Ebv  v. 
Foster,  61  Cal.  282,  287. 

"A  judgment  cannot  become  a  lien  upon  the  home- 
stead premises.  It  can  become  a  lien  only  upon  the 
real  property  of  the  judgment  debtor  which  is  'not 
exempt  from  execution'— that  is,  which  can  be  sub- 
jected to  forced  sale":  Bowman  v.  Norton,  16  Cal. 
213,  220. 

And  although  the  homestead  premises  greatly  ex- 
ceed in  value  the  homestead  value,  a  judgment  cannot 
become  a  lien  against  them.  The  judgment  creditor 
must  take  the  proper  means  to  have  the  homestead 
partitioned  and  the  homestead  set  apart:  Sanders  v. 
Eussell,  86  Cal.  119,  120-121,  21  Am.  St.  Eep.  26,  24 
Pac.  852;  Barrett  v.  Sims,  59  Cal.  615,  619. 
Liens— 64 


1010  JUDGMENT    LIENS.  §    623 

time  of  the  docketing  or  afterward  acquired  by 
him  during  the  continuance  of  the  lien.^ 

624.     Extinction  of  Lien. 

Such  lien  is  extinguished 

(1)  by  the  satisfaction  of  the  judgment, 

(2)  by  the  staying  of  the  judgment  secured 
thereby  by  the  execution  of  a  sufficient  under- 
taking on  appeal,  and 

(3)  by  the  lapse  of  five  years  after  the  accrual 
of  the  lien.^ 

5  But  where  before  a  judgment  is  recovered,  prop- 
erty which  was  held  by  the  judgment  debtor  when 
the  action  was  commenced  has  been  conveyed  to  a 
third  party  hy  the  judgment  debtor,  a  judgment  lien 
will  not  attach  thereto  upon  the  docketing  of  the 
judgment.  ^^The  statutory  lien  of  a  judgment  upon 
the  real  estate  of  the  judgment  debtor  can  attach  only 
upon  property  in  which  such  debtor  has  a  vested  legal 
interest:  People  v.  Irwin,  14  Cal.  428,  434;  Watt  v. 
Wright,  66  Cal.  202,  208,  209,  5  Pac.  91. 

The  same  is  true  where  the  plaintiff-  had  attached 
the  land,  although  in  this  case  recourse  could  not  be 
defeated  by  the  transfer:  Eilev  v.  Mance,  97  Cal.  203, 
205,  31  Pac.  1126,  32  Pac.  315^ 

6  Code  of  Civil  Procedure,  section  671,  second  sen- 
tence, provides:  *^The  lien  continues  for  five  years, 
unless  the  enforcement  of  the  judgment  be  stayed 
on  appeal  by  the  execution  of  a  sufficient  undertaking 
as  provided  in  this  code,  in  which  case  the  lien  of 
the  judgment  and  any  lien  by  virtue  of  an  attachment 
that  has  been  issued  and  levied  in  the  action  ceases.'' 
As  amended,  in  effect  March  9,  1895. 

E\storical.—Th.Q  section  before  the  amendment,  and 
Practice  Act,  section  204,  provided:  ^^The  lien  shall 
continue  for  two  years,  unless  the  judgment  be  pre- 
viously satisfied.'' 


§  625  SUPERIOR  COURT.  1011 

Subdivision  2»     Lien   of   Superior   Court  Judg- 
ment in  Other  Counties, 

625.     Accrual  of  Lien. 

A  transcript  of  an  original  docket  of  a  judg- 
ment;,  certified  by  the  clerk^  may  be  filed  with 
the  recorder  of  any  other  county.  From  the 
time  of  the  filing,  if  done  during  the  lifetime  of 
the  judgment  debtor,  the  judgment  constitutes 
a  lien  against  all  the  immovable  property  of  the 
judgment  debtor  p.ot  exempt  from  execution, 
in  such  county,  whether  owned  by  the  judgment 
debtor  at  the  time  of  filing  or  afterward  acquired 
by  him  during  the  continuance  of  the  lien.''' 

7  Code  of  Civil  Procedure,  section  674,  first  sen- 
tence, provides:  ^'A  transcript  of  the  original  docket, 
certified  by  the  clerk,  may  be  filed  with  the  recorder 
of  any  other  county,  and  from  the  time  of  the  filing 
the  judgment  becomes  a  lien  upon  all  the  real  prop- 
erty of  the  judgment  debtor,  not  exempt  from  execu- 
tion, in  such  county,  owned  by  him  at  the  time,  or 
which  he  may  afterward,  and  before  the  lien  expires, 
acquire. ' ' 

Practice  Act,  section  207,  was  substantially  the 
same. 

In  Donner  v.  Palmer,  23  Cal.  40,  45,  46,  decided  in 
1863,  the  court  said :  ^  ^  The  statute  is  plain  that  the 
lien  commences  at  the  time  of  the  filing  of  the  tran- 
script in  the  recorder's  office,  and  continues  for  two 
years  from  that  time,  unless  the  judgment  be  satis- 
fied before  that  time  expires.  No  language  could 
more  clearly  express  that  to  be  the  intention  of  the 
legislature,  and  we  can  perceive  no  injustice  or  hard- 
ship in  it.  The  fact  that  a  lien  under  the  judgment 
has  existed  and  expired  in  one  county,  can  make  no 


1012  JUDGMENT    LIENS.  §    626 

626.  Extinction  of  Lien. 

Such  lien  is  extinguished 

(1)  by  the  satisfaction  of  the  judgment, 

(2)  by  the  lapse  of  two  years  after  the  accrual  of 
the  lien.*"^ 

Subdivision  3.     Lien   of  Justice's    Court   Judg- 
ment,   . 

627.  Accrual  of   Lien.^ 

xin  abstract  ^^  of  a  judgment  of  a  justice^s 
court,  given  by  the  justice  to  the  party  in  whose 
favor  the  judgment  was  rendered  on  his  demand, 
may  be  filed  in  the  office  of  the  recorder  of  any 

difference.  The  intention  is  to  give  a  judgment  credi- 
tor the  right  to  acquire  a  lien  in  any  county  when 
and  where  he  pleases,  and  then  it  gives  him  two  years 
thereafter  in  which  to  enforce  that  lien.  If  he  fails 
or  neglects,  or  can  find  no  property  in  one  county  on 
which  to  enforce  it,  that  is  no  just  cause  why  he 
should  not  exercise  his  right  of  enforcing  it  in  an- 
other county  where  he  may  be  able  to  find  property 
of  the  judgment  debtor.'' 

8  Code  of  Civil  Procedure,  section  674,  second  sen- 
tence: ^^The  lien  continues  for  two  years,  unless  the 
judgment  be  previously  satisfied.'' 

9  Code  of  Civil  Procedure,  section  897:  ''The  jus- 
tice, on  the  demand  of  a  party  in  whose  favor  judg- 
ment is  rendered,  must  give  him  an  abstract  of  the 
judgment. ' ' 

Section  900:  ''A  judgment  rendered  in  a  justice's 
court  creates  no  lien  upon  any  lands  of  the  defendant, 
unless  such  an  abstract  is  filed  in  the  office  of  the 
recorder  of  the  county  in  which  the  lands  are  situated. 
When  so  filed,  and  from  the  time  of  filing,  the  judg- 


§  627  justice's  court.  1018 

county  in  which  any  iinniovable  property  of  the 
judgment  debtor  is  sitmated.  From  the  time  of 
filings  if  done  during  the  lifetime  of  the  judg- 
ment debtor,  the  judgment  constitutes  a  lien 
against  all  his  immovable  property,  not  exempt 
from  execution,  in  such  county,  whether  owned 
by  the  judgment  debtor  at  the  time  of  filing  or 
afterward  acquired  by  him  during  the  continu- 
ance of  the  lien. 

628.     Extinction  of  Lien. 

Such  lien  is  extinguished 
"(1)  by  the  satisfaction  of  the  judgment, 
,(2)  by  the  lapse  of  two  years  after  the  accrual 

of  the  lien.^^ 

ment  becomes  a  lien  upon  all  the  real  property  of  the 
judgment  debtor,  not  exempt  from  execution,  in  such 
county,  owned  by  him  at  the  time,  or  which  he  may 
afterward,  and  before  the  lien  expires,  acquire.'' 
As  amended,  in  effect  April  16,  1880. 

Practice  Act,  section  599,  as  amended  in  effect  July 
1,  1854,  contained  provisions  similar  to  Code  of  Civil 
Procedure,  sections  597  and  600,  quoted  above. 

The  filing  and  recording  in  the  recorder's  office  is 
prerequisite  to  the  accrual  of  the  judgment  lien:  Bag- 
ley  V.  Ward,  27  Cal.  369,  371. 

A  justice's  court  judgment  becomes  a  lien  against 
the  property  of  the  judgment  debtor  only  by  a  com- 
pliance with  Code  of  Civil  Procedure,  section  900: 
Beaton  v.  Eeid,  111  Cal.  484,  486,  44  Pac.'167. 

10  A  ** certified  copy"  of  a  justice's  court  judgment 
is  not  an  ^^ abstract"  thereof,  and  the  filing  thereof  is 
not  equivalent  to  filing  an  abstract  in  its  effect:  Fra- 
zier  V.  Crowell,  52  Cal.  399,  401,  402. 

11  Code  of  Civil  Procedure,  section  900,  second  sen- 


1014  JUDGMENT    LIENS.  §    629 

SnibcUvision    4*     Provisions    AppUcadle    to    All 
Judgment  Liens* 

629.  Judgment  Lien  not  Provable  by  Parol. 

^N'either  the  existence  nor  the  time  of  the  ac- 
-crual  or  continuance  of  a  judgment  lien  can  be 
proved  by  parol  evidence.^ 

630.  Computation    of   Time   of   Limitation    of 
Lien. 

A  judgment  lien  is  extinguished  immediately 
upon  the  expiration  of  the  time  limited  for  its 
continuance  although  proceedings  are  com- 
menced during  its  continuance  for  its  enforce- 
ment;,  and  unless  enforced  before  expiration  of 
the  time  is  lost.^^     The  time^  however,  during 

tence:  ''The  lien  continues  for  two  years,  unless  the 
judgment  be  previously  satisfied.''  As  amended,  in 
effect  April  16,  1880. 

12  **The  time  [during  which  a  judgment  lien  con- 
tinues] must  appear  by  the  record;  for  as  the  lien  is 
purely  statutory,  neither  its  existence  nor  commence- 
ment can  be  proved  by  paroP':  Eby  v.  Foster,  61  Cal. 
282,  287. 

Parol  proof  cannot  be  admitted,  if  objected  to,  to 
show  that  a  written  encumbrance  exists  against  real 
estate:  Eacouillat  v.  Requena,  36  Cal.  651,  658. 

13  Judgment  Lien  Extinguished  Immediately  upon 
Expiration  of  Time  Limited. 

(1858)  ^^  Section  204  [of  the  Practice  Act]  creates 
the  lien  of  the  judgment,  au.d  also  fixes  the  period  of 
its  continuance.  Taking  the  different  portions  of  the 
section  together,  the  intent  is  clear  that  the  lien 
should   not   continue  beyond  the  time   specified.     The 


§    630  JUDGMENT    LIENS.  1015 

which  the  enforcement  of  a  judgment  lien  is 
stayed  by  an  order  of  court  made  during  the  pen- 
dency of  a  motion  for  a  new  trials  or  by  an  ap- 
peal to  the  supreme  court  together  with  the  fil- 

power*  that  creates  confines  the  existence  of  the 
thing  created  within  a  specified  period.  The  lien  it- 
self would  not  exist  without  this  provision  of  the 
statute,  and,  of  course,  cannot  exist  beyond  the  time 
expressly  stated 

^^The  rule  that  confines  the  lien  of  the  judgment 
strictly  within  the  two  years  is  the  most  simple  and 
certain  in  theory,  and  the  most  beneficial  in  practice. 
If  we  hold  that  the  lien  of  the  judgment  may  be  pro- 
longed beyond  the  period  stated,  by-  the  issue  and 
levy  of  an  execution  within  the  time,  then  we  can  fix 
no  definite  and  certain  limits  to  the  continuance  of 
the  lien'^  Isaac  v.  Swift,  10  Cal.  71,  81,  70  Am.  J3ec. 
698;  Sanders  v.  Eussell,  86  Cal.  119,  121,  21  Am.  St. 
Rep.  26,  24  Pac.  852. 

In  order  to  preserve  a  judgment  lien  the  property 
must  be  sold  before  the  time  set  for  the  expiration 
of  the  lien:  Bagley  v.  Ward,  37  Cal.  121,  133,  99  Am. 
Dec.  256;  Eogers  v.  Druffel,  46  Cal.  654,  656;  Ebv  v.  Fos- 
ter, 61  Cal.  282,  287;  Petaluma  Sav.  Bank  v.  Superior 
Court  San  Francisco,  111  Cal.  488,  499,  44  Pac.  177. 

But  in  Estate  of  Wiley,  138  Cal.  301,  71  Pac.  441, 
the  court  held  that  where  a  claim  secured  by  judg- 
ment lien  accruing  under  the  Code  of  Civil  Pro- 
cedure, section  674,  section  613,  above,  is  presented 
for  allowance  or  rejection  about  one  year  after  its 
accrual,  and  upon  its  rejection  the  claimant  brings 
suit  with  due  -diligence,  and  afterward  obtains  a 
judgment  establishing  his  lien  and  within  a  reasonable 
time  thereafter  petitions  the  probate  court  to  sell  the 
liened  property,  the  lien  is  not  discharged  by  reason 
of  the  fact  that  the  order  of  sale  was  not  made  until 
the  expiration  of  more  than  two  years  after  the  ac- 
crual of  the  lien,  no  laches  being  imputable  to  the 
lienor. 


1016  JUDGMENT    LIENS.  §    630 

mg  of  a  sufficient  stay  bond  (where  the  lien  is 
not  extinguished  by-  such  filing),  is  not  included 
within  the  time  limited  for  commencing  the  ac- 
tion, but  is  omitted  in  the  computation  there- 
of.^4 

Whether  the  provision  of  the  Code  of  Civil  Proce- 
dure, section  1569,  that  ^^no  claim  against  any  estate, 
which  has  been  presented  and  allowed,  is  affected  by 
the  statute  of  limitations,  pending  the  proceedings 
for  the  settlement  of  the  estate  ^^  operates  to  protect 
a  .judgment  lien— querv:  Estate  of  Wiley,  138  Cal. 
301,  71  Pae.  441. 

14  Time  When  Judgment  Stayed  by  Motion  for 
New  Trial  or  Appeal  not  Included  in  Time  of  Continu- 
ance of  Lien. 

**The  two  years  mentioned  in  the  two  hundred  and 
fourth  section  of  the  Practice  Act,  which  relates  to 
judgment  liens,  commences  to  run  from  the  docketing 
of  the  judgment,  unless  execution  is  stayed  by  an 
order  of  court  pending  a  motion  for  a  new  trial  or  by 
an  appeal  with  a  stay  bond.  The  time  during  which 
execution  is  thus  stayed  constitutes  no  part  of  the 
two  years,  but  is  to  be  omitted  from  the  computation. 
Any  period  of  time,  however,  which-  may  transpire 
between  the  docketing  of  the  judgment  and  the  stay 
of  proceedings,  is  to  be  included  in  the  computation. 
A  stay  of  proceedings,  whether  by  an  order  of  the 
court  pending  a  motion  for  a  new  trial  or  by  an  ap- 
peal with  a  stay  bond,  merely  suspends  the  running 
of  the  statutory  time.  But  it  does  not  postpone  the 
commencement  of  the  statutory  limitation  until  after 
the  stay  has  ceased  ^\*  Barroilhet  v.  Hathawav,  31 
Cal.  395,  89  Am.  Dec.  193.  In  Solomon  v.  Maguire, 
29  Cal.  224,  237,  the  court  expressed  a  doubt  whether 
the  making  of  an  order  staying  execution  suspended 
the  running  of  the  statutory  period,  but  the  doctrine 
of  the  Barroilhet  case  has  never  been  overruled. 

^^The  obvious  intention  [of  the  statute]  was  to 
charge  the  estate  of  the  judgment  debtor,  and  to  give 


§    631  JUDGMENT    LIENS.  1017 

631.     Lien  not  Affected  by  Division  of  County. 

Where  a  judgment  lien  has  attached  to  all  the 
immovable  property  situated  in  a  given  county^ 
the  lien  is  not  affected  by  a  subsequent  division  of 
the  countv,  but  continues  to  aifect  all  the  lien- 

the  creditor  two  years  to  make  his  money.  The  stat- 
ute intended  that  this  time  should  run  from  the  date 
of  the  judgment,  or  period  at  which  the  plaintiff  was 
in  a  situation  to  take  out  execution,  and  pursue  his 
remedy  to  final  satisfaction.  By  the  defendant's 
[Judgment  debtor's]  own  act  [in  prosecuting  an  ap- 
peal], the  force  of  that  judgment  has  been  suspended, 
und  the  lien,  which  is  merely  an  incident,  must  share 
a  like  fate.  It  would  be  absurd  to  say  that  a  lien 
attached  upon  a  judgment,  and  expired  upon  its  own 
limitation,  while  the  judgment  was  still  in  fieri,  and 
could  not  be  prosecuted  to  full  fruition'':  Dewey  v. 
Latson,  6  Cal.  130;  Englund  v.  Lewis,  25  Cal.  337, 
351-353;  Chapin  v.  Broder,  16  Cal.  403,  420-421. 

But  the  statement  in  Dewey  v.  Latson,  6  Cal.  130, 
that  where  the  judgment  was  stayed  on  appeal  the 
judgment  lien  ran  from  the  date  of  the  remittitur 
from  the  supreme  court  was  not  necessary  for  the 
decision,  and  cannot  be  supported,  and  in  Barroilhet 
V.  Hathaway,  31  Cal.  395,  397,  89  Am.  Dec.  193,  the 
court  held  that  all  that  was  in  fact  decided  by  the 
case  was  that  the  running  of  the  time  was  suspended 
during  the  appeal. 

Where,  however,  a  sufiicient  stay  bond  is  not  filed 
on  appeal,  the  running  of  the  statute  is  not  stayed  by 
the  appeal:  Chapin  v.  Broder,  16  Cal.  403,  420,  421.      * 

The  running  of  the  statutory  time  for  the  continu- 
ance of  the  lien  is  not  stopped  by  an  injunction  re- 
straining the  sheriff  from  selling  the  land  under  exe- 
cution, but  the  lien  ceases  after  two  years:  Eogers 
V.  Druffel,  46  Cal.  654. 


1018  JUDGMENT    LIENS.  §    631 

able  property  in  both  counties  until  it  is  extin- 
guished.^^ 

632.  Property  not  Twice  Lienabie  under  Same 
Judgment. 

The  same  property  cannot  twice  be  affected  by 
a  lien  under  the  same  judgment.^ ^ 

633.  Cannot  Accrue  Ag^ainst  Property  of  Dece- 

dent or  Bankrupt. 

A  judgment  lien  cannot  be  created  against  the 
estate  of  a  decedent/''  nor  against  the  estate  of 
a  person  adjudged  a  bankrupt.^^ 

15  Bowman  v.  Hovions,  17  Cal.  471,  474-476. 

16  Same   Property  not   Twice   Lienabie.— *  ^  This   is 

the  only  conclusion  at  which  we  can  reasonably  ar- 
rive. If  such  a  lien,  once  exhausted,  can  afterward 
be  revived,  there  is  no  limit  to  the  number  of  times 
that  this  may  be  done'':  Bowman  v.  Hovious,  17  Cal. 
471,  476. 

Thus  where  a  judgment  lien  has  attached  to  the 
land  in  a  county  and  the  county  is  subsequently  di- 
vided, a  transcript  of  the  judgment  cannot  be  filed 
in  the  new  county  to  prolong  the  lien  beyond  the 
time  at  which  it  would  otherwise  have  expired:  Bow- 
man V.  Hovious,  17  Cal.  471,  476. 

17  Judgment  does  not  Constitute  Lien  Against  Es- 
tate of  Decedent. 

Code  of  Civil  Procedure,  section  669  (Practice  Act, 
section  202),  provides:  ^^If  a  party  die  after  a  verdict 
or  decision  upon  any  issue  of  fact,  and  before  judg- 
ment, the  court  may  nevertheless  render  judgment 
thereon.  Such  judgment  is  not  a  lien  on  the  real 
property  of  the  deceased  party^  but  is  payable  in  the 
course  of  administration  on  his  estate.'' 


§634  JUDGMENT    LIENS.  1019' 

634.     Liened  Property  not  Subject  to  Independ- 
ent Levy. 

During  the  continuance  of  a  judgment  liert' 
against  any  property,  the  levying  of  an  execution 
thereon  pursuant  to  the  secured  judgment  by  the 
judgment  lienor  is  wholly  useless,  neither  extend- 
ing the  existing  lien  nor  creating  a  new  lien.^**^' 

Section  1504:  ^'A  judgment  rendered  against  an 
executor  or  administrator,  upon  any  claim  for  moneys 
against  the  estate  of  his  testator  or  intestate,  only 
establishes  the  claim  in  the  same  manner  as  if  it  had 
been  allowed   by  the   executor   or   administrator   and 

the  judge No  execution  must  issue  upon  such 

judgment,  nor  shall  it  create  any  lien  upon  the  prop- 
erty of  the  estate,  or  give  to  the  judgment  debtor 
any  priority  of  payment.^' 

Section  1506:  ''A  judgment  rendered  against  a  de- 
cedent, dying  after  verdict  or  decision  on  an  issue  of 
fact,  but  before  judgment  is  rendered  thereon,  is  not 
a  lien  on  the  real  property  of  the  decedent,  but  is 
payable  in  due  course  of  administration.'' 

18  Nor  Against  Estate  of  Bankrupt:  See  Bankrupt 
Act,  section  67f,  as  quoted  section  40,  note  6,  above. 

19  Levying  of  Execution  Wholly  Useless. 

^^The  judgment  lien  being  a  lien  upon  the  lands, 
a  levy  is  unnecessary.''  ^'The  judgment  binds  the 
lands,  and  the  execution  comes  as  a  power  to  sell" 
(p.  132):  Bagley  v.  Ward,  37  Cal.  121,  99  Am.  Dec. 
256. 

Where  property  is  affected  by  a  judgment  lien,  a 
levy  under  the  same  judgment  cannot  sequester  such 
property  (p.  133).  ^ ^Pending  the  judgment  lien,  the 
levy  of  the  execution  neither  extends  the  existing 
lien  nor  creates  a  new  lien"  (pp.  138,  139):  Bagley 
V.  Ward,  37  Cal.  121,  99  Am.  Dec.  256,  per  Ehodes, 
Sanderson,    and    Crockett,    JJ.;    Sawyer,    C.    J.,    and 


1020.  JUDGMENT    LIENS.  §    635 

635.  Attachment  Merged  into  Judgment  Lien. 

Where  immovable  property  has  been  attached 
and  afterward  a  judgment  lien  accrues  there- 
against  as  security  for  the  same  demand  in  the 
course  of  the  same  action,  notwithstanding  the 
property  is  still  in  contemplation  of  law  in  the 
possession  of  the  attaching  officer  subject  to  the 
judgment,  the  attachment  lien  is  merged  into  the 
judgment  lien  and  ceases,  except  as  maintaining 
priority  for  the  judgment  lien  against  the  prop- 
erty attached,  and  does  not  revive  upon  the  ex- 
piration of  the  judgment  lien.^^ 

636.  Enforcement.^! 

A  judgment  lien  may  be  enforced. 
(1)   by  execution,^'^  the  writ  for  which  may  issue 
as  of  course  at  any  time  within  five  years  after 
the  docketing  of  the  judgment,  or  on  motion 

Sprague,  J.,  dissenting  (pp.  142-149).  To  the  same 
effect,  Rogers  v.  Druffel,  46  Cal.  654,  656. 

Thuc  by  the  issue  and  levy  of  an  execution  during 
the  continuance  of  the  lien,  the  lien  cannot  be  ex- 
tended beyond  the  time  at  which  it  would  otherwise 
expire:  Isaac  v.  Swift,  10  Cal.  71,  81,  70  Am.  Dec. 
698;  Sanders  v.  Eussell,  86  Cal.  119,  121,  21  Am.  St. 
Rep.  26,  24  Pac.  852. 

20  Eagley  v.  Ward,  37  Cal.  121,  131,  99  Am.  Dec. 
256,  per  Rhodes,  Sanderson,  and  Crockett,  J  J.;  Saw- 
yer, C.  J.,  and  Sprague,  J.,  dissenting  (p.  153) ;  Porter 
V.  Pico,  55  Cal.  165,  174;  Anderson  v.  Goff,  72  Cal.  65, 
71,  1  Am.  Sfc.  Bep.  34,  13  Pac,  73. 


§    636  JUDGMENT    LIENS.  1021 

21  In  Bartholomew  v.  Hook,  23  Cal.  277,  where  cer- 
tain land  subject  to  a  judgment  lien  was  affected  by 
a  subsequent  homestead  declared  thereon  by  the  judg- 
ment debtor's  wife,  and  there  was  no  property  other 
than  the  liomestead  subject  to  the  judgment  lien,  the 
court  required  the  judgment  creditor  to  proceed  first 
against  the  movable  property  of  the  judgment  debtor. 
The  court,  however,  merely  quoted  the  first  portion  of 
the'  first  subdivision  of  the  Code  of  Civil  Procedure, 
section  682  (Practice  Act,  210),  which  provides  that 
the  writ  of  execution  ^^must  require  the  sheriff  to  sat- 
isfy the  judgment,  with  interest,  out  of  the  personal 
property  of  such  judgment  debtor,  and  if  sufficient 
personal  property  cannot  be  found,  then  out  of  his 
real  property, '^  and  wholly  ignored  the  next  portion 
of  that  subdivision  which  provides  that  the  writ  of 
execution  ^^must  require  the  sheriff  to  satisfy  the 
judgment,  with  interest,  ....  if  the  judgment  be  a 
lien  upon  real  property,  then  out  of  the  real  property 
belonging  to  him  on  the  day  when  the  judgment  was 
docketed,  or  at  any  time  thereafter. ' '  It  seems  clear 
that  if  certain  of  the  property  affected  by  a  judgment 
lien  was  subject  to  a  subsequent  homestead,  while 
the  remainder  was  not,  then  on  the  principle  of  mar- 
shaling of  securities  (see  section  21  above),  the 
lienor  would  be  required  to  proceed  first  against  the 
property  not  subject  to  the  homestead;  but  where  all 
the  liened  property  alike  is  affected  by  a  subsequent 
homestead,  to  compel  the  lienor  to  forego  his  lien  and 
enforce  his  judgment  against  the  movable  property 
of  the  judgment  debtor  is  to  ignore  the  force  of  the 
provision  of  Civil  Code,  section  1241,  first  subdivi- 
sion, that  the  homestead  is  subject  to  forced  sale  un- 
der such  liens. 

22  Judgment  Lien  may  "be  Enforced  by  Execution. 
Code   of   Civil  Procedure,   section  681:   ^^The  party 

in  whose  favor  judgment  is  given  may,  at  any  time 
within  five  years  after  the  entry  thereof,  have  a  writ 
of  execution  issued  for  its  enforcement. '' 

Section  685:  ''In  all  cases,  the  judgment  may  be 
enforced  or  carried  into  execution  after  the  lapse  of 
five  years  from  the  date  of  its  entry,  by  leave  of  the 


1022  JUDGMENT    LIENS.  §    636 

court,  upon  motion,  or  by  a  judgment  for  that  pur- 
pose, founded  upon  supplemental  pleadings/^  As 
amended,  in  effect  March  9,  1895. 

Historical.— By  the  Code  of  Civil  Procedure,  section 
685  and  Practice  Act,  sec.  214,  before  April  8,  1861, 
and  after  March  9,  1895  (except  in  respect  to  judg- 
ments which  had  been  barred  before  March  9,  1895), 
execution  could  be  issued  by  the  court  on  motion 
after  five  years  from  the  entry  of  the  judgment  in  all 
cases;  between  April  2,  1866,  and  March  9,  1895,  by 
the  same  section  it  could  be  so  issued  except  in  cases 
for  the  recovery  of  money  (which  included  cases  of 
the  recovery  of  money  demands  by  the  enforcement 
of  liens) ;  between  April  8,  1861,  and  April  2,  1866,  it 
could  not  in  any  case  be  issued  after  the  lapse  of 
five  years  after  entry. 

In  Donner  v.  Palmer,  23  Cal.  40,  46,  decided  in 
1863,  the  court  said:  ^^ Section  209  [of  the  Practice 
Act]  provides  that  an  execution  to  enforce  this  [judg- 
ment] lien  can  only  issue  within  five  years  after  the 
date  of  the  judgment,  and  if  the  judgment  debtor  suf- 
fers that  time  to  elapse  without  having  enforced  his 
lien,  he  cannot  procure  an  execution,  since  the  repeal 
of  section  214,  with  which  to  enforce  it.  So,  too,  ail 
right  of  action  upon  the  judgment  is  barred  by  the 
seventeenth  section  of  the  statute  of  limitations  un- 
less commenced  within  five  years  of  the  date  of  its 
rendition.  AVhether  a  lien  can  exist  in  any  county 
after  the  expiration  of  five  years  from  the  date  of 
the  judp;ment  by  filing  a  transcript  in  the  recorder's 
office  just  within  the  two  years,  is  a  question  not  prop- 
erly before  us  in  this  case;  but  it  is  clear  that  if  a 
lien  could  exist  in  such  case,  it  would  be  merely 
nominal,  unless  an  execution  is  issued  within  the  five 
years  with  which  to   enforce  it.'' 

A  Judgment  Lien  is  Enforced  hy  Execution.— '  ^  ThRt 
is  the  only  purpose  of  the  execution  in  respect  to  real 
estate  while  the  judgment  lien  subsists":  Bagley  v. 
"Ward,  37  Cal.  121,  131,  99  Am.  Dec.  256. 

Although  the  liened  property  is  in  the  possession  of 
a    receiver,    the    lienor    may    sell    it   under    execution 


§    636  JUDGMENT    LIENS.  1023 

without  leave  of  court,  without  committing  a  eon- 
tempt  of  court:  Petaluma  Savings  Bank  v.  Superior 
Court    San  Francisco,  111  Cal.  488,  500,  44  Pac.  177. 

Whether  a  judgment  lien  is  enforceable  by  execu- 
tion or  otherwise  after  the  death  of  the  judgment 
debtor,  or  whether  the  secured  demand  must  be  ]3re- 
sented  against  the  estate  of  the  decedent  and  paid  as 
a  preferred  demand,  has  never  been  directly  decided. 

It  has  been  held  that  where  judgment  is  rendered 
during  the  lifetime  of  the  judgment  debtor,  execution 
thereon  issued  after  his  death  is  void,  no  judgment 
lien  having,  however,  accrued  in  this  case:  Smith  v. 
Eeed,  52  Cal.  345. 

It  has  also  been  held  that  where  a  money  judgment 
is  rendered  during  the  lifetime  of  the  judgment  debtor 
and  execution  is  issued,  but  not  levied,  against  cer- 
tain property  which  had  previously  been  attached, 
the  death  of  the  judgment  debtor  before  the  levy 
discharges  both  attachment  and  execution  under  the 
Code  of  Civil  Procedure,  section  686,  Practice  Act, 
section  215,  there  being  no  judgment  lien:  Ham  v. 
Cunningham,  50  Cal.  365;  Ham  v.  Henderson,  50  Cal. 
367. 

In  Estate  of  Wiley,  138  Cal.  301,  71  Pac.  441,  443B, 
where  a  judgment  lien  was  involved,  and  the  judg- 
ment secured  by  the  lien  had  been  presented  and  re- 
jected, and  action  had  been  prosecuted  thereon  to 
successful  termination,  the  court  remarked  inciden- 
tally: ^^  After  the  death  of  the  judgment  debtor,  no 
execution  could  issue,''  citing  Code  of  Civil  Proce- 
dure, section  1505,  which  provides:  ^^When  any  judg- 
ment has  been  rendered  for  or  against  the  testator, 
intestate  in  his  lifetime,  no  execution  shall  issue 
thereon  after  his  death,  except  as  provided  in  section 
686.  A  judgment  against  the  decedent  for  the  recov- 
ery of  money  must  be  presented  to  the  executor  or 
administrator  like  any  other  claim.  If  execution  is 
actually  levied  upon  any  property  of  the  decedent 
before  his  death,  the  same  may  be  sold  for  the  satis- 
faction thereof;  and  the  oflScer  making  the  sale  must 
account  to  the  executor  or  administrator  for  any  sur- 
plus in  his  hands.'' 


1024  JUDGMENT    LIENS.  §    636 

by  the  court  after  the  lapse  of  five  years,  the 
execution  being  enforceable  without  the  ne- 
cessity of  a  levy^^^"^ 
(2)  by  a  foreclosure  action  (where  necessary  for 
the  protection  of  the  lien,  if  not  in  every 
case).^"* 

Code   of   Civil  Procedure,   section   686,   referred   to 
above,    provides:    '* Notwithstanding   the    death    of    a 
party  after  the  judgment,   execution  thereon  may  be 
issued,  or  it  may  be  enforced  as  follows:   .... 
.(2)   in  case  of  the  death  of  the  judgment  debtor,  if 
the  judgment  be  for  the   recovery   of  real  or  per- 
sonal property,  or  the  enforcement  of  a  lien  there- 
on.'^ 

It  would  seem  that  as  in  Estate  of  Wiley,  138  Cal. 
301,  71  Pac.  441,  it  was  held  that  a  judgment  lien  is 
a  lien  within  the  meaning  of  the  Code  of  Civil  Pro- 
cedure, section  1570,  which  allows  the  lienor,  when 
the  liened  property  is  sold  in  the  course  of  the  ad- 
ministration of  the  estate  of  the  deceased  owner  of 
the  property,  to  become  the  purchaser  and  pay  the 
purchase  price  by  giving  a  receipt  for  the  secured 
demand,  it  must  also  be  held  a  lien  within  the  Code 
of  Civil  Procedure,  section  686,  and  thus  to  be  en- 
forceable by  execution,  notwithstanding  the  death  of 
the  judgment  debtor. 

23  Levy  Unnecessary.— Where  property  is  affected 
by  a  judgment  lien,  a  levy  thereof  as  attachments  are 
required  to  be  levied,  is  not  requisite  on  execution  to 
the  due  appropriation  of  the  liened  property  to  the 
satisfaction  of  the  judgment:  Lehnhardt  v.  Jennings, 
119  Cal.  192,  193-197,  48  Pac.  56,  51  Pac.  195. 

24  Judgment  Lien  may  "be  Sometimes  Foreclosed.— 
A  judgment  lienor  has  a  specific  lien  against  the 
property  affected  by  his  lien,  which,  so  long  as  the 
secured  obligation  is  not  satisfied,  he  is  entitled  to 
enforce.     Were  there  a  doubt  of  the  right  of  a  judg- 


§    636  JUDGMENT    LIENS.  1025 

ment  lienor,  in  the  absence  of  other  remedy,  to  main- 
tain an  independent  action  to  foreclose  his  lien,  there 
can  be  none  of  his  right  to  do  so  in  an  action  brought 
to  foreclose  a  superior  encumbrance  in  which  action 
he  was  made  a  part}^  defendant:  Hibernia  Savings 
etc.  Soc.  V.  London  etc.  Fire  Ins.  Co.,  138  Cal.  257,  71 
Pac.   334,  335A. 

Liens— 65 


CHAPTER  9. 

TAX  LIENS. 

63.7.  Lien  of  tax  upon  immovable  property. 

638.  Of  tax  upon  improvements. 

639.  Of   movable  property  tax. 

640.  Of  poll  tax. 

641.  Extinction    of    lien. 

642.  Time  of  commencing  foreclosure  action. 

637.     Lien   of   Tax   upon   Immovable  Property.^ 

Every  tax^  upon  immovable  property  consti- 
tutes a  lien  against  the  taxed  property  which  at- 

1  Political  Code^  section  3718  provides:  ^* Every  tax 
upon  real  property  is  a  lien  against  the  property  as- 
sessed; ....  which  several  liens  attach  as  of  the 
first  Monday  of  March  in  each  year.''. 

The  liens  provided  by  Political  Code,  sections  3716, 
3717,  and  3718,*  ^* attach  to  the  property  of  railroad 
companies  owning  and  operating  roads  situate  in  two 
or  more  counties,  the  same  as  to  all  other  property  in 
the  state.  It  will  thus  be  seen  that,  for  the  *taxes 
upon  this  class  of  property,  the  state  and  every  county 
in  it  has  the  same  security  that  is  provided  for  taxes 
upon  all  other  property  in  the  state — a  lien  upon  all 
property  of  the  owner — not  even  excepting  that  which 
is  by  law  exempt  from  execution;  and  by  other  pro- 
visions of  the  statute  it  is  made  a  first  lien;  so  that, 
in  no  event  can  the  state  be  defeated  in  the  collec- 
tion of  its  taxes,  if  its  own  proceedings  in  the  assess- 

(1026) 


§  637  TAX  LiE^-s.  1027 

taches  as  of  the  first  Monday  in  March  of  the 
calendar  year  in  which  the  tax  was  assessed.^ 

638.     Of  Tax  upon     Improvements.^ 

Every  tax  due  upon  improvements  upon  im- 
movable property  assessed  to  other  persons  than 
the  owners  of  the  immovable  property  constitutes 

ment,  levy,  and  collection  have  been  lawful'':  People 
V.  Central  Pac.  E.  E.  Co.,  83  Cal.  393,  407-408,  23  Pac. 
303. 

2  Query:  Whether  a  tax  levied  for  municipal  pur- 
poses, constitutes  a  lien  under  this  and  sections  63S 
and  639  following?  City  of  San  Diego  v.  Higgins, 
115  Cal.  170,  176,  46  Pac.  923. 

3  This  proposition  seems  to  Ire  recognized  in  the 
cases. 

Thus  in  San  Gabriel  Valley  Land  etc.  Co.  v.  Witmer, 
Bros.  Co.,  96  Cal.  625,  626,  29  Pac.  500,  31  Pac.  588, 
the  court  said: /^ The  taxes  for  each  fiscal  year  accrue 
on  the  first  Monday  of  March  preceding,  ....  and 
when  assessed,  take  effect  and  become  a  lien  from 
that  date.'' 

In  McPike  v.  Heaton,  131  Cal.  109,  82  Am.  St.  Eep. 
335,  63  Pac.  179,  the  court  recognized  that  a  tax  lien 
for  taxes  for  the  fiscal  year  commencing  July  1,  1897, 
the  taxes  being  levied  on  November  29,  1897,  attached 
on  March  1,  1897.  In  this  case  where  a  person  sold 
land  on  March  24th  after  the  accrual  of  the  lien,  cove- 
nanting that  the  land  was  free  from  liens,  and  subse- 
quently the  purchaser  sold  the  land  to  a  third  person 
who  paid  the  taxes,  the  court  held  that  the  third  per- 
son could  not  recover  the  ta.xes  from  the  original  ven- 
dor as  a  covenant  that  land  is  free  from  encumbrances 
does  not  run  with  the  land  or  pass  to  the  assignee, 
but  was  personal  to  the  first  purchaser. 

4  See  Political  Code,  section  3718,  except  first 
clause. 


1028  TAX    LIENS.  §    638 

a  lien  against  the  property,  unless  nontaxable/' 
and  improvements,  which  attaches  as  of  the  first 
Monday  in  March  of  the  calendar  year  in  which 
the  tax  was  assessed.^ 

639.  Of  Movable  Property  Tax. 

Every  tax  due  upon  movable  property  consti- 
tutes a  lien  against  the  immovable  property  of 
the  owner  of  the  movable  property,  which  at- 
taches at  12  o'clock  noon  of  the  first  Monday  in 
March  in  each  year.''  . 

640.  Of  Poll  Tax. 

A  delinquent  poll  tax,  together  with  one-third 
the  amount  thereof  in  addition  thereto,  consti- 
tutes a  lien  against  the  property  assessed  to  the 
person  liable  for  the  payment  of  the  poll  tax 
which  attaches  from  the  first  Monday  in  March 
in  each  year.^ 

641.  Extinction  of    Lien.^ 

A  tax  lien  is  extinguished  only 
(1)   by  the  payment  of  the  tax,  or 

5  A  tax  upon  improvements  upon  nonassessable 
public  lands  cannot  become  a  charge  against  the  land: 
See  Political  Code,  section  3650,  subdivision  12,  last 
sentence;  People  v.  Smith,  123  Cal.  70,  76,  55  Pac.  765. 

6  See  section  637,  note  3,  above. 

7  Political  Code,  section  3717,  as  amended  in  effect 
March  22,  1880. 

8  Political  Code,  section  3860,  in  part. 


§    641  TAX    LIENS.  1029 

(2)  by  the  sale  of  the  liened  property  in  satis- 
faction of  the  demand  secured  by  the  lien^  [or 

(3)  by  the  lapse  of  the  time  within  which  a  fore- 
closure action  can  be  commenced]. ^^ 

642.     Time  of  Commencing  Foreclosure  Action. 

An  action  to  foreclose  a  tax  lien  must  be  com- 
menced before  the  expiration  of  three  years  after 
the  right  of  action  accrued. ^^ 

9  Political  Code,  section  3716,  provides:  *' Every 
tax  has  the  effect  of  a  judgment  against  the  person, 
and  every  lien  created  by  this  title  has  the  force  an*l 
effect  of  an  execution  duly  levied  against  all  the  prop- 
erty of  the  delinquent;  the  judgment  is  not  satisfied 
nor  the  lien  removed  until  the  taxes  are  paid  or  the 
property  sold  for  the  payment  thereof.^' 

10  In  City  of  San  Diego  v.  Higgins,  115  Cal.  170, 
46  Pac.  923J  the  court  in  effect  holds  that  the  lapse 
of  the  time  for  commencing  an  action  does  not  extin- 
guish the  lien,  but  merely  bars  the  remedy;  but  Mr. 
-Justice  Temple,  in  his  dissenting  opinion,  clearly 
shows  that,  a  legal  right  Avithout  a  remedy  is  a  con- 
tradiction in  terms. 

11  Action  must  be  Commenced  Within  Three  Years. 
An  action  to  foreclose  a  tax  lien  is  an  action  upon  a 
liability  created  by  statute  other  than  a  penalty  or 
forfeiture,  and  is  barred  under  the  Code  of  Civil  Pr<:)- 
cedure,  section  338,  subdivision  1,  r.pon  the  lapse  of 
three  years  from  the  time  the  right  of  action  accrued: 
ntj  of  San  Diego  v.  Higgins,  115  Cal.  170,  46  Pac. 
923,  per  Henshaw,  McFarland,  Garoutte,  Van  Fleet, 
and  Harrison,  JJ.;   Temple,  J.,  dissenting. 

In  Lewis  v.  Eothchild,  92  Cal.  626,  629,  28  Pac. 
805,  it  was  held  that  the  action  to  foreclose  a  tax 
lien  was  not  barred  by  any  of  the  limitations  con- 
tained in  the  Code  of  Civil  Procedure;  but  this  state 
ment  was  overruled  and  the  case  distinguished. 


CHAPTEE    10. 

ASSESSMENT  LIENS.* 

SuMivision  1.     The  Assessment. 

643.  Assessment    defined. 

644.  Distinction    between    tax   and    assessment. 

645.  Authority   to    levy    granted    by   legislature   but 

vested     in   local    public     corporations     exclu- 
sively. 

646.  Opportunity     to     be     heard     must     usually     bo 

granted    property    owner    before    assessment 
becomes   final. 

647.  Assessment   must    be    levied    on  uniform   stan- 

dard. 

648.  Assessment   when   properly   apportioned   not   in- 

validated  by   erroneous   distribution   thereof. 

649.  Assessment   grossly  disproportionate  to  benelits 

invalid. 

650.  Description  must  be  sufficient  for  identification. 

SuhdivUion  2.     The  Lien. 

651.  Assessment    when    duly    levied    constitutes    spe- 

cific lien. 

652.  Lien  cannot  accrue  when  contract  to  pay  which 

assessment  was  levied  void. 

653.  Maximum   amount    of   assessment   the   value    of 

the    property    assessed. 

1  In  this  chapter  an  attempt  is  made  to  state  some 
of  the  general  principles  of  constitutional  law  which 
apply  to  all  local  assessments,  and  to  set  forth  some 
of  the  rules  which  in  California  have  been  held  to 
govern  all  assessment  liens. 

(1030) 


§    643  ASSESSMENT  LIENS.  1031 

654.  Expiration    of   lien. 

655.  Demand    prerequisite    to    maintenance    of    fore- 

closure action. 

656.  Joinder  of  causes  of  action. 

657.  Certain    documents    may    be    constituted    prima 

facie   evidence   of  lien. 

658.  Of  defenses  available  in  the  foreclosure  action. 

659.  Of  counsel  fees  in  foreclosure  actions. 

Subdivision  1,     The  Assessments 
643.     Assessment  Defined. 

Every  special  local  charge  duly  levied  under 
authority  of  law  in  the  exercise  of  the  taxing 
power  upon  the  immovable  property  in  the  im- 
mediate vicinity  of  a  public  work  of  local  con- 
venience, upon  the  theory  of  apportioning  bur- 
dens to  benefits,  and  for  the  purpose  of  defraying 
a  special  public  expenditure  made  upon  such 
work  and  of  peculiar  and  especial  advantage  to 
the  property  charged,  is,  as  distinguished  from  a 
tax,  called  an  assessment.^ 

2  Assessment  Defined.— ^ '  An  assessment,  as  distin- 
guished from  a  tax,  is  a  special  and  local  charge 
or  imposition  upon  property  in  the  immediate  vicin- 
ity of  municipal  improvements,  predicated  upon  the 
theory  or  principle  of  equivalents  for  benefits  from 
such  improvements,  and  levied  as  a  charge  upon  land 
or  property  specially  benefited  thereby.  It  is  a 
charge  upon  property,  in  theory  at  least,  upon  the 
principle  of  apportionment  according  to  the  relation 
between  burden  and  benefit '^  Holley  v.  County  of 
Orange,  106  Cal.  420,  426,  39  Pac.  790.  See,  also, 
Emery  v.  San  Francisco  Gas  Co.,  28  Cal.  345,  356, 
357;  City  of  San  Diego  v.  Linda  Vista  Irr.  Dist.,  108 
Cal.  189,  193,  194,  41  Pac.  291. 


1032  ASSESSMENT    LIENS.  §    643 

Assessment  Considered  and  Distinguished  from  Tax, 
''The  word  'assessment/  as  employed  in  the  con- 
stitution [of  1849^  article  4,  section  37],  while  it 
represented  in  part  the  general  power  of  taxation 
vested  in  the  government,  was  used  to  designate  a 
particular  branch  of  that  power  specifically  different 
in  its  purpose  and  mode  of  working  from  that  in- 
tended by  the  more  general  and  comprehensiv.e  term 
of  'taxation/  ....  By  the  latter  the  power  of  im- 
posing taxes  upon  the  property  of  the  citizen  gen- 
erally for  the  support  of  government  was  intended, 
and  by  the  former  the  power  of  imposing  a  tax  for 
the  purpose  of  improving  the  streets  of  cities  and 
incorporated  villages  upon  the  property  bordering 
upon  or  in  the  vicinity  of  the  improvement.  .... 
[p.  250.] 

"In  exercising  the  power  of  taxation  the  govern- 
ment is  authorized  to  call  upon  the  taxpayer  for  an 
unlimited  percentage  upon  the  value  of  all  his  prop- 
erty not  exempt  from  taxation.  It  must  be  so  ex- 
ercised as  to  operate,  so  far  as  possible,  equally  and 
uniformly.  The  burden  imposed  must  be  apportioned 
upon    the    ad    valorem    principle,    and    not    otherwise. 

From  this  mode  no  departure  can  be  made In 

its  exercise,  counties,  cities  and  incorporated  villages 
are  governed  by  the  same  rules  by  which  the  legis- 
lature  is   governed [pp.   251,   252.] 

"The  power   of   assessment,   on  the   other   hand,   is 

of  municipal  rather  than  of  state  consequence 

It  is  true  that  the  power  of  assessment  is  vested  in 
the  state  legislature,  but  it  is  so  in  a  modified  sense. 
It  is  not  so  vested  as  an  independent  or  principal 
power,  like  that  of  taxation,  but  as  a  part  of,  or  as 
an  incident  to  the  power  of  organizing  municipal 
corporations  and  providing  for  them  a  system  of 
government  to  the  proper  working  of  which  the 
power  of  assessment  is  indispensable [p.  252.] 

"[The  term  assessment]  was  employed  ....  [in 
the  constitution  of  1849]  to  represent  those  local 
burdens  imposed  by  municipal  corporations  upon  prop- 
erty bordering   upon   an   improved   street   or   situated 


§    644  THE    ASSESSMENT.  1033 

644.     Distinction  Between  Tax  and  Assessment. 

Every  charge  levied  upon  all  the  property^  both 
movable  and  immovable^  within  a  taxing  district 
is  a  tax,  without  regard  to  the  purposes  for  which 
it  was  levied,^  and  must  be  levied  in  proportion 

so  near  it  as  to  be  benefited  by  the  improvement, 
for  the  purpose  of  paying  the  cost  of  the  improve- 
ment, and  laid  with  reference  to  the  benefit  which 
such  property  is  supposed  to  receive  from  the  ex- 
penditure of  the  money.  This  definition  ex  vi  ter- 
mini describes  the  power  and  defines  with  precision 
its  limits.  It  is  not  a  power  to  tax  all  the  property 
within  the  corporation  for  general  purposes,  but  a 
power  to  tax  specific  property  for  a  specific  purpose. 
It  is  not  a  power  to  tax  property  generally  founded 
upon  the  benefits  supposed  to  be  derived  from  the 
organization  of  a  government  for  the  protection  of 
life,  liberty  and  property,  but  a  power  to  tax  specific 
property  founded  on  the  benefit  supposed  to  be  de- 
rived by  the  property  itself  from  the  expenditure 
of  the  tax  in  its  immediate  vicinity '^  (p.  254):  Tay- 
lor  V.   Palmer,   31   Cal.   240. 

3  An  imposition  laid  upon  all  the  property  mov- 
able and  immovable  within  a  certain  district  does 
not  become  an  assessment  from  the  mere  fact  that  it 
is  used  for  a  local  public  work.  In  People  v.  Whyler, 
41  Cal.  351,  the  court  says:  ^^jSTo  cases  are  called 
to  our  attention  which  hold  that  by  reason  of  the 
purposes  for  which  they  [the  so-called  taxes]  were 
levied,  they  became  assessments.  Taxes  for  the  con- 
struction of  roadS;  bridges,  and  school  houses  are 
familiar  instances.  The  funds  to  pay  for  the  grad- 
ing of  a  street  may  be  raised  by  taxes  levied  upon 
all  the  property  of  a  town,  should  the  law  so  direct; 
but  the  tax  does  not  become  an  assessment,  because 
the  latter  is  the  mode  usually  adopted  to  raise  funds 

for    that    purpose If    the    legislature    intended 

that  a  tax  should  be  levied,  and  if  it  may  be  levied 


1034  ASSESSMENT    LIENS.  §    644 

to  the  value  of  the  property.^  But  an  assess- 
ment is  levied  upon  immovable  property  only  and 
in  proportion  to  benefits  deemed  to  have  been 
conferred  thereon  by  the  local  public  work.^ 

645.  Authority  to  Levy  Granted  by  Legislature, 
but  Vested  in  Local  Public  Corporations 
Exclusively. 

The  legislature  itself  cannot  levy  an  assess- 
ment;^ but  without  violating  any  constitutional 

to  pay  for  a  local  improvement,  it  is  not  only  no 
objection  to  the  act  [permitting  the  district  to  levy 
the  tax],  or  the  proceedings  that  were  had  under 
it,  that  it  was  not  levied  upon  property  in  propor- 
tion to  the  benefits  leceived  by  means  of  the  im- 
provement; but  if  a  tax  should  be  levied  on  that 
principle,  it  would  be  fatally  defectfve,  because  lack- 
ing the  constitutional  qualities  [required  under  the 
constitution  of  1849]   of  equality  and  uniformity/' 

4  Const.    1879,    art.   13,    sec.    1. 

5  As  the  levy  of  an  assessment  depends  wholly 
upon  the  location  of  the  property  assessed  in  relation 
to  the  public  work  to  defray  the  cost  of  which  the 
assessment  is  levied,  and  as  the  assessment  is  ap- 
portioned on  the  theory  of  apportioning  the  burdens 
to  the  benefits  derived  from  the  public  work,  it  is 
manifest  that  an  assessment  can  only  be  levied  upon 
immovable  property  and  property  which  by  affixment 
has  become  a  part  thereof,  for  that  property  alone 
has  such  a  locus  that  it  can  be  said  to  have  de- 
rived any  benefit,  except  of  the  most  ephemeral  sort, 
from    the    public    work. 

6  Legislature  cannot  Levy  Assessment.— See  Con- 
stitution 1879,  article  11,  section  12,  which  provides: 
^^The  legislature  shall  have  no  power  to  impose  taxes 
upon   counties,    cities,   towns,   or   other  public   or   mu- 


§    G45  THE    ASSESSMENT.  1035 

nicipal  corporations,  or  upon  the  inhabitants  or 
property  thereof,  for  county,  city,  town,  or  other 
municipal  purposes,  but  may,  by  general  laws,  vest 
in  the  corporate  authorities  thereof  the  power  to 
assess   and   collect   taxes  for   such   purposes/' 

This  section  does  not  in  terms  prohibit  the  legis- 
lature from  levying  an  assessment,  but  merely  a  tax. 
But  the  intent  of  the  provision  seems  to  be  to  pro- 
hibit the  legislature  from  levying  any  charge  for 
local  purposes,  and  an  assessment  is  always  levied 
for   a  local  purpose. 

Moreover,  in  article  13  of  the  constitution,  where 
the  power  of  the  legislature  in  respect  to  taxation 
is  defined,  there  is  no  reference  to  assessments  being 
made  by  the  legislature,  but  it  is  declared  in  sec- 
tion 1  thereof  that  '^all  property  in  the  state,  not 
exempt  under  the  laws  of  the  United  States,  shall 
be  taxed  in  proportion  to  its  value,  to  be  ascer- 
tained as  provided  by  law.'' 

Furthermore,  under  the  constitution  of  1849,  it  was 
held  that  the  legislature  has  no  power  to  levy  an 
assessment  for  a  local  public  work  in  an  incorporated 
city,  or  in  a  reclamation  district:  Brady  v.  King,  53 
Cal.  44;  People  v.  Houston,  54  Cal.  536,  539;  Schu- 
macker  v.  Toberman,  56  Cal.  508,  511;  People  v. 
McCune,  57  Cal.  153.  See,  also.  Fanning  v.  Scham- 
mel,  68  Cal.  428,  430,  9  Pac.  427;  Kellv  v.  Luning, 
76  Cal.  309,  18  Pac.   335. 

As  to  Taxation,  it  has  been  held  that  the  legisla- 
ture cannot  levy  a  tax  in  a  high  school  district  for 
the  support  of  the  high  school:  McCabe  v.  Carpen-. 
ter,   102   Cal.   469,  471,   36  Pac.   836. 

Nor  can  the  legislature  levy  such  a  tax  inrlirectly. 
In  McCabe  v.  Carpenter,  102  Cal.  469/471,  36  Pac. 
836,  the  court  says:  '^Whether  a  school  district  is 
itself  a  public  corporation,  or  ....  is  to  be  deeme-l 

a  part  of  the  county  organization,  is  immaterial 

In  either  view  the  constitutional  provision  [Const. 
1879,  art.  11,  see.  12]  limits  the  power  of  the  legis- 
lature in  the  matter  of  imposing  taxes  upon  the  in- 
habitants  or  the   property  within  it.     If   the   legisla- 


IQcQ  ASSESSMENT    LIEXS.  §    645 

inhibition"''  may  authorize  the  legislative  body  of 
any  duly  constituted  public  corporation^  but  no 
other  body  nor  person,^  to  levy  an  assessment^  for 

ture  cannot  impose  a  tax  upon  the  property  or  in- 
habitants of  a  schcol  district,  it  would  seem  to  fol- 
low that  it  cannot  prescribe  a  procedure  through 
which  such  tax  would  inevitably  be  levied  without 
leaving  some  discretion  in  regard  to  it  to  the  local 
authorities.  The  legislature  imposes  the  tax  when 
it  requires  an  officer  to  make  certain  computations, 
the  result  of  which  must  fix  the  amount  to  be  levied. ' ' 
7  Constitutional  Law.— Article  13,  section  1,  of 
the  California  constitution  of  1879.  which  provides 
that  all  taxes  must  be  levied  upon  all  property  both 
movable  and  immovable  according  to  value  does  not 
apply  to  local  assessments,  nor  limit  the  power  of 
the  legislature  to  authorize  their  levy  in  proper 
cases:  Turlock  Irr.  Dist.  v.  Williams,  76  Cal.  360, 
370,  18  Pac.  379;  Citv  of  San  Diego  v.  Linda  Vista 
Irr.  Dist.,  108  Cal.  189,   192-194,  41  Pac.  291. 

Likewise  the  court  previously  held  under  the  con- 
stitution of  1849  that  the  provision  of  article  11, 
section  13,  thereof,  in  regard  to  taxation,  did  not 
^Pply  to  special  assessments,  nor  prohibit  their  levy: 
Burnett  v.  City  of  San  Francisco,  12  Cal.  76,  83,  84, 
73  Am.  Dec.  518;  Emerv  v.  San  Francisco  Gas  Co., 
28  Cal.  345,  356,  372:  Emery  v.  Bradford,  29  Cal. 
75,  82;  Walsh  v.  Mathews,  29  Cal.  123;  Taylor  v. 
Palmer,  31  Cal.  240,  250;  Chambers  v.  Satterlee,  40 
Cal.  497,  514;  Hagar  v.  Board  of  Supervisors,  47  Cal. 
222,   234. 

In  Chadwick.  v.  Kelly,  187  IT.  S.  540,  23  Sup.  Ct. 
175,  177,  the  United  States  supreme  court  quotes  as 
^^  consonant  with  the  great  weight  of  authority,  both 
state  and  federal,^'  the  following  views  enunciated 
in  Kelly  v.  Chadwick,  104  La.  719,  29  So.  295: 

/*It  is  too  late  to  question  the  right  of  the  gen- 
eral assembly  [legislature]  to  establish  particular 
districts    for   the    attainment    of    special   local   public 


§    Gi5  THE    ASSESSMENT.  1037 

good,  through  works  of  a  particular  character,  and 
to  order  itself,  or  authorize  some  political  body  to 
order,  special  assessments  to  be  made,  within  the 
district,  for  the  purpose  of  meeting  the  cost  and  ex- 
pense of  such  works 

^^It  is  true  that  in  some  instances  almost  the  whole 
benefit  accrues  to  a  few,  but  there  can  be  no  uni- 
versal rule  of  justice  upon  which  such  assessments 
can  be  made.  An  apportionment  of  the  cost  that 
would  be  just  in  one  case  would  be  oppressive  in 
another.  For  this  reason  the  power  to  determine 
when  a  special  assessment  shall  be  made,  and  ori 
what  basis  it  shall  be  apportioned,  rests  in  the  legis. 
lature  or  some  other  political  body  to  which  it  has 
delegated   that   authority 

'^It  cannot  be  exacted  for  the  purpose  of  sus- 
taining the  constitutionality  of  a  statute  or  ordi- 
nance authorizing  a  work  of  local  public  improve- 
ment, at  the  cost  of  abutting  owners,  that  it  be 
shown  that  there  is  a  benefit  in  every  possible  re- 
spect to  the  particular  owners,  nor  that  the  benefit 
be   direct  and  immediate 

'^The  general  assembly  has  ....  conferred  upon 
the  common  council  the  right  and  power,  by  a  tw(»- 
thirds  vote,  to  constitute  any  particular  street  which 
it  proposes  to  pave  a  special  taxing  district  for  the 
purpose  of  meeting  the  cost  of  making  such  paving. 
It  has  exercised  this  right  in  the  matter  of  the  pav- 
ing of  Hagar  avenue.  Having  done  so,  the  legis- 
lature has  designated  how,  in  what  proportion,  and 
by  what  standard  this  cost  is  to  be  met.  The  coun- 
cil was  not  at  liberty  to  depart  from  this  appor- 
tionment. The  judiciary  is  not  authorized  to  alter 
it  and  to  substitute  for  a  fixed  legislative  standard 
a  fluctuating  judicial  standard  based  upon  actual 
benefits  received  and  measured  by  values  or  enhanced 
values  to  be   established  by   evidence   and  proof. '^ 

s  Cannot  be  Levied  by  Other  Person  or  Body  Than 
Legislative  Body  or  Public  Corporation. 

^^  Since  the  power  to  levy  a  tax  is  purely  legisla- 
tive, it  would  seem  to  follow  that  the  power  cannot 


1038  ASSESSMENT    LIEN'S.  §    645 

be  vested  in  any  other  autliority  of  the  local  cor- 
poration than  the  body  in  which  is  vested  the  legis- 
lative power  of  such  municipal  corporation'^:  McCafce 
V.   Carpenter,   102   Cal.   469,  472,   36  Pac.   836. 

'^The  legislative  body  must  determine,  not  only 
the  character  and  extent  of  the  improvcm^ent  which 
it  will  authorize,  but  also  the  amount  of  the  burden 
which  is  to  be  imposed  therefor  by  the  assessment 
upon  the  adjacent  property  to  defray  the  expense  of 
the  improvement.  This  power  of  assessment  is  ref- 
erable to  the  power  of  taxation,  and  Is  itself  a  leg- 
islative power  which  must  not  only  find  express  au- 
thority for  its  exercise,  but  which  can  neither  be 
exercised  by  an  executive  officer,  nor  delegated  to 
such  officer  by  the  legislative  body  of  the  munici- 
pality. The  clerical  or  ministerial  act  of  appor- 
tioning the  assessment  upon  the  lands  to  be  charged 
therewith  may  be  performed  by  another  official,  but 
whether  the  assessment  shall  be  imposed  upon  the 
lands,  and  the  amount  of  such  assessment,  must  be 
determined  by  the  legislative  body'':  Bolton  v. 
Gilleran,  105  "Cal.  244,  248,  38  Pac.  881,  45  Am.  St. 
Rep.   83. 

Moreover,  a  valid  assessment  cannot  be  levied  by 
a  de  facto  public  corporation  unless  it  is  a  de  jure 
corporation  also:  Reclamation  Dist.  No.  537  v.  Burger.. 
122  Cal.  442,  444,  55  Pac.  156.  In  Swamp  Land  Dist 
iSTo.  150  V.  Silver,  98  Cal.  51,  53,  32  Pac.  866,  the 
court,  however,  thought  that  the  validity  of  thf 
organization  of  a  district  could  not  be  attacked  iv 
an  action  to  foreclose  an  assessment  lien. 

The  Power  to  juevi/  an  Assessment  cannot  6?  DeJe 
gated  to  Any  Private  Body.  Article  11,  section  13 
of  the  California  constitution  of  1879,  provides; 
*^The  legislature  shall  not  delegate  to  any  special 
commission,  private  corporation,  company,  associa 
tion,  or  individual,  any  power  to  make,  control,  ap 
propriate,  supervise,  or  in  any  way  interfere  with 
any  county,  city,  town,  or  municipal  improvement 
money,  property,  or  effects,  whether  held  in  trust  o 
otherwise,  or  to  levy  taxes  or  assessments,  or  per 
form   any  municipal   functions  whatever." 


§    G45  THE    ASSESSMENT.  1039 

In  Banaz  v.  Smith,  133  Cal.  102,  103,  104,  65  Pao 
309,    where    the    contention   was    made    that    the    pro  . 
vision   of   the   Street   Improvement   Act   of   1885    (thr 
Vrooman    Act)    by    which    the    contractor    for    stree*' 
work  was  made  the  collector  of  the  assessment  levied 
to    defray   the    cost    of    the    work,    violated    this    pro 
vision,  the  court   said:    '^It  is  perfectly  otvious  tha^ 
there  is  here  n^   delegation  of  a  municipal  function 
The  contractor  acts  only  as  the  agent  or  servant  of 
the    city.     He    has    no    discretion,    and    can   create   n«' 
liability,  nor  can  he  impose  any  duty  or  exercise  any 
control    or    authority    over     anyone.     He     makes     i\i^ 
assessment,   levies  no   tax,   or   performs  no   municipal 
function.     The    municipal    officers    who    enforce    thf 
ordinances    of    the    city    do    not    perform    municipal 
functions,  and  in  the  collection  of   the  street  assess 
ment  the  contractor  does  no  more.  ^' 

Of  Corporations  Which  are  Puhlic  and  Thus  Author 
ized    to   Levy   Assessments. 

All  municipal  corporations  are  public  corpora 
tions:  In  re  Werner,  129  Cal.  567,  572,  62  Pac.  97. 

'^An  irrigation  district  organized  under  the  Wright 
Act  becomes  a  public  corporation,  and  its  officers  be- 
come public  officers  of  the  state ^':  Boehmer  v.  Big 
Eock  Irr.  Dist.,  117  Cal.  19,  28,  48  Pac.  908.  See 
In  re  Madera  Irr.  Dist.,  92  Cal.  296,  321,  322,  27  Am. 
St.  Eep.  106,  28  Pac.  272,  675. 

An  irrigation  district  ^^is  a  public  corporation^': 
People  V.  Selma  Irr.  Dist.,  98  Cal.  208,  32  Pac.  1047; 
Perry  v.  Otay  Irr.  Dist.,  127  Cal.  565,  568,  60  Pac. 
40. 

^'The  formation  of  one  of  these  irrigation  districts 
amounts  to  the  creation  of  a  public  corporation,  and 
their  officers  are  public  officers' ':  Fallbrook  Irr. 
Dist.  V.  Bradley,  164  U.  S.  112,  174,  17  Sup.  Ct.  Rep. 
56,  41  Law  ed.  369. 

While  a  reclamation  district  is  not  a  municipal 
corporation  (People  v.  Reclamation  Dist.  No.  551, 
117  Cal.  114,  123-124,  48  Pac.  1016),  nor  is  a  sanitary 
district  a  municipal  corporation  (In  re  Werner,  129 
Cal.   567,   572-573,   62   Pac.   97),  yet  they  seem  to  be 


1040  ASSESSMENT    LIENS.  §    645 

any  public  purpose  of  special  and  peculiar  local 
benefit,^  upon  such  property  within  its  territorial 
limits  as  may  be  properly  charged  with  the  as- 
sessment,^^ and  may  by  general  law,  or  where 
special  legislation  is  permissible  by  special  law/^ 

public  corporations  (People  v.  Levee  Dist.  No.  6, 
131  Cal.  30,  33-34,  63  Pac.  676).  They  do  not  pos- 
sess the  police  powers  usually  belonging  to  cities 
and  municipal  corporations  exercising  local  govern- 
mental functions,  and  the  legislature  cannot  delegate 
to  them  the  power  of  enacting  penal  legislation;  but 
their  powers  are  usually  limited  to  those  required 
for  the  execution  of  some  special  local  improvement 
(In  re  Werner,  129  Cal.  567,  572,  575,  62  Pac,  97). 

9  Assessment  can  Only  be  Levied  for  Public  Pur- 
pose.— ^^The  taxing  power,  whether  it  be  executed 
in  the  form  of  general  taxation  or  of  local  assess- 
ment, cannot  be  upheld,  when  the  purpose  in  view 
can  be  judicially  seen  to  be  other  than  public '':  In 
the  Matter  of  Opening  and  Grading  Market  Street, 
49   Cal.   546,  549. 

10  What  Land  is  Properly  Chargeable  with  an  As- 
sessment.— Property  belonging  to  the  state  or  a  mu- 
nicipal corporation  therein,  as  well  as  .private  prop- 
erty, may  be  subject  to  a  special  assessment;  but  the 
legislature  has  no  such  power  over  United  States  lands: 
City  of  San  Dieffo  v.  Linda  Vista  Irr.  Dist.,  108  Ca). 
189,  194-196,  41  Pac.  291. 

On  the  other  hand,  property  belonging  to  the  state 
or  a  municipal  corporation  therein  may  be  exempted 
from  liabilitv  for  an  assessment:  Dovle  v.  Austin,  47 
Cal.    353,   360-361. 

Under  the  laws,  land  owned  by  a  school  district 
and  used  for  school  purposes  is  not  liable  for  special 
assessment  for  street  work,  and  where  it  is  sought 
to  enforce  an  assessment  lien  against  such  land,  the 
fact  must  be  averred  in  the  complaint  that  the  land 
is  not  used  for  school  purposes:  Witter  v.  Mission 
School  Dist.,  121  Cal.  350,  66  Am.  St.  Eep.  33,  53  Pac. 
905. 


I    645  THE    ASSESSMENT.  1041 

declare  the  rule  by  which  the  district  to  be  bene- 
fited by  a  public  work  is  to  be  ascertained^^  and 
by  which  the  relative  benefit  to  the  property  in 
the  district  to  be  derived  from  the  work  is  to  be 
measured. ^^ 

64:6.  Opportunity  to  be  Heard  must  Usually  be 
Granted  Property  Owner  Before  Assess- 
ment Becomes  Final. 

Whenever  a  local  public  corporation  expresses 
the  intention  to  perform  a  public  work  to  defray 
the  cost  of  which  an  assessment  is  leviable,  and 
the  legislature  has  conferred  upon  the  legislative 

11  A  reclamation  district,  or  a  levee  district,  may 
be  organized  by  special  law:  People  v.  Levee  Dist. 
No.   6,   131   Cal.   30,   33,   34,   63   Pac.   676. 

12  Legislature  may  Determine  District  Benefited.— 
^^The  legislature  has  power  to  fix  such  a  district 
for  itself  without  any  hearing  as  to  benefits,  for 
the  purpose  of  assessing  ui)on  the  lands  within  the 
district  the  cost  of  a  local,  public  improvement.  The 
legislature  when  it  fixes  the  district  itself  is  sup- 
posed to  have  made  proper  inquiry,  and  to  have 
finally  and  conclusively  determined  the  fact  of  bene- 
fits to  land  included  in  the  district,  and  the  citizen 
has  no  right  to  any  other  or  further  hearing  upon  the 
question^':  Fallbrook  Trr.  Dist.  v.  Bradley,  164  U. 
S.  112,  174,  17  Sup.  Ct.  Eep.  56,  41  Law  ed.  369. 

Thus  under  the  Vrooman  Act  the  district  to  be 
benefited  by  a  city  street  improvement  is  declared 
for  most  purposes  to  consist  of  the  lots  fronting 
thereon,  and  on  a  portion  of  the  cross  streets. 

13  Legislature  may  Determine  Method  by  Which 
Relative    Benefit    is    Ascertained.— ^ '  The    legislature 

Liens— 66 


1042  ASSESSMENT    LIENS.  §    646 

body  of  the  corporation  the  discretion  to  deter- 
mine the  district  to  be  benefited  by  the  work^  or 
the  relative  benefit  to  the  property  in  the  district 
to  be  derived  from  the  work/^  any  assessment 
which  may  thereupon  be  levied  by  the  corpora- 
tion to  defray  the  expenses  of  the  work  can  only 
become  a  final  charge  upon  the  property  against 
which  it  is  levied,  and  an  assessment  lien  can 
only  accrue  against  the  property  thereunder, 
after  each  property  owner  has  had  an  opportunity 
to  be  heard/^  respectively,  as  to  whether  his 

may  establish  an  arbitrary  standard  of  estimating 
the  amount  of  benefit  derived  by  each  tract  of  land 
within  an  assessment  district  declared  to  be  benefited 
as  a  whole;  as  by  reference  to  the  number  of  front 
feet  in  the  case  of  street  assessments,  or  to  the  num- 
ber of  acres  in  cases  of  reclamation^':  Eeclamation 
Dist.  No.   108  v.  Evans,  61   Cal.   104,  107. 

14  This  discretion  is  conferred  upon  the  local  cor- 
poration whenever  the  assessment  is  to  be  appor- 
tioned according  to  the  value  of  the  .  land  in  the 
district,  or  according  to  the  benefits  estimated  to  be 
received  by  the  land. 

But  where  the  legislature  directs  the  assessment 
to  be  leviKid  according  to  frontage  or  superficial  area 
or  a  combination  of  the  two,  there  is  no  discretion 
conferred  upon  the  local  corporation,  and  a  hearing 
is   of   no   possible   advantage. 

15  Opportunity  to  "be  Heard  must  "be  Given  Prop- 
erty Owners.— This  opportunity  may  be  granted  be- 
fore a  special  board  or  equalizer  appoinfed  for  that 
purpose  before  the  levy  of  the  assessment,  or  after 
the  levy  of  the  assessment  in  a  special  proceeding 
for  the  confirmation  of  the  assessment  and  the  de- 
termination of  its  validity  (as  to  reclamation  dis- 
tricts,  see  Political   Code,   section   34931/^;   as  to  irri- 


§    046  THE    ASSESSMENT  1043 

gation  districts,  see  Stats.  1897,  p.  254,  c.  189,  sees. 
68-73;  also,  see  Lower  Kings  Eiver  Eeclamation  Dist. 
No.  531  V.  McCullah,  124  Cal.  175,  177,  56  Pac.  887), 
or  in  the  action  for  the  foreclosure  of  the  assess- 
ment lien:  Gwynn  v.  Dierrsen,  101  Cal.  563,  566,  36 
Pac.  103;  Lower  Kings  River  Reclamation  Dist.  No. 
531  V.  Phillips,  i08  Cal.  306,  313-315,  39  Pac.  630, 
41  Pac.  335. 

Thus  where  an  assessment  can  only  he  enforced 
by  legal  proceedings  in  which  the  property  owner  has 
a  right  to  avail  himself  of  all  his  grievances  by  way 
of  defense,  there  is  due  process  of  law:  Hagar  v.  Rec- 
lamation Dist.  No.  108,  111  U.  S.  701,  711,  712,  4  Sup. 
Ct.  Rep.  663,  28  Law  ed.  569. 

Whenever  an  assessment  is  to  be  levied  propor- 
tionate to  the  whole  expense  and  to  the  benefits  to 
be  derived  therefrom,  a  taxpayer  not  given  an  op- 
portunity to  be  heard  before  the  assessment  is  levied 
is  entitled  to  prove  as  a  defense  in  the  action  to 
foreclose  the  assessment  lien  any  material  overrat- 
ing of  benefits  and  consequent  assessment  injurious 
to  himself,  whether  the  overrating  is  the  result  of 
the  fraud,  negligence,  or  incompetence  of  the  asses- 
sors: Lower  Kings  River  Reclamation  Dist.  No.  531  v, 
Phillips,  108  Cal.  306,  324,  39  Pac.  630,  41  Pac.  335. 
People  V.  Hagar,  66  Cal.  59,  4  Pac.  951,  to  the  con^ 
trary    was    overruled. 

*'It  cannot  be  material  ....  that  the  land  owner 
had -no  notice  before  the  proportional  benefit  to  his 
land  [to  be  assessed  against  it]  was  estimated  by 
the  commissioners  [appointed  for  that  purpose],  if 
in  the  subsequent  action  he  has  had  his  day  in  court, 
with  full  opportunity  to  contest  the  charge,  before 
it  was  declared  a  lien  upon  his  land'':  Reclamation 
Dist.  No.  108  V.  Evans,  61  Cal.  104,  107. 

See,  also.  Reclamation  Dist.  No.  3  v.  Goldman,  65 
Cal.  635,  637,  638,  4  Pac.  676;  Lent  v.  Tillson,  72 
Cal.  404,  420,  14  Pac.  71;  Lower  Kings  River  Rec- 
lamation Dist.  No.  531  V.  Phillips,  108  Cal.  306,  311, 
312,  39  Pac.  630,  41  Pac.  335;  Lov/er  Kings  River 
Reclamation  Dist.  No.  531  v.  McCullah,  124  Cal.  175 
177,  36  Pac.  103. 


1044  ASSESSMENT    LIENS.  §    646 

property  should  be  included  within  the  district 
upon  which  the  assessment  is  levied/^  or  as  to 
the  relative  benefit  to  be  derived  from  the  work 
to  his  property.^'' 

But  where  no  hearing  is  granted  "before  the  levy 
of  the  assessment,  and  the  assessment  is  to  be  col- 
lected hj  summary  process  in  which  the  property 
owner  is  not  heard,  the  constitutional  guaranties  are 
infringed  and  the  law  is  invalid:  Hutson  v.  Wood- 
bridge  Protection  Dist.  No.  1,  79  Cal.  90,  95,  16  Pac. 
549,  21  Pac.  435;  Lower  Kings  Eiver  Eeclamation 
Dist.  No.  531  V.  Phillips,  108  Cal.  306,  312,  39  Pac. 
630,    41    Pac.    335. 

In  the  early  case  of  Eeclamation  Dist.  No.  108  v. 
Hagar,  66  Cal.  54,  55,  4  Pac.  945,  the  contrary  was 
held. 

As  the  Irrigation  Act  of  1897  provides  for  notice 
to  the  taxpayer  of  the  meeting  of  the  board  of 
equalization,  the  duration  of  which  is  fixed  by  law, 
and  of  all  the  preliminary  steps  which  h^  can  ex- 
amine and  make  objection  to,  the  act  is  not  invali- 
dated by  not  providing  for  notice  being  given  of  the 
levy  of  the  assessment,  this  act  being  the  final  out- 
come of  the  rest,  in  reference  to  which  he  can  have 
nothing  to  say;  Lahman  v.  Hatch,  124  "Cal.  1,  7,  56 
Pac.    621. 

16  Property  Owner  has  Eight  to  Hearing  as  to 
Boundaries  of  District,  When  Determined  by  Local 
Corporation.— By  Stats.  1867-68,  p.  316,  c.  293,  the 
supervisors  of  Sutter  county  were  commanded  to  es- 
tablish levee  districts  upon  the  request  of  the  prop- 
erty owners  in  the  proposed  district,  no  discretion 
being  lodged  in  the  supervisors.  The  costs  of  the 
public  works  to  be  constructed  by  the  districts  were 
to  be  defrayed  by  a  special  tax  upon  all  the  prop- 
erty in  the  district.  This  act  was  unconstitutional, 
because  it  permitted  a  mere  majority  of  the  property 
owners  to  determine  the  boundaries  of  the  districi. 
and    the    benefits    to   be    derived,    thus    making    them 


§    646  THE    ASSESSMENT.  "      1045 

judges  in  their  own  cases:  Monlton  v.  Parks,  64  Cal. 
166,  183-184,  30  Pac.  613;  Brandenstein  v.  Hoke,  101 
Cal.  131,  133,  134,  35  Pac.  562;  People  v.  Levee  Dist. 
No.   6,   131  Cal.   30,  31,  63  Pac.   676. 

Where  an  assessment  for  street  work  is  to  be  pro- 
portioned according  to  benefits  and  to  the  expense  of 
the  work,  there  is  no  constitutional  objection  to  n 
statute  which  confers  upon  the  superintendent  of 
streets  the  power  to  estimate  the  benefits,  the  prop- 
erty owners  thereafter  having  a  hearing  before  the 
city  council  before  the  levy  of  the  assessment:  Green- 
wood V.  Morrison,  128  Cal.  350,  352,  60  Pac.  971. 

Where  each  parcel  of  land  is  to  be  assessed  ac- 
cording to  benefits  and  the  property  owner  has  a 
hearing  upon  such  question,  it  is  immaterial  whether 
he  has  a  hearing  upon  whether  his  property  should 
be  included  in  the  district  or  not,  because  although 
his  property  is  included  in  the  district  yet  if  the 
benefits  are  nil  there  would  be  no  assessment;  but 
where  the  assessment  is  by  frontage  or  superficial 
area  or  value,  it  is  clear  that  this  inquiry  is  vital. 

17  Property  Owner  has  Right  to  Hearing  as  to 
Relative  Benefit,  When  Determined  by  Local  Cor- 
poration.— Where  the  assessment  is  to  be  levied  upon 
the  basis  of  benefit  received,  to  be  estimated  by  com- 
missioners, the  property  owner  is  entitled  to  a  hear- 
ing before  the  assessment  becomes  a  finally  deter- 
mined lien  against  the  property  affected  thereby, 
for,  as  the  court  pointed  out  in  Lower  Kings  Eiver 
Eeclamation  Dist.  No.  531  v.  Phillips,  108  Cal.  306, 
39  Pac.  630,  41  Pac.  335,  ^'otherwise  it  would  be  a 
proceeding  in  which  one  might  be  deprived  of  his 
property  without  due  process  of  law^^  (p.  313).  '*For 
it  would  be  no  recompense,  and  but  poor  consolation 
to  the  land  owner  who  has  been  overtaxed  without 
a  hearing,  to  assure  him  that  the  unlawful  burden 
put  upon  him  was  the  honest  judgment  of  incompe- 
tent or  negligent  commissioners.  And  the  issue  of 
this  should  be  determined  by  the  tribunal  of  original 
jurisdiction  (whether  a  court  or  a  board  of  super- 
visors) according  to  a  satisfactory  preponderance  of 
evidence,   allowing  just   weight   to   what   may  appear 


1046  ASSESSMENT    LIENS.  §    646 

Whenever  a  local  public  corporation  is  about  to 
be  organized  for  the  purpose  of  performing  a  pub- 
lic work  for  the  cost  of  which  an  assessment  is 
leviable^  and  the  legislature  had  not  determined 
the  territorial  limits  of  the  corporation  but  has 
declared  that  all  the  property  therein  must  be 
assessed^  the  corporation  can  be  incorporated  only 
after  each  property  owner  within  the  limits  of 
the  proposed  corporation  has  had  an  opportunity 
to  be  heard  as  to  whether  his  property  should  be 
included  within  the  jurisdiction  of  the  corpora- 
tion and  the  district  against  which  the  assessment 
is  to  be  levied.^* 

to  have  been  the  honest  judgment  of  the  commis- 
sioners'' (p.  324).  See,  also,  Eeclamation  Dist.  No. 
551  V.  Eunyon,  117  Cal.  164,  49  Pac.  131. 

18  Hearing  Prerequisite  to  Formation  of  Corpora- 
tion in  Which  All  Property  is  to  be  Assessed.— 
^^  There  is  nothing  in  the  essential  nature  of  ....  a 
[public]  corporation,  so  far  as  its  creation  only  is 
<3oncerned,  which  requires  notice  to  OT  hearing  of 
the  parties  included  therein  before  it  can  be  formed. 
It  is  created  for  a  public  purpose,  and  it  rests  in 
the  discretion  of  the  legislature  when  to  create  it 
and    with   what   powers   to    endow   it. 

^^[But  under  the  Wright  Act]  ....  the  estab- 
lishment of  its  boundaries,  and  the  purposes  for 
which  the  district  is  created  if  it  be  finally  organ^ 
ized  by  reason  of  the  approving  vote  of  the  people^ 
will  almost  necessarily  be  followed  by  and  result 
in  an  assessment  upon  all  the  lands  included  within 
the  boundaries  of  the  district.  The  legislature  thu« 
in  substance  provides  for  the  creation  not  alone  of 
a  public  corporation,  but  of  a  taxing  district  whose 
boundaries  are  fixed,  not  by  the  legislature,  but,  after 


§  646  THE  assessmejN^t.  1047 

a  hearing  by  the  board  of  supervisors,  subject  to  the 
final  approval  by  the  people  in  an  election  called 
for  that  purpose. 

'^It  has  been  held  in  this  court  that  the  legisla- 
ture has  power  to  fix  such  a  district  for  itself  with- 
out any  hearing  as  to  benefits,  for  the  purpose  of 
assessing  upon  the  lands  within  the  district  the  cost 
of  a  local,  public  improvement.  The  legislature, 
when  it  fixes  the  district  itself,  is  supposed  to  have 
made  proper  inquiry,  and  to  have  finally  and  con- 
clusively determined  the  fact  of  benefits  to  the 
land  included  in  the  district,  and  the  citizen  has  no 
constitutional  right  to  any  other  or  further  hearing 
upon  the  question.  The  right  which  he  thereafter 
has  is  to  a  hearing  upon  the  question  of  what  is 
termed  the  apportionment  of  the  tax,  i.  e.,  the 
amount  of  the  tax  which  he  is  to  pay.  .... 

^^But  when  as  in  this  case  the  determination  of 
what  lands  shall  be  included  in  the  district  is  only 
to  be  decided  after  a  decision  as  to  what  lands  de- 
scribed in  the  petition  will  be  benefited,  and  the  de- 
cision of  that  question  is  submitted  to  some  tribunal 
(the  board  of  supervisors  in  this  case),  the  parties 
whose  lands  are  thus  included  in  the  petition  are 
entitled  to  a  hearing  upon  the  question  of  benefits, 
and  to  have  them  excluded  if  the  judgment  of  the 
board  be  against  their  being  benefited. 

^  •  Unless  the  legislature  decide  the  question  of 
benefits  itself,  the  land  owner  has  the  right  to  be 
heard  upon  the  question  before  his  property  can  be 
taken^^:  Fallbrook  Irr.  Dist.  v.  Bradley,  164  U.  S. 
112,  174,  175,  17  Sup.  Ct.  Eep.  56,  41  Law  ed.  369. 

But  where,  after  the  hearing  and  decision  by  the 
board  of  supervisors,  the  question  of  the  organization 
of  the  proposed  irrigation  district  is  to  be  submitted 
to  the  electors  for  final  action,  no  notice  nor  hearing 
is  requisite  on  the  question  of  whether  such  ques- 
tion shall  be  so  submitted:  In  re  Madera  Irr.  Dist., 
92  Cal.  296,  323,  27  Am.  St.  Eep.  106,  28  Pac.  272, 
675. 


1048  ASSESSMENT    LIENS.  §    G47 

64:7.     Assessment  must    be    Levied    on    Uniform 
Standard. 

While  the  legislature^  or  any  public  corpora- 
tion upon  which  is  conferred  the  discretion  to 
determine  the  relative  benefit  supposed  to  be  de- 
rived from  a  public  work^  may  levy  the  assess- 
ment according  to  any  standard  or  system  of 
estimating  the  benefits  to  be  derived  therefrom 
which  it  may  deem,  proper^  yet  such  body  cannot 
levy  an  assessment  arbitrarily  without  reference 
to  any  such  standard  or  system;  and  a  purported 
assessment  when  so  arbitrarily  levied  is  void, 
aiid  no  lien  can  accrue  as  security  for  the  pay- 
ment thereof.-*^^ 

(In  McMnien  v.  Anderson,  9o  U.  S.  37,  42,  24  Law 
ed.  335,  where  a  license  tax  levied  upon  business  was 
eittacked  upon  the  ground  that  the  taxpayer  was  not 
granted  a  hearing  before  the  tax  was  collected  by 
summary  process,  the  claim  being  made  that  the  14th 
amendment  of  the  federal  constitution "  v/as  thereby 
violated,  the  court  said:  ^^It  seems  to  be  supposed 
that  it  is  essential  to  the  validity  of  this  tax  that  the 
party  charged  should  have  been  present  in  some  tri- 
bunal when  he  was  assessed.  But  this  is  not,  and 
never  has  been,  considered  necessary  to  the  validity 
of  a  tax/^) 

19  Assessment  Must  be  Levied  on  Uniform  Stand- 
ard.—In  People  V.  Lynch,  51  Cal.  15,  21  Am.  Eep. 
677,  where  the  legislature  sought  to  confirm  an  as- 
sessment which  had  been  levied  by  a  local  legisla- 
tive body,  and  one  parcel  of  property  within  the 
district  determined  to  be  benefited  by  the  public 
work  was  not  assessed  at  all,  the  court  (pp.  22  and 
23)  said:  ^^The  act  ....  must  be  the  same  as  if  it 
had   declared     certain   tracts    of  land   to    have   been 


§    647  THE    ASSESSMENT.  1041> 

benefited  by  the  local  improvement,  and  had  further 
enacted  that  parts  of  the  tract  should  pay  the  whole 
cost.  It  has  been  repeatedly  held  that  an  attempt 
by  the  legislature  to  compel  each  lot  upon  a  street 
to  pay  the  whole  expense  of  grading  and  paving 
along  its  front  cannot  be  maintained,  because,  while 
there  is  an  apparent  uniformity,  the  measure  of 
equality  required  by  the  constitution  is  entirely 
wanting.  It  is  far  more  clearly  a  violation 
of  the  constitutional  principle  of  equality  and 
uniformity  to  require  of  one  lot,  or  any  number  less 
than  all,  to  pay  for  all  within  a  given  assessment 
district.  ....  This  act,  at  best,  is  an  attempt 
directly  to  levy  a  contribution  within  a  certain  dis- 
trict; to  declare  that,  each  lot  shall  pay  a  sum,  arbi- 
trarily fixed,  as  its  proportion  thereof,  and  that 
particular  lots  shall  pay  nothing.  Such  a  statute 
....  [is]  undoubtedly  ....  invalid,  as  clearly  a 
violation  of  principles  recognized  and  established  by 
the   constitution   of   the   state.  ^' 

Where  the  legislature  by  general  act  declared  me 
district  to  be  benefited,  but  erroneously  levied  the 
assessment  so  that  it  covered  certain  land  outside 
the  district  declared  to  be  benefited,  the  assessment 
is   void:   Schumacker   v.    Toberman,   56   Cal.    508,   510. 

Where  the  commissioners  appointed  to  determine 
the  relative  benefit  to  be  derived  to  each  parcel  of 
land  in  a  reclamation  district  from  the  reclamation 
works  apportioned  an  equal  amount  to  each  acre  in 
the  district,  although,  parts  of  it  were  lower  and  more 
subject  to  overflow  than  others,  and  allowed  certain 
credits  to  certain  lands  for  portions  of  old  levees 
upon  them,  the  assessment  is  not  according,  to  benefits 
and  cannot  be  sustained:  Eeclamation  Dist.  No.  537 
V.  Burger,  122  Cal.  442,  55  Pac.  156. 

But  where  an  assessment  is  levied  upon  the  basis 
of  benefit  actually  received,  and  it  is  duly  determined 
that  certain  lands  within  the  district  will  not  be  bene- 
fited by  the  work  to  be  done,  although  such  land  ia 
within  the  assessment  district,  no  assessment  need  be 
levied  against  it,  and  the  assessment  against  the  re- 
mainder is  not  invalidated  thereby:  Eeclam.ation  Dist.. 
No.  3  V.  Goldman,  65  Cal.  635,  641,  4  Pac.  676. 


1050  ASSESSMENT    LIENS.  §    648 

648.  Assessment  When  Properly  Apportioned 
Not  Invalidated  by  Erroneous  Distribu- 
tion  Thereof. 

Whenever  the  officer  to  whom  is  intrusted  the 
ministerial  act  of  apportioning  an  assessment  ac- 
cording to  a  standard  or  system  of  apportionment 
determined  by  the  proper  legislative  body  er- 
roneously apportions  the  same,  the  assessment, 
although  subject  to  correction,  is  not  invalidated 
by  the  error,  and  unless  the  assessment  is  cor- 
rected at  the  instance  of  an  aggrieved  property 
owner  by  appeal  to  the  tribunal  provided  by  law, 
a  lien  accrues  against  the  assessed  property  as 
security   for   the   payment   thereof.^^     But   the 

20  Assessment,  When  Properly  Apportioned  by 
Legislative  Body,  not  Invalidated  by  Erroneous  Dis- 
tribution Thereof.— Where  the  superintendent  of 
streets  erroneously  apportions  against  certain  lots  a 
larger  amount  than  was  properly  chargeable  against 
them  (other  lots  being  entirely  omitted  .from  the  as- 
sessment properly  chargeable  against  them),  although 
the  objection  appears  upon  the  face  of  the  assessment, 
as  to  the  lots  against  which  an  excessive  sum  is 
charged,  no  appeal  having  been  taken  to  the/  body 
.  provided  by  law  for  the  correction  of  such  errors  in 
the  levy,  the  assessment  is  valid,  and  the  lien  ac- 
cruing thereunder  foreclosable.  For,  the  lot  '^was 
lawfully  assessable  for  the  work  on  that  crossing; 
and,  inasmuch  as  an  assessment  of  it  for  such  work 
was  fully  authorized,  the  mistake  of  the  superin- 
tendent of  streets  in  assessing  it  for  a  sum  exceeding 
its  proper  proportion  was  merely  an  error  in  the  ex- 
ercise of  an  unquestionable  power,  which  error  m.ight 
have   teen    corrected   by   an   appeal   to   the   board   of 


§    648  THE    ASSESSMENT.  1051 

supervisors;  and  the  failure  to  take  such  appeal 
operated  as  a  waiver  of  the  error ^^:  Dowling  v.  Coniff, 
103  Cal.  75,  77,  78,  36  Pac.  1034. 

In  four  other  cases  it  is  necessarily  implied  that 
the  assessment  is  not  invalidated  by  the  erroneous 
distribution  of  the  assessment.  For  while  in  these 
cases  the  error  did  not  appear  on  the  face  of  the  as- 
sessments, yet  that  which  is  void  may  always  be 
shown  to  be  so,  whether  the  invalidity  appears  upon 
the  face  of  the  papers  or  not;  and  a  fact  which,  when 
not  apparent,  does  not  render  a  proceeding  void,  can- 
not reasonably  be  said  to  render  it  void  merely  be- 
cause it  is  apparent. 

Where  a  valid  contract  was  made  for  grading  a 
street,  the  ministerial  act  of  apportioning  the  expense 
of  the  work  being  given  by  law  to  the  superintendent 
of  streets,  the  property  owner,  if  dissatisfied  with  his 
apportionment,  should  appeal  to  the  board  of  super- 
visors upon  whom  was  conferred  the  power  of  rectify- 
ing the  levy,  and  having  failed  to  do  so,  cannot  com- 
plain in  an  action  for  the  foreclosure  of  the  accruing 
assessment  lien  of  any  matters  from  which  he  could 
have  obtained  relief  by  applying  at  the  proper  time 
to  the  proper  authorities:  McVerry  v.  Boyd,  89  Cal. 
304,  310,  26  Pac.  885. 

In  McDonald  v.  Coniff,  99  Cal.  386,  389,  34  Pac.  71, 
the  court  held  that  the  question  whether  the  superin- 
tendent of  streets  in  levying  a  street  assessment  ha-l 
erroneously  included  lots  which  ought  not  to  be  as- 
sessed, or  has  failed  to  include  all  those  which  should 
have  been  assessed,  must,  when  it  does  not  appear 
upon  the  face  of  the  assignment,  be  raised  by  ap- 
peal to  the  board  of  supervisors,  and  cannot  be  raised 
in  the  foreclosure  action. 

In  Buckman  v.  Landers,  111  Cal.  347,  350,  43  Pac. 
1125,  a  foreclosure  action,  it  was  contended  by  the 
property  owners  that  the  assessment  was  invalid  for 
the  reason  that  certain  lots  which  should  have  borne 
a  portion  of  the  expense  of  the  work  "were  not  in  fact 
assessed;  but  the  court  held  that  this  error  could  not 
be  assigned  in  the  foreclosure  action,  but  should  have- 


1052  ASSESSMENT    LIENS.  §    648 

been  corrected  upon  appeal  to  the  board  of  super- 
visors. 

Where  a  whole  street  assessment  is  not  equally  dis- 
tributed according  to  frontage,  and  one  lot  was  as- 
sessed for  more  than  its  proper  proportion  of  the  ex- 
pense, the  error  is  waived  by  the  failure  of  the  owner 
to  appeal  to  the  board  of  supervisors:  Wells  v.  Wood, 
114  Cal.  255,  257,  46  Pac.  96.  (In  this  case  it  does 
not  appear  whether  or  not  the  objection  appeared 
upon  the  face  of  the  assessment.) 

Moreover,  in  People  v.  Lynch,  51  Cal.  15,  23,  21  Am. 
Rep.  677,  where  an  assessment  was  declared  void  be- 
cause levied  under  an  unconstitutional  law,  the  court 
added:  ^^This  cannot  be  fairly  treated  as  a  law  pro- 
viding for  the  levy  of  an  assessment  within  a  certain 
district,  and  appointing  officers  to  make  it,  whose  er- 
rors, perhaps,  might  not  vitiate  the  entire  levy. '^ 

ConfiictuKj  Cases.— There  is  a  sharp  conflict  on  this 
point,  and  in  the  following  instances  it  was  held 
that  where  the  assessment  was  erroneously  appor- 
tioned by  the  ministerial  officer  the  assessment  was 
rendered  void. 

Thus,  where  the  superintendent  of  streets  errone- 
ously apportioned  the  assessment  for  street  work, 
omitting  three  lots  therefrom,  the  assessment  was  void 
•'because  certain  lots  in  the  assessment  district  for 
sidewalks  were  omitted''  from  assessment:  Dyer  v. 
Harrison,  63  Cal.  447,  448;  Diggins  v.  Brown,  76  Cal. 
318,  322,  18  Pac.  373. 

Where  *'the  property  in  the  assessment  district  was 
not  all  assessed,''  the  assessment  was  void:  Davies 
V.  City  of  Los  Angeles,  86  Cal.  37,  49,  50,  24  Pac.  771. 

Where  the  superintendent  of  streets  erroneously 
apportioned  to  certain  lots  twice  the  amount  properly 
chargeable  against  them,  the  assessment  is  void: 
Kenny  v.  Kelly,  113  Cal.  364,  45  Pac.  699. 

Where  the  superintendent  of  streets  erroneously  ap- 
portioned to  certain  lots  twice  the  amount  properly 
chargeable  against  them,  and  failed  to  apportion  to 
others  the  sums  chargeable  against  them,  the  assess- 


§    G48  THE    ASSESSMENT.  1053 

assessment,  so  far  as  apportioned  upon  property 
outside  the  assessment  district,  is  void.-^ 

649.     Assessment     Grossly    Disproportionate    to 
Benefits  Invalid. 

Where  an  assessment  -is  apportioned  against 
the  property  in  an  assessment  district  according 
to  a  system  or  standard  which  renders  the  rela- 
tive amounts  assessed  against  the  various  parcels 
of  land  therein  grossly  disproportionate  to  the 
benefit  actually  derived  from  the  public  work,  the 
assessment  is  invalid.^^ 

ment  is  void:  Ryan  v.  Altschul,  103  Cal.  174,  178,  37 
Pac.  339;  San  Diego  Investment  Co.  v.  Shaw,  129  Cal. 
273,  61  Pac.  1082. 

In  City  Street  Imp.  Co.  v.  Taylor,  138  Cal.  364,  71 
Pac.  446,  where  a  resolution  of  intention  provided  for 
paving  a  street  and  laying  granite  curbs  where  not 
already  laid,  and  the  superintendent  of  streets 
charged  against  a  certain  lot  in  front  of  which  gran- 
ite curbs  were  already  laid,  a  gross  sum  which  in- 
cluded its  pro  rata  of  the  cost  of  laying  granite  curbs 
along  the  street,  although  no  such  sum  was  properly 
chargeable,  and  no  appeal  was  taken  to  the  super- 
visors, in  an  action  to  foreclose  the  assessment  lien 
accruing  under  such  assessment,  the  court  reduced  the 
assessment  by  the  pro  rata  of  the  cost  of  the  curbing. 
The  court  cited  De  Haven  v.  Berendes,  135  Cal.  179, 
67  Pac.  786,  as  authoritative^  but  clearly  it  was  not, 
for  in  the  Berendes  case  the  resolution  of  intention 
and  contract  were  in  excess  of  the  jurisdiction  of  the 
local  legislative  body,  while  in  this  case  they  were 
not. 

21  Ryan  v.  Altschul,  103  Cal.  174,  177,  37  Pac.  339. 

23  Assessment  Grossly  Disproportionate  to  Benefits 
Invalid. — '^Before  the  judiciary  would  be  justified  in 


1054  ASSESSMENT    LIENS.  §    649 

holding  an  assessment  to  be  invalid,  it  should  be  made 
to  appear  that  it  is,  as  was  said  in  Norwood  v.  Baker, 
172  U.  S.  269  [19  Sup.  Ct.  Eep.  187,  43  Law  ed.  443], 
^in  substantial  excess  of  benefits,'  or,  as  was  said  in 
Cleveland  v.  Tripp,  13  E.  I.  50,  that  it  ^  palpably  trans- 
gresses' the  principle  upon  which  it  is  authorized.  In 
Fallbrook  Irr.  Dist.  v.  Bradley,  164  U.  S.  [112]  176  [17 
Sup.  Ct.  Eep.  56,  41  Law  ed.  369],  the  court  said:  'The 
way  of  arriving  at  the  amount  may  be,  in  some  in- 
stances, inequitable  and  unequal,  but  that  is  far  from 
arising  to  the  level  of  a  constitutional  problem,  and 
far  from  the  case  of  taking  property  without  due 
process  of  law.'  In  Lent  v.  Tillson,  72  Cal.  428  [14 
Pac.  71],  the  court  said:  'The  benefits  need  not  be 
immediate.  I  see  no  just  limitation  in  this  respect, 
except  that  a  tax  will  not  be  upheld  when  the  courts 
can  plainly  see  that  the  legislature  has  not  really  ex- 
ercised its  judgment  at  all,  or  that  manifestly  and 
certainly  no  such  benefit  can  or  could  reasonably  have 
been  expected  to  result'  ":  Hadley  v.  Dague,  130  Cal. 
207,  221,  222,  62  Pac.  500. 

The  legislative  determination  that  an  assessment 
be  apportioned  between  several  lots  according  to  their 
frontage  'Ms  a  declaration  by  the  legislature  that,  in 
the  judgment  of  that  body,  the  property  within  the 
district  will  receive  a  benefit  from  the  improvement  in 
proportion  to  its  frontage  upon  the  work.  Unless, 
therefore,  it  is  made  to  appear  upon  the  face  of  the 
proceedings,  or  by  some  competent  showing,  that  there 
is  a  gross  or  substantial  variation  from  this  principle 
[of  benefits  (?)],  it  is  the  duty  of  the  courts  .... 
to  uphold  the  assessment":  Hadley  v.  Dague,  above, 
p.  221. 

Illustrations.— Where  the  standard  of  assessment 
in  a  reclamation  district  was  that  the  assessment 
should  be  proportionate  to  the  whole  expense  and  to 
the  benefit  to  result  from  the  work,  and  the  assess- 
ment was  levied  at  the  same  rate  per  acre  upon  land 
actually  benefited,  and  that  prospectively  to  be  bene- 
fited at  some  future  time  after  other  work  was  done, 
the  assessment  on  the  latter  land  was  disproportionate 


§    650  THE    ASSESSMENT.  1055 

650.     Description  must  be  Sufficient  for  Identi- 
fication. 

The  description  in  the  instruments  upon  which 
an  assessment  is  founded  of  the  property  sought 
to  be  charged  with  the  assessment  must  be  suf- 
ficient to  enable  the  property  owner  to  identify 
the  property  assessed  without  reference  to  ex- 
trinsic evidence.^^ 

and  invalid:  Eeclamation  Dist.  No.  108  v.  West,  129 
Cal.  622,  62  Pac.  272. 

A  statute  assessing  the  whole  cost  of  opening  a  new 
street  upon  the  property  fronting  upon  such  newly 
opened  street  according  to  frontage  is  unconstitutional 
because,  in  the  guise  of  determining  a  standard  oc 
measuring  the  benefit,  it  in  effect  provides  that  pri- 
vate property  shall  be  taken  for  public  use  without 
compensation.  (This  result  at  any  rate  follows  when 
the  same  person  owns  the  property  taken  for  the  new 
street,  and  that  fronting  thereon  also.)  Norwood  v. 
Baker,  172  IT.  S.  269,  19  Sup.  Ct.  Eep.  ]87,  43  Law  ed. 
443.  See  the  discussion  of  this  case  in  Hadley  v. 
Dague,  130  Cal.  207,  217-222,  62  Pac.  500. 

23  Description  Must  be  Sufficient  Without  Ex- 
trinsic Evidence.— ^  ^  The  description  must  be  suffi- 
cient to  enable  the  owner  to  determine  from  an  inspec- 
tion of  it  whether  his  land  is  sought  to  be  subjected 
to  the  lien. '^  ^^The  rule,  'id  certum  est,  quod  certum 
reddi  potest,^  has  no  application  to  descriptions  under 
proceedings  in  invitum^^  Labs  v.  Cooper,  307  Cal. 
656,  657,  40  Pac.   1042. 

Thus,  in  case  of  a  street  assessment,  the  description 
of  the  assessed  land  must  be  sufficient  to  identify  the 
land  assessed,  and  to  show  the  relative  location  of 
each  lot  to  the  work  done:  Blanchard  v.  Ladd,  135 
Cal.  214,  217,  67  Pac.  131. 

Descriptions  in  street  assessments  were  held  suffi- 
cient in   Whiting  v.   Quackenbush,   54   Cal.   306,   310; 


1056  ASSESSMENT    LIENS.  §    651 

SuMivisiGn  2,     The  Lien. 

651.     Assessment    When    Duly    Levied    Consti- 
tutes Specific  Lien. 

Whenever  an  assessment  duly  levied  upon  any 
propert}'  has  become  final  and  payment  has  be- 
come due^  the  assessment  upon  each  known  lot 
or  parcel  of  land  becomes  a  specific  lien  against 
the  whole  of  such  lot  or  parcel.^"*     But  an  assess- 

Gillis  V.  Cleveland,  87  Cal.  214,  219,  220,  25  Pac.  351; 
Blanchard  v.  Ladd,  135  Cal.  214,  67  Pac.  131. 

Insufficient  in  Himmelman  v.  Danos,  35  Cal.  441^ 
449,  450;  Himmelman  v.  Bateman,  50  Cal.  11;  Norton 
V.  Courtney,  53  Cal.  691;  People  of  the  City  and 
County  of  San  Francisco  v.  Quackenbush,  53  Cal.  52. 

24  Assessment  Constitutes  Specific  Lien. 

Where  a  parcel  of  land  wa-s  assessed  to  unknown 
owners,  and  the  lien  for  the  amount  of  the  assess- 
ment attached  to  the  whole  of  the  property,  and  the 
owner  of  one-half  of  the  parcel  came  forward  and 
paid  his  proportion  of  the  assessment,  the  lien  never- 
theless continued  to  attach  to  the  entire  parcel  for 
the  remainder  due  upon  the  assessment.  ^^The  pay- 
ment of  a  portion  of  the  assessment  did  not  release 
any  portion  of  the  lot  assessed  from  the  lien  for  the 
amount  remaining  unpaid.  The  lien  was  against  the 
lot  as  an  entirety  for  the  whole  and  every  part  of 
the  amount  of  the  assessment.  The  assessment  was 
to  'unknown'  owners,  and  the  payment  by  one  of  sev- 
eral co-owners  of  his  proportion  of  the  assessment 
had  no  more  eifect  to  release  any  portion  of  the  lot 
from  the  lien  than  would  the  payment  of  such  portion 
had  he  been  the  sole  owner  of  the  lof :  Williams  v. 
Bergin,  127  Cal.  578,  580,  581,  60  Pac.  164. 

''Where  two  or  more  lots  are  assessed  for  the  ex- 
penses of  the  work  on  a  street,  each  lot  is  chargeable 
only  with   the  amount  assessed  upon  it,  and  not  for 


§    651  ASSESSMENT    LIENS.  1057 

ment  levied  upon  a  whole  parcel  of  property,  but 
properly  chargeable  only  upon  a  part  thereof, 
does  not  constitute  a  lieri.^^ 

652.     Lien    cannot    Accrue    When    Contract  to 
Pay  Which  Assessment  was  Levied  Void. 

Where  an  assessment  is  levied  to  pay  the  con- 
tract price  of  a  contract  for  a  public  work,  but 
the  contract  is  or  becomes  void,  no  assessment 
lien  can  accrue^^  upon  such  void  contract  as  se- 

the  amount  assessed  upon  another  lot,  and  in  enforc- 
ing the  lien  of  the  assessment  the  judgment  should 
state  the  amount  for  which  each  lot  is  liable,  and 
should  order  a  sale  of  each  lot,  or  so  much  thereof  as 
may  be  necessary  to  satisfy  such  amount  and  costs^'; 
Brady  v.  Kelly,  52  Cal.  371;  Gillis  v.  Cleveland,  87 
Cal.  214,  218,  25  Pac.  351. 

In  case  of  street  work  under  the  Vrooman  Act, 
where  the  certificate  of  the  engineer  provided  for  in 
section  34  of  the  act  has  not  been  duly  recorded  as  re- 
quired by  section  9,  assuming  that  the  assessment 
is  not  thereby  vitiated,  yet  no  assessment  lien  can 
accrue  until  the  due  recordation  thereof,  and  no  cause 
of  action  for  the  foreclosure  thereof  can  arise:  Eauer 
V.  Lowe,  107  Cal.  229,  231-233,  40  Pac.  337;  Frenna 
V.  Sunnyside  Land  Co.,  124  Cal.  437,  57  Pac.  302. 

S5  Parker  v.  Keay,  76  Cal.  103,  105,  18  Pac.  124. 

26  When  Contract  Void,  Lien  cannot  Accrue. 

Burke  v.  Turney,  54  Cal.  486,  487;  Manning  v.  Den, 
90  Cal.  610,  614,  27  Pac.  435;  Perine  v.  Forbush,  97 
Cal.  303,  310,  32  Pac.  226;  Capron  v.  Hitchcock,  98 
Cal.  427,  430,  33  Pac.  431;  Schiesau  v.  Mahon,  110  Cal. 
543,  42  Pac.  1065;  California  etc.  Co.  v.  Quinchard, 
•119  Cal.  87,  51  Pac,  24;  Chase  v.  Scheerer,  136  Cal. 
248,  251j  68  Pac.  768. 

^'A  contract  authorized  and  executed  in  the  mode 
Liens— 67 


1058  ASSESSMENT    HENS.  §    652 

curity  for  the  payment  of  the  whole  or  any  part 
of  the  contract  price  thereof.^" 

653.     Maximum    Amount     of    Assessment     the 
Value  of  the  Property  Assessed. 

An  assessment  being  levied  upon  the  assump- 
tion that  the  assessed  property  has  been  benefited 
to  the  amount  of  the  assessment^  the  assessment 
constitutes  a  lien  merely  against  the  property  up- 
on which  the  assessment  was  levied,  and  cannot 
be  extended  to  cover  other  property ,^^  nor  can 
any  person  be  held  personally  liable  for  the  satis- 
faction of  the  secured  demand.^^ 

prescribed  by  the  act  is^  indispensable  to  the  validity 
of  the  assessment'^:  Dougherty  v.  Hitchcock,  35  Cal. 
512,  524. 

^^The  contract  for  the  construction  of  the  sewer 
was  void,  and  the  work  done  thereunder,  and  the  sub- 
sequent assessment  and  proceedings  created  no  lien 
upon  the  propertv  of  defendants'':  McBean  v.  Kedick, 
96  Cal.  191,  192,  81  Pac.  7. 

37  Cannot  Accrue  for  Payment  of  Any  Part  of  Con- 
tract Price.— Under  the  Street  Improvement  Act  of 
188d,  as  amended  b}^  Stats.  1889,  p.  169,  c.  151,  sec.  9, 
by  the  addition  of  section  12i/^,  a  proportional  assess- 
ment may,  when  the  work  is  of  a  certain  magnitude,  be 
levied  for  its  part  payment.  But  where  a  contract 
has  not  been  completed  within  the  prescribed  time 
or  a  valid  extension  thereof,  the  contract  is  rendered 
void,  and  no  valid  assessment  lien  can  be  created  for 
the  payment  of  any  part  of  the  contract  price:  Kelso 
V.  Cole,  121  Cal.  121,  53  Pac.  353;  John  Kelso  Co.  v. 
Gillette,  1B6  Cal.  603,  69  Pac.  296. 

28  Constitutes  Lien  Merely  Against  Assessed  Prop- 
erty.— '^Property   not    benefited   by   the   improvement 


§    654  ASSESSMENT    LIENS.  1059 

654.     Expiration  of  Lien. 

The  various  assessment  liens  expire  by  lapse  of 
time  in  the  manner  prescribed  in  each  case  by 
law. 

cannot  be  subjected  to  the  burden  imposed  for  that 
purpose.  To  say  that  the  owner  of  land  bordering 
upon  an  improved  street  can  be  made  personally  liable 
for  the  payment  of  the  improvement  is  equivalent  to 
saying  that  his  entire-  estate,  real,  personal,  and 
mixed,  whether  bordering  upon  the  street  or  remoto 
from  it,  whether  within  the  corporate  limits  or  with- 
out, whether  benefited  or  not,  shall  be  held  responsi- 
ble for  the  tax,  which,  in  turn,  is  equivalent  to  say- 
ing that  his  entire  estate  may  te  taxed  for  the  im- 
provement in  direct  contradiction  to  the  very  ternijf 
of  the  power  ^^  Taylor  v.  Palmer,  31  Cal.  240,  254, 
255,  per  Sanderson,  J.,  Currey,  C.  J.,  and  Ehodes,  J.;, 
Sawyer  (see  31  Cal.  666)^  and  Shafter,  XJ.,  dissenting. 
In  Williams  v.  Corcoran,  46  Cal.  553,  556,  the  court 
says  that  the  principal  proposition  in  the  above  case 
is  that  an  assessment  is  a  charge  upon  the  immovable 
property  within  the  given  district  only,  and  for  that 
reason  it  was  held  that  a  personal  judgment  could  not 
be  rendered  for  the  amount  of  the  assessment  against 
the  person  owning  the  immovable  property  chargecl 
with  the  assessment. 

29  Personal  Liability  cannot  be  Constitutionally 
Imposed:  Taylor  v.  Palmer,  note  28,  above;  Beaudry 
V.  Valdez,  32  Cal.  269,  279;  Guerin  v.  Keese,  33  CaL 
292,  29'6;  GalPney  v.  Donolioe,  36  Cal.  104,  105;  Coniff 
V.  Hastings,  36  Cal.  292,  per  Sprague,  Crockett, 
Ehodes,  and  Sanderson,  JJ,;  Sawyer,  C.  J.,  dissenting; 
.  Gillis  V.  Cleveland,  87  Cal.  214,  217,  25  Pac.  351; 
Manning  v.  Den,  90  Cal.  610,  617,  27  Pac.  435;  Santa 
Cruz  etc.  Co.  v.  Bowie,  104  Cal.  286,  288,  37  Pac.  934. 


1060  ASSESSMENT    LIENS.  §    055 

655.     Demand   Prerequisite   to    Maintenance    of 
Foreclosure  Action. 

When  payment  of  an  assessment  is  due,  a  sep- 
arate and  distinct  demand  must,  as  a  prerequisite 
to  the  maintenance  of  an  action  for  the  fore- 
closure of  the  assessment  lien,  be  made  againsl: 
each  known  lot  or  parcel  of  land,  or  the  owner 
thereof,  for  the  amount  of  the  assessment  due 
thereon.^^ 

30  Demand  Must  be  Made  for  Exact  Amount  of 
Assessment. — Where  work  was  performed  under  a 
street  improvement  contract,  which  was  not  author- 
ized by  the  resolution  of  intention,'  and  the  cost 
thereof  was  included  in  the  assessment,  and  a  demand 
was  made  upon  the  property  owner  for  an  aggregate 
amount  including  the  cost  of  the  unauthorized  work, 
the  demand  is  ineffectual:  Dyer  v.  Chase,  52  Cal.  440; 
Donnelly  v.  Howard,  60  Cal.  291;  Partridge  v.  Lucas, 
99  Cal.  519,  522,  523,  33  Pac.  1082.  Compare  Himmel- 
mann  v.  Satterlee,  50  Cal.  68,  wherein  it  was  intimated 
that  if  the  void  items  could  be  segregated  the  lien 
could  be  sustained. 

Must  he  Made  Against  Each  Known  Parcel  for  Itself. 
AVhere  two  or  more  lots  are  assessed  for  the  expense?? 
of  street  work,  a  demand  for  the  amount  due  on  each 
lot  must  be  made  separately,  and  an  aggregate  de^ 
mand  for  the  amount  due  on  two  or  more  lots,  al- 
though owned  bv  the  same  person,  is  insufficient. 
Schirmer  v.  Hovt";  54  Cal.  280;  Gillis  v.  Clevelanri,  87 
Cal.  214,  217,  218,  25  Pac.  351. 

Under  the  Vrooman  Act  it  is  also  necessary  for  the 
superintendent  of  streets  to  sign  the  record  of  the 
return  showing  the  demand  before  the  lien  becomes 
enforceable:  Witter  v.  Bachman,  117  Cal.  318,  322, 
323,  49  Pacr.  202. 

Parcels  Unkmnrn,—The  reputed  owner  of  certain 
land  who   caused   it   to   be   rssessed  for   a   street   im^ 


§    656  ASSESSMENT    LIENS.  1061 

656.     Joinder  of  Causes  of  Action. 

Assessment  liens 
(1)   accruing  under  the  same  assessment  against 
different  parcels  of  land  belonging  to  the  same 
person,^^  or 

I)rovemeTit  as  a  single  lot  owned  by  unknown  owners, 
cannot  attack  the  assessment  lien  on  the  ground  that 
the  two  lots  were  assessed  together  as  one  parcel: 
McSherry  v.  Wood,  102  Cal.  647,  650,  36  Pac.  1010. 

Where  a  street  assessment  was  levied  by  the  front 
foot  method,  and  a  parcel  of  land  assessed  to  unknown 
owners  was  afterward  shown  to  belong  to  two  per- 
sons each  owning  a  given  number  of  front  feet  in 
severalty,  the  assessment  might  be  segregated  with- 
out injustice  to  either  and  enforced:  McSherrv  v. 
Wood,  'l02  Cal.  647,  650,  651,  36  Pac.  1010. 

Pleading. — In  an  action  to  foreclose  a  street  assess- 
ment lien  against  property  assessed  to  ^^unknow/i 
owners,'^  a  complaint  which  does  not  show  any  do- 
mand  on  the  premises  for  the  amount  of  the  assess- 
ment does  not  state  a  cause  of  action:  Engelbert  v. 
McElwee,  122  Cal.  284,  54  Pac.  900. 

In  case  of  street  assessments,  where  an  appeal  is 
taken  from  a  street  assessment  to  the  tribunal  pro- 
vided by  law  for  the  correction  of  errors,  until  the 
final  determination  of  the  appeal  and  the  ^confirmation 
of  the  assessment  or  the  making  of  a  new  assessment, 
no  action  to  foreclose  the  lien  accruing  thereunder  can 
be  maintained:  People  v.  O^Neil,  51  Cal.  91;  Mahoney 
V.  Braverman,  54  Cal.  565,  569;  Williams  v.  Bergin, 
108  Cal.  166,  172,  173,  41  Pac.  287;  Girvin  v.  Simon^ 
127  Cal.  491,  494,  495,  59  Pac.  945. 

ai  Liens  Under  Same  Assessment  Against  Different 
Parcels  Belonging  to  Same  Person  may  be  Joined.— 
Thus  several  such  assessment  liens  accruing  to  a 
swamp  land  district  under  Stats.  1867-68,  p.  507,  c. 
415,  sec.  35,  may  be  foreclosed  in  one  action. 
^'Though  several  tracts  of  the  same  owner  were  sep- 
arately assessed,   there   was  but   one   assessment,    an,1 


1062  ASSESSMENT    LIENS.  §    656 

(2)   accruing  under  different  assessments  made 
at  different  times  against  the  parcel  of  land  in 
the  course  of  the  same  public  work.^^ 
ma}^  be  foreclosed  in  the  same  action. 

But  in  the  absence  of  statutory  permission  sev- 
eral  distinct  assessment  liens  accruing  under  as- 
sessments made  at  different  times  against  several 
parcels  of  land  for  distinct  public  works  cannot 
be  foreclosed  in  one  action.^^ 

657.     Certain    Documents    may    be    Constituted 
Prima  Facie  Evidence  of  Lien. 

The  legislature  may  ordain  that  certain  docu- 
ments shall/in  an  action  to  foreclose  an  assess- 

the  cause  of  action  is  the  failure  to  p>ay  it.  The 
assessment  is  a  unit,  constituting  but  one  transaction, 
and  is  strictly  analogous  to  the  levy  of  state  and 
county  taxes  upon  different  parcels  of  land  of  the 
same  owner;  and  it  has  never  been  doubted,  so  far 
as  we  are  aware,  that  under  our  revenue  system  a  tax 
assessed  at  the  same  time  upon  several  parcels  of  land 
of  the  same  owner  may  be  enforced  in  the  same  ac- 
tion. This  has  been  the  uniform  practice,  and  it 
would  lead  to  great  and  useless  multiplicity  of  actions 
if  it  were  otherwise.  The  same  rule  is  applicable  to 
assessments  of  this  character'^:  People  v.  Hagar,  5'1 
Cal.   171,  181,   182. 

»2  Liens  IJKder  Different  Assessments  Against  the 
Same  Parcel  in  Course  of  Same  Work  may  be  Joined.— 
Thus  two  causes  of  action  upon  two  reclamation  dis- 
trict assessment  liens  accruing  under  two  assessments 
made  upon  the  same  land  at  different  times  in  the 
course  of  carrying  out  the  same  work  may  be  united 
in  one  action,  and  should  be  so  united  in  order  to 
avoid  a  multiplicitv  of  action:  Swamp  etc.  Dist.  No. 
110  V.  Feck,  60  Cal.  403,  405. 


§    657  ASSESSMENT    LIENS.  1063 

ment  lien,  be  prima  facie  evidence  of  the  regu- 
larity and  validity  of  the  assessment  lien  to  be 
foreclosed  therein,"'*  saving  to  the  owner  of  the 
liened  property  the  right  to  overcome  this  pre- 
sumption by  any  competent  and  relevant  evi- 
dence.^^ 

658.     Of  Defenses  Available  in  the  Foreclosure 
Action. 

Where  the  legislature  provides  a  forum  for  the 
correction  of  any  errors  or  irregularities  which 
may  be  made  in  the  establishment  of  an  assess- 
ment, and  the  property  owner  fails  to  apply  there- 
in for  the  relief  which  may  be  obtained  there- 
from, as  to  all  defects  which  might  lawfully  have 
been  corrected  by  such  body,  and  for  which  an 

33  Dyer  v.  Barstow,  50  Cal.  652.  In  the  cases  cited 
in  the  two  preceding  notes  this  case  was  distinguished. 

34  Prima  Facie  Evidence.— ''It  is  competent  for 
the  legislature  to  prescribe  rules  of  evidence  for  tho 
trial  of  actions,  and  statutes  which  make  a  document 
prima  facie  evidence  of  the  regularity  of  official  pro- 
ceedings in  reference  thereto,  or  which  cast  the  burden 
of  proof  in  an  issue  upon  either  party  to  the  action, 
are  within  the  constitutional  power  of  the  legislature. 
....  Neither  does  this  provision  of  the  statute  con- 
travene the  provision  of  the  constitution  prohibiting 
the  legislature  from  passing  special  or  local  laws 
'regulating  'the  practice  of  courts  of  justice'  '': 
McDonald  v.  Coniff,  99  Cal.  386,  390,  391,  34  Pac.  71. 

35  Such  a  presumption  has  been  established  in 
street  improvement  cases;  but  the  courts  hold  that 
evidence  is  admissible  in  evidence  to  rebut  it:  Burke 
V.  Turney,  54  CaL  4Se,  488;  Manning  v.  Den,  90  Cal. 
610,  614,  27  Pac.  435. 


1064  ASSESSMENT    LIENS.  §    058 

appeal  is  provided,  and  which  do  not  appear  upon 
the  face  of  the  instruments  upon  which  the  as- 
sessment lien  is  founded,  the  property  owner  by 
such  failure  to  apply  therein  waives  the  right  to 
object,  and  cannot  defend  the  foreclosure  action 
on  the  ground  of  such  defects.^® 

36  Where  Forum  Provided  for  Correction  of  Errors, 
Appeal  Must  be  Taken  Thereto,  or  Objection  Waived. 

^^As  to  all  matters  which  may  lawfully  be  corrected 
on  appeal  to  the  city  council  or  other  governing  powers 
of  the  municipality,  and  for  which  an  appeal  is  pro- 
vided by  the  statute,  the  property  owner  deeming 
himself  aggrieved  must  prosecute  his  appeal,  failing 
in  which  he  is  estopped^':  Girvin  v.  Simon,  116  Cal. 
606,  610;  611,  48'  Pac.  720.  See,  also,  McSherry  v. 
Wood,  102  Cal.  647,  651,  86  Pac.  1010;  Shepard  v. 
McNeil,  38  Cal.  72,  74,  75;  Emery  v.  Bradford,  29  CaL 
75,  85,  86,  per  Sawyer  and  Shafter,  JJ.,  and  Sanderson, 
C.  J.;   Currey  and  Ehodes,  JJ.,  dissenting. 

Irregularities  on  Account  of  WJiich  Appeal  Must  he 
Taken,  or  Tliey  are  Deemed  to  he  Waived.— I^Yiq  failure 
of  the  contractor  to  complete  the  work,  and  the  mis- 
conduct of  the  superintendent  of  streets  in  approving 
or  accepting  the  work  before  it  was  "completed: 
Jennings  v.  Le  Breton,  80  Cal.  8,  11,  21  Pac.  1127. 
See,  also,  Warren  v.  Eiddell,  106  Cal.  35^,  353,  354; 
Diggins  V.  Hartshorne,  108  Cal.  154,  162,  41  Pac.  283; 
Smith  V.  Hazard  110  Cal.  145,  149,  42  Pac.  465. 

The  failure  to  properly  grade  a  street:  Fanning  v. 
Leviston,  93  Cal.  186,  188,  28  Pac.  943. 

Where  the  resolution  of  intention  provided  for  grad- 
ing a  street  to  the  official  line,  but  the  contract  pro- 
vided for  grading  it  to  a  line  one  foot  below  the 
official  grade,  and  the  work  so  done  was  accepted  (for 
the  contract  might  have  been  set  aside  on  appeal  and 
a  proper  one  substituted,  see  p.  531):  Chambers  v. 
Satterlee,  40  Cal.  497,  519,  524-526,  531,  per  Wallac?, 
Temple,  and  Crockett,  JJ.;  Ehodes,  C.  J.,  dissenting; 
Himmelman  v.  Burns,  40  Cal.  531  (the  court  being^ 
likewise  divided). 


§    658  '         ASSESSMENT    I.IENS.  1065 

But  the  owner  may  interpose  any  defense 
which  appears  upon  the  face  of  the  instruments 
upon  which  the  lienor^s  action  is  founded.^'' 

The  inclusion  in  an  assessment  as  incidental  ex- 
penses of  an  amount  for  printing  and  engineering,  not 
properly  belonging  therein:  Boyle  v.  Hitchcock,  6Q 
Cal.  129,  4  Pac.  1143,  Compare  Ryan  v.  Altschul,  103 
Cal.  174,  177,  37  Pac.  339. 

The  inclusion  in  an  assessment  for  street  work  of 
the  cost  of  doing  a  greater  number  of  lineal  feet  of 
work  than  was  authorized  by  the  resolution  of  inten- 
tion and  contract:  Himmelmann  v.  Hoadley,  44  Cal. 
276;  Frick  v.  Morford,  87  Cal.  576,  579,  25  Pac.  764. 

The  inclusion  in  an  assessment  for  street  work  of 
the  cost  of  work  not  within  the  terms  of  the  contract, 
although  reasonably  related  thereto,  and  of  sucJi  a 
character  as  might  have  been  included  in  the  contract 
without  rendering  it  void:  Perine  v.  Forbush,  97  Cal. 
305,  313,  32  Pac.  226;  Petaluma  Paving  Co.  v.  Singley, 
136  Cal.  616,  619,  69  Pac.  426. 

Certain  errors  in  the  diagrams  under  which  street 
work  was  done  at  which  the  property  owner  felt  ag- 
grieved, where  the  diagrams  set  forth  the  facts  re- 
quired by  law:  Borland  v.  McGlynn,  47  Cal.  47,  51. 

A  purely  technical  objection  to  an  assessment,  which 
could  not  possibly  affect  the  substantial  rights  of  tho 
property    owner:   Dyer    v.    Parrott,    60    Cal.    551,    555. 

37  Defense  Appearing  Upon  Face  of  Assessment 
May  Always  be  Interposed. — Where  one  street  ter- 
minated in  another,  and  the  whole  expense  of  improv- 
ing the  street  opposite  tho  termination  was  assessed 
to  the  two  quarter-blocks  cornering  on  the  intersec- 
tion, and  the  objection  appeared  upon  the  face  of  the 
papers,  ^'as  the  objection  did  not  require  extrinsic 
evidence  for  the  purpose  of  establishing  the  fact,  but 
the  assessment  appeared  on  its  face  to  have  been 
made  in  violation  of  the  statute,  the  defendants  are 
not  precluded  from  making  the  objection  without  hav- 
ing previouslv  appealed  to  the  toard  of  supervisors ^'r 
Perine  v.  Lewis,  128  Cal.  236,  241,  60  Pac.  422,  772. 
See,  also,  Kenny  v.  Kelly,  113  Cal.  364,  45  Pac.  699. 


10G6  ASSESSMENT    LIENS.  §    658 

And  the  property  owner  may  always  contest 
a  lien  upon  the  ground  that  the  jurisdictional 
prerequisites  to  the  levy  of  the  assessment  and 
the  accrual  of  the  lien  are  lacking^  or  on  the 
ground  that  the  local  corporation  has  exceeded 
its  powers.^® 

38  Lack  of  Jurisdictional  Prerequisites.— The  ques- 
tion of  the  existence  of  facts  or  acts  of  a  jnrisdictional 
character,  and  essential  to  the  validity  of  the  assess- 
ment, may  be  raised  in  the  foreclosure  action  without 
the  necessity  of  a  previous  appeal:  Emery  v.  Brad- 
ford, 29  Cal.  75,  86 ;  San  Jose  Imp.  Co.  v.  Auzerais, 
106  Cal.  498,  500,  39  Pac.  859;  Manning  v.  Den,  90 
Cal.  610,  616,  27  Pac.  435  (interpreted  in  Girvin  v. 
Simon,  116  Cal.  610,  6T6,  48  Pac.  720);  Warren  v. 
Chandos,  115  Cal.  382,  387,  47  Pac.  132;  Chase  v. 
City  Treasurer  of  the  City  of  Los  Angeles,  122  CaJ. 
540,  545,  55  Pac.  414;  De  Haven  v.  Berendes,  135  Cal. 
17S,  181,  67  Pac.  786. 

*'A  void  [street  improvement]  contract  does  not 
become  valid  by  failure  to  appeal  to  the  board  of 
supervisors'^:  Girvin  v.  Simon,  116  Cal.  606,  610,  48 
Pac.  720.  See,  also,  Bvan  v.  Altschul,  103  Cal.  174:, 
177,  37  Pac.  339. 

Circumstances  Avoiding  JnrisUiction  not  Cnred  hy 
Failure  to  Appeal  and  Provable  as  Defense  to  Fore- 
closure Action.  — A  valid  contract  being  essential  under 
the  Vrooman  Act,  that  there  was  no  valid  contract: 
Williams  v.  Bergin,-  129  Cal.  461,  465,  62  Pac.  59; 
McBean  v.  Eedick,  96  Cal.  191,  193,  31  Pac.  7. 

That  the  street  work  actually  done  was  different 
from  that  set  forth  in  the  notice  of  intention:  Dough- 
erty V.  Hitchcock,  35  Cal.  512,  524. 

That  the  contract  for  street  work  was  prematurely 
made  by  the  superintendent  of  streets,  the  contract 
being  for  that  reason  void:  Burke  v.  Turney,  54  Cal. 
486,  487. 

That  a  contract  for  street  work  allowed  a  longer 
time  for  doing  the  work  than  that  prescribed  by  the 


§    G58  ASSESSMET^T    LIENS.  IOG'7 

'  Any  objections  for  which  an  appeal  is  not  pro- 
vided to  the  forum  provided  by  law  may  also  be 
availed  of  in  the  foreclosure  action.^^ 

That  the  property  owner  has  appealed  to  such 
forum  in  a  case  where  an  appeal  thereto  must 
needs  be  unavailing  does  not  estop  the  property 

board  of  suDervisors  for  doing  the  work:  Brock  v. 
Xuning,  89  Cal.  316,  321,  26  Pac.  972. 

That  street  work  was  not  completed  within  the  time 
prescribed  by  the  contract,  no  extension  of  the  time 
having  been  granted,  this  fact  being  fatal  to  any  as- 
sessment: Mahoney   v.    Braverman,    54   Cal.    565,   571. 

The  fact  that  the  local  legislative  body  delegated 
powers  which  it  was  required  to  exercise  itself:  Chase 
V.  City  Treasurer  of  the  City  of  Los -.Angeles,  12L' 
Cal.  540,  545,  55  Pac.  414.  ' 

That  an  irrigation  district  has  no  outstanding  bonds 
upon  which  interest  is  payable,  or  that  the  amount 
of  the  assessment  is  not  within  any  reasonable  esti- 
mate of  that  interest,  the  power  of  an  irrigation  dis- 
trict being  limited  to  purpose  of  raising  money  to  pay 
the  interest  on  outstanding  bonds:  Hughson  v.  Crane, 
115  Cal.  404,  416,  417,  47  Pac.  120. 

That  a  contract  for  street  work  was  rendered  void 
by  fraudulent  collusion  between  the  contractor  and 
certain  property  owners:  Bradv  v.  Bartlett,  56  Cal. 
350,  362-369. 

The  provision  of  section  3  of  the  Street  Improve- 
ment Act  of  1885,  relating  to  a  Detition  of  remon- 
strance, being  intended  to  be  applicable  only  to  acts 
within  the  power  of  the  city  council,  the  right  to  in- 
terpose the  defense  that  the  act  complained  of  was 
in  excess  of  the  powers  of  the  common  council  is  not 
waived  either  by  the  filing  of  the  remonstrance  or 
the  failure  to  file  it:  De  Haven  v.  Berendes,  135  Cal. 
178,  182,  67  Pac.  786;  Capron  v.  Hitchcock,  98  Cal. 
427,  431,  33  Pac.  431. 

30  Manning  v.  Den,  90  Cal.  610,  616,   27  Pac.  435. 


INDEX. 


Agistor's  lien 70S 

Accessory — encumbrance     accessory    to     secured 

obligation    9 

Accrual  of  encumbrance,  time  thereof. 

Liens  generally     682 

Mechanics  ^  liens    943-944 

Mortgage  on  crop  to  be  planted 501 

Administrator,  lien  of .693-695 

Alimony,  lien  of . 1005 

Assessment  liens. 

Assessment  defined 1031 

Assessment   constitutes  lien  when  duly  levied 

1056-1058 

Distinction  between  tax  and  assessment .  .  .  1033-1034 

Enforcement  of  lien .1060-1068 

Maximum  amount 1058 

Validity  and  operation  of  assessments.  .  .  .    1034-1055 

Attachment   of   encumbered  property 

390-391,   519-521,   685 

Banker's  lien 686 

Bankruptcy— effect  thereof  on  encumbrances. 

Bankrupt  defined 70-71 

Control     of     bankruptcy     court     over     encum- 
brances  116-128 

Enforcement    of    encumbrances    against    prop- 
erty   of   bankrupt 129-136 

Persons  embraced  within  operation  of  federal 

bankrupt  law 71-77 

Possession  of  encumbered  property 110-112 

Priorities  not   affected  by  bankruptcy 98 

Proof    of    secured    demand    against    bankrupt 

estate :. 113-115 

(1071) 


1072  ,  INDEX. 

Bankruptcy — Continued . 

Validitv  of  encumbrances    in    case    of    bank- 
ruptcy  81-109 

See  ^^ insolvency/' 
Bankruptcy— relation  of  federal  and  state  legis- 
lation to  each  other. 

Congress  may   enact   uniform   laws 64 

Effect  of  enactment  and  repeal  of  federal  laws 

on  state  laws 69-70 

Persons  embraced  within  scop«  of  federal  bank- 
rupt law 71-77 

Persons  embraced  within  scopie  of  state  insol- 
vent law. 78-70 

Scope  of  federal  bankrupt  laws 64-65 

Scope   of   state   insolvent   laws    66-68 

Boarding-house  keeper,  lien  of 713-716 

Carrier  of  goods 706-707 

Carrier  of  passengers 717 

Characteristics  of  encumbrances 3-5 

Contract   encumbrances,  generally 361-363 

Corporation — lien  thereof  on  its  own  stock.  .  .  .805-806 

Other  liens  of  corporation  discussed 803-805 

Death — effect    thereof    on    encumbrances. 

Control  of  probate  court  over  encumbered  prop- 
erty       .  .     .  .  •• 50-55 

Enforcement  of  encumbrances  against  estate  of 

decedent 56-63 

Proof    of    secured    demand   against    decedent's 

estate 45-49 

Validity  of  encumbrances  in  case  of  death. ..  .38-44 

Depositary   for   hire,   lien   of 710-711 

Enforcement    of    encumbrances. 

By  foreclosure  proceeding.     See  ^^foreclosure. " 

Modes  thereof  in  general 170-171 

Of  various  encumbrances. 

Assessment  lien 1060-1068 

Carrier's    lien — goods 707 

Carrier's    lien— passengers 717 

Depositary  for  hire,  lien   of        711 

Equitable  lien  in  nature  of  mortgage 656 


INDEX.  16v3 

Of   various   encumbrances— Continued. 

Factor 's  lien 688 

Finder  of  lost  articles,  lien  of 712 

Insect   i^est   nuisances,    lien   for   abating.  ...     995 

Innkeeper  ^s  lien 714-716 

Judgment  liens ^ 1020-1024 

Logger 's  lien 768-770 

Mechanics'    liens — immovable   property.  .  .981-986 

Mechanics'  lien — movable  property 704-705 

Maritime  liens 797 

Mortgage 620-651 

Nonmaritime  liens  against  vessels 800-802 

Pledge 411-416 

Propagating  animals,  lien,'  in  favor  of  owner 

of 775 

Purchaser's   lien — immovable   property..     ..     823 

Thresher's   lien .' 772 

Tax  lien 1029 

Trust  deed  in  nature  of  mortgage 

..,646-651,664-665 

Vendor's    lien — immovable    property 820-821 

Vendor's  lien — movable  property 701-702 

Vessels,  liens  against 797,  800-802 

Vendor's  security 672-677 

Equitable  mortgage 652-656 

Estates  of    deceased  persons. 
See    ^^ Death." 

Estrays,    distraint    of 762-7G4 

See,  also,  ''trespassing  animals." 

Executor,  lien  of 493-495 

Extinction  of  encumbrances— modes  thereof. 

Conversion  of  property 166-167 

Destruction   of   encumbered  property 163 

Generally 162 

Lapse  of  time 165 

Offer  to  perform 163-164 

Partial  performance * 169 

Performance     163-164 

Sale  of  property  in  satisfaction  thereof 165-166 

Surrender  of  property  by  encumbrancer.  ..  .168-169 

Tender 163-164 

Wrongful  dealing  with  property 166-167 

Liens— 68 


1074  INDEX. 

Factor's  lien 68T-68S 

Finder  of  lost  articles,  lien  of 712 

Foreclosure. 

Action  to  enforce  judgment  of  foreclosure....      236 

Appeal  bonds  in  foreclosure  actions 354-359 

Application  of  proceeds  of  sale  of  encumbered 

property 292-294 

Assistance,   writ   of 286-289 

Commissioner  to  sell  property 232-23  i 

Deficiency  judgment .226-227,  295-302 

Effect  of  foreclosure  judgment 235-236 

Elisor  to  sell  property .234-235 

Equitable  proceeding,   foreclosure  an 173-171 

Intervention  in   foreclosure  actions 211 

Judgment   of  foreclosure. 

Action  to  enforce  judgment 236 

Deficiency,  provision  as  to 226-227 

Effect  of  judgment 235-236 

Encumbered    property   situate   in    two    coun- 
ties, provision  as  to 229 

Levy  on  judgment 237 

Money  required  in  payment,  kind  thereof.  .228-229 
Paramount  and  adverse  titles,  provisions  as 

to 230-232 

Requisites   in    general    ...221-225 

Subsequent   encumbrances,  provision  as  to.  .      228 

Levy  on  foreclosure  judgment ' 237 

Money  required  in  payment,  kind  of   228-229 

Nature  of  foreclosure  action 172-174 

Paramount  title— adjudication  thereon  in  fore- 
closure action 181-184,  230-232 

Parties  in    foreclosure  action. 

Indispensable  parties 192-198 

Intervention  in  foreclosure  actions   211 

Necessary  parties 199-207 

Persons  not  reqiuired  to  be  parties   210-211 

Proper  parties    207-210 

Purchaser  at  foreclosure  sales. 

Joint  owner  of  encumbrance— effect  of  piir- 

chase  by 282-283 

Judgment  creditor  may  purchase 259 

Person  conducting  sale  cannot  purchase  ....      259 
Purchaser  who  refuses  to  pay  purchase  price 

......261-262 


1075 


Purchaser   at   foreclosure   sales— Continued. 

Belief  from  defective  sale   267-268 

Eelief  when  necessary  parties  not  joined.  .216-219 

Sale  vests  property  sold  in  purchaser    273 

Writ  of  assistance 286-280 

See     ^'Foreclosure— redemption^';     '^  Foreclos- 
ure—sales.'^ 

Eecovery    of    excessive    amount    paid    encum- 
brancer from  proceeds  of  sale   294 

Eedemption  from  foreclosure  sales. 

Constitutionality   of  redemption   statutes  as 
applied   prospectively   and  retrospectivelv 

304-318 

Effect   of  redemption    349-352 

Certificate  of  redemption    348-349 

Conditions  of  redemption   338-346 

Evidence  of  right  to  redeem   336-337 

Expiration  of  time  of  redemption   352-353 

Mistake  in  attempt  to  redeem   347 

Persons  entitled  to  redeem   ....  .  . . 329-336 

Possession  during  time  of  redemption   320 

Property  subject  to  redemption   319 

Eedemption,  how  effected 329-349 

Eents  and   profits   and  value   of   use   during 

time  of  redemption 321-327 

Subsequent    redemptions    340-341 

Time  within  which  redemption  may  be  made 

:    338-340 

Use  during  time  of  redemp'tion 327-329 

Sales  of  property  in  foreclosure  actions. 

Certificate  of  sale   269-272 

Death  of  owner  of  encumbered  property  does 

not  prevent  sale 246 

Delivery  of  property  sold 269 

Finality  of  sale *..,.,.,...,. 263-268 

Foreclosure  sales  and  execution  sales  distin- 
guished.  239-241 

Joint  owner  of  encumbrance  foreclosed,  effect 
of  sale  to     282-283 

.  Mode  and  conduct  of  sale 251 

Notice  of  sale 250-254 

Operation  of   sale   .  .. , 273-283 

Order  of  sale 178-179 


1076  INDEX. 

Foreclosure. 

Sales  of  property  in  foreclosure  actions — Con- 
tinued. 
Paramount    and   adverse   claims   usually  not 

affected   by   sale    279-282 

Proceeds  of  sale 292-294 

Eedemption  from  sales— see  ^^Foreclosure — 
redemption   from    sales.  ^  ^ 

Belief  from  sales 266-268 

Eeport  of  sale 262-263 

Specified  kind  of  money  must  sometimes  be 

required  in  pa^'ment ^  .      260 

Subordinate    encumbrances    extinguished   by 

sale    279 

Title  of  purchaser  at  sale 283-291 

Writ   of  assistance    286-289 

Writ  of  sale    241-249 

Writ  prerequisite  to  valid  sale   224 

Scope     of    judicial    authority    in    foreclosure 

actions    176-186 

Description  of  encumbered  property — ambig- 
uities therein 180-181 

Homestead 185 

Movable  property  may  be  taken  into  custody 

229-230 

Paramount  and  adverse  claims   181-184 

Perishable  property 176-177 

Secured  obligations  not  all  due .*. .  .  .177-178 

Subordinate   claims 186 

Validity. 

As  against  necessary  parties  not  joined.  .  .212-216 

Generally   174-175 

Venue    of    actions    against    immovable    prop- 
erty  ^ 187-191 

Forfeitures 363,   534-536 

Fraud — encumbrance  made   to   hinder,   delay,    or 

defraud     105,   362,   478 

Future  interest  may  be  encumbered   361,  437-438 

Goats,  lien  against    750 

See,   also,   ^trespassing  animals. ^^ 

Guardian,  lien  of    493 

Hogs,  lien  against 753-758 

See,  also,   ^trespassing   animals.'' 


INDEX.  1077 

Homestead — operation    of    encumbrances    in    re- 
spect thereto. 
Bankruptcy— effect    on    encumbrances    against 

homestead— see   ^  ^  bankruptcy. '  ^ 
Death— effect  on  encumbrances  against  home- 
stead—see '  ^  death. '^ 

Equitable  lien  in  nature  of  mortgage 20-^1 

Insolvency — eff'ect     on     encumbrances    against 
homestead— see  ^ '  insolvency.  ^ ' 

Mechanics^  liens— immovable  property 20 

Mortgages    513-518 

Vendor  ^s  lien 20 

Hotelman's  lien  713-716 

Improvement  liens — see  ^^ mechanics^  liens. '^ 

Innkeeper's  lien    713-716 

Insect  pest  nuisances,  lien  for  abating 993-995 

Insolvency  under  state  law— effect  thereof  on  en- 
cumbrances. 

Control  of  court  over  encumbrances   151-152 

Enforcement  of  encumbrance  against  property 

of  insolvent   153-154 

Insolvent  defined 71 

Persons    embraced    within    operation    of    state 

insolvent   law 78-7^ 

Proof  of  secured  demand  against  insolvent  es- 
tate   146-150 

Validity  of  encumbrances  in  case  of  insolvency 

138-146 

Validity  of  encumbrance  made  by  insolvent  .  .     362 
See  '^bankruptcy.'' 
Judgment  liens. 

Attachment  merged  into  judgment  lien 1020 

Division  of  county,  lien  not  affected  by.  .1017-lOlS 

Enforcement ".  .  .  1020-1024 

Justice's  court  judgment  lien   1012-1013 

Limitation  of  lien,  computation  of  time  there- 
of   1014-lOlG 

Liened    property    not    subject    to    independent 

levy    1019 

Parol,  lien  not  provable  by   1014 

Property  not  twice  lienable  under  same  judg- 
ment       1018 


1078  INDEX. 

Judgment  liens— Continued. 

Superior  court  judgment  lien  in  county  where 

judgment  rendered    1008-1010 

Superior  court  judgment  lien  in  other  counties 

1011-1012 

Iiaundryman's  lien '    689 

Levy  on  encumbered  movable  property 519-'520 

Lien-claim  defined    ; 858 

Liens. 

Accrual  of  lien,  time  of '     682 

See,  also,     '*  accrual     of     encumbrances,     time 
thereof.'' 

Classified   . 682 

Defined 681 

Exempt  property  lienable 683 

General  lien   defined    682 

Possession  of  liened  property 684-685 

Special  lien   defined   682 

Waived  by  taking  mortgage 683 

Logger's  lien    21,  765-770 

Manner  of  creation  of  encumbrances  7 

Maritime  liens.     See  '' Vessels,  liens  against.''      ' 

Marshaling  of  securities 32-34 

Mechanics*  liens— immovable  property. 

Agent— original  contractor  contracting  owner's 

agent  when  contract  void    854 

Amount  of  liens. 

Contract  price  payable  in  property   975-976 

Maximum   amount  of  individual  lien    959 

Maximum  amount  of  liens  in  aggregate. 

Contract   price   fixed 960-964 

Contract   price   not   fixed    966 

Not   reduced   by   contracting     owner's   equi- 
ties     964-966 

Original    contract    nonconformable    to    statu- 
tory requirements    967-968 

Original  contractor's  lien 972-974 

Recourse     of    owner    against     original     con- 
tractor         974 

Stoppage   of  work  before   completion    ....970-972 


INDEX.  1079 

Assignment. 

Lien — assignment  thereof 946-947 

Lien-claim  unassignable    897 

Attachment   of   liens,   time    thereof    943-944 

Bonds  for  the  benefit   of  lien-claimants. 

In   case   of   public   works    888-889 

Cann<)t   constitutionally  be   required  in   case 

of   private   improvements 889-896 

Contracting   owner    defined    825 

Contracts  for  improvements. 

Certain  contracts  exempt  from  usual  require- 
ments          832 

Memorandum   of  contract    844-846 

Persons  presumed  to  have  right  to  bind  prop- 
erty for  liens    883-884 

Eecord    of    contract     842 

Eecovery  when  contract  void    851 

Requisites  of  contract    833-842 

Void  contracts 847-854,  897 

Cumulative  security,  the  mechanics '  lien  a   .  .     979 
Enforcement  of  lien. 

Costs  and   counsel   fees    985-986 

Foreclosure.     See  '^foreclosure.^' 

Joinder   of   actions    983-984 

Method    of    enforcement 981 

Time   of   commencing   action    981-982 

Equitable    subrogation    of    certain    persons    to 

moneys  owing  by  contracting  owner 948-957 

Estate,  property  thereof,  how  far  lienable....     886 
Exemptions  from  liens. 

Estate,    property   of    886 

Incompetents,  property  of 885 

Public    property 886 

Improvement    defined     825 

Incompetents,  property  thereof  not   lienable.  .      885 

Indemnity  against  liens 989-992 

Lien-claim   defined    .  .  . ." '     85S 

Materialman    defined    829 

Materials  about  to  be  used  in  improvement  ex- 
empt  from   execution .  .  . .  .829-830 

Memorandum  of   improvement   contract    ....  844-846 


1080  INDEX. 

Mechanics'   liens— Continued. 

Mining    claim    defined 880-881 

JSTotice  to  owner  to  stop  payments  to  original 

contractor .  948-957 

Notice  of  claim  of  lien. 

Cannot  be  reformed  nor  amended 935 

Joint  claim ^   operation  and  requisites    ....940-942 

Eequisites 907-908 

Substantial    observance   of   requirements    es- 
sential    935-938 

Time   of   filing    923-932 

Notice  of  completion    or   cessation  from  labor 

must  be  filed    900-905 

Notice    of   nonresponsibility   for   improvement 

868-872,  877-879,  882 

Objects  against  which  a  lien  may  be  claimed. 

Aqueduct.. " 860 

Bridge 860 

Buildings  ^ • 859 

Ditch    * 860 

Fence    860 

riume    860 

Land  necessary  for  convenient  use  and  occu- 
pation          866 

Land  of  noncontracting  owner   ..868-872,  877-879 

Leased  mining  machinery 880 

Lot  in  incorporated  city  or  town    .  ; 881-882 

Machinery 860 

Mining    property    873-876 

Railroad ' 860 

Structure 860 

Tuniiel    . 860 

Wagon  road 860 

Well    860 

Wharf 859 

See    ^^  mechanics'    liens  —  exemptions    from 
liens. ' ' 

Operation  of  perfected  lien   945 

Original  contract  defined 831-832 

Original   contractor   defined    827-828 


INDEX.  1081 

Perfecting  the  lien. 

Every  lien- claimant  may  perfect 907 

^         Lien  forfeited  by  filing  fraudulent  notice  of 

claim 939 

Notice  of  claim  of  lien. must  be  filed   907 

See    ^^ mechanics^    liens — notice    of    claim    of 
lien. 
Persons  who  may  claim  liens. 

Building,  •  structure,     aqueduct,     well,     road, 

wharf    858-872 

Classification  of 826-827 

City  street  or  lot    881-882- 

Mining    property    873-87J^ 

Original   contractor  cannot   claim  lien  when 

contract  void    897 

Property  subject  to  liens. 

See     *' mechanics'      liens  —  objects     against 
which,  liens  may  be  claimed. '  ^ 
Presumption   of   authority   to   render   property 

subject  to  liens    883-884 

Priorities  of  liens  among  themselves    977 

Public  property  not  lienable 886 

Promptitude  in  exercise  of  rights  conferred  es- 
sential         824 

Eationale   of  liens    82-1 

Subcontractor    ^lefined     828 

Void    improvement    contracts 847-854 

Waiver   of  lien    898- 

Waste,  commission  of  on  liened  property    ....      900 

Mechanics*    liens— movable    property    703-705 

Mining  partner's  lien 1002-1004 

Mortgage. 

Absolute  deed  as  mortgage  426-429,  485-488,  537-541 

Accommodation,    mortgage   made   for    474-47d 

Acknowledgment    to    continue    or    renewal    of 

mortgage 632-640 

Assignment   of    mortgage    585-589^ 

Assessment  of  mortgage  and  mortgaged  prop- 
erty—  see  '  ^  taxation. ' ' 
Attachment  of  mortgaged  movable  property  519-521 


1082-  INDEX. 

Mortgage— Continued. 

Attorii^6T?s  fee  when   secured' by  mortgage    .. 

\ .451-454,   642-645 

Continuance   of   mortgage    ......;,.  w  ...  .  .632-638 

Conversion  of   mortgaged  property    506-509 

Crop  mortgage. 

Continues  after  severance  without  removal  500-501 
Effect    of   provision   in   immovable   property 

mortgage  mortgaging  crops    * 492-494 

Time  of  attachment  on  crop  to  be  planted.  .     501 
Deed     absolute     in     form     as     mortgage.     See 
^^ mortgage— absolute  deed.'* 

Definition    418-419 

Description  of  mortgaged  property    421-424 

Distinguished 432-437 

Enforcement. 

Deficiency  in  case  of  sale  of  mortgaged  prop- 
erty   295-302,  651 

Foreclosure  by  judicial  proceeding. 

Attorney's  fee 642-645 

Multiplicity  of  actions 623-628 

Keceiver 641 

Time  of  commencing  foreclosure  action  629-640 
See   ^^foreclosure.'' 

Power  of  sale,  exercise  of 646-651 

Strict  foreclosure  unknown  in  California    .  .      622 

Equitable  mortgage    .' 652-656 

Evidence — Extrinsic     evidence     admissible     to 

show    mortgage    429-431 

Execution  of  mortgage    419-420,  455-463 

Extinction. 

Generally 598-599 

Movable  property  mortgages   (special  modes 

of    extinction) "    600-601 

Eecorded  mortgages    602-605 

Eemoval  of  movable  property 499,  601 

See  ^ '  extinction  of  encumbrances. ' ' 
Foreclosure.     See  ''foreclosure." 

Forfeitures 534-536 

Formal   hypothecations  mostly  mortgages    ..426-437 

Form    of   mortgage    420 

Fraud,   mortgage  made   to   defraud    478-479 


INDEX.  IQS'i 

Future  advances,  mortgages  to  secure. 

Advances,  how  made   ........    ......    .  .  .  .510-511 

Failure  to  make  advances  contracted  for   .  .     513 

Maturity 511 

Priority    in    respect    to    subsequent    encum- 
brances     511-513 

Stating  object 509-510 

Validity    509-5ia 

Homestead,   mortgage   of    513-518 

Immovable  property  mortgages — see  the  vari- 
ous heads. 

Instrument  of  mortgage 419-425 

Becordation      of      instrument — see      ^  ^mort- 
gage—recordation.  ^^  ^ 
Insurance  of  mortgaged  property  .  .447,  448,  541-545 

Interpretation   of   mortgage    448-454 

Levy  upon  mortgaged  movable  property  .  . .  .519-521 

Limitation    of   action    629-640^ 

Mortgagee    in   possession    of   immovable   prrop- 

erty    575-584 

In   wrongful   possession    533 

In  possession  of  movable  property   445 

Movable   property   mortgage — see   the   various 
heads. 

Movable  property  mortgageable 439-444 

Operation  of  mortgage. 

Absolute    deed    as    mortgage.     See    ^'mort- 
gages—  absolute  deed.  ^' 
Affixment    of    mortgaged    movable    property 

to  immovable 503 

After-acquired   title    470-473 

Appurtenances  to   mortgaged  land    480 

Crop       mortgages.     See       '^  mortgages — crop 
mortgages. ' ' 

Fixtures  on  mortgaged  land    489-490 

Future    advances.     See    ' '  mortgages,    future 
advances.  ^ ' 

Generally ! 468-484 

Holders   of    several    notes    secured    by   one 

mortgage    483-484 

Homestead,  mortgages  of   513-ol8 


1084  INDEX. 

Mortgage. 

Operation  of  mortgage— Continued. 

Immovable  property   mortgages  executed  as 

such    484-49i 

Income  of  mortgaged  property  . 502 

Levy  of  mortgaged  movable  property  .  .  .  .519-521 
Mortgage  taken  subject  to  existing  burdens 

on  mortgaged  property    490-491 

Movable  property  mortgages   495-509 

Offspring  of  mortgaged  animals 502 

Provision   accelerating   time   of   payment   in 

case  of  default   480-483 

Title  to  mortgaged  property 468 

Unrecorded — validity   when 

Immovable  property  mortgages   .  .17-19,  484-488 

Movable  property  mortgages   496-499 

Personal   action   on  mortgage   obligation.  .  .  .616-617 
Possession    of    mortgaged    property.  ..  .444-445,    521 
Liability  of  mortgagee   in  wrongful  posses- 
sion        533 

Mortgagee  in  rightful  possession   575-584 

Possession  during  time   of  redemption.     See 

'  ^  foreclosure— redemption. ' ' 
Eemedies  of  mortgagee  entitled  to  possession 

530-5:;3 

Power    of    sale    445-447,    646-6oi 

Primary  security,  the  mortgage  a. 

Failure  to  foreclose  does  not  impair  remedies 

against    secondary   parties    613-615 

Loss  of  security  without  fault  of  mortgagee 

does  not  bar  personal  action 616-617 

Mortgaged   property   must   first   be   resorted 

to    r 607-610 

Waiver  of  mortgage  waives  personal  liability 

of  mortgagor 611-613 

Property  mortgageable 437-444,  473-474 

Purchase  money  mortgage   15-16 

Purchaser    of    mortgaged    property,    liabilities 

of 591-596 

Eeceivers  of  mortgaged  property 532-533,  641 

Eecordation  of  instrument. 

Additional  recordation  of  movable  property 

mortgages    46-1 

A-ssignment  of  mortgage,  recordation  of... 587-588 


INDEX.  lOSo 

Recordation    of    instrument— Continued. 

Crop    mortgages    45^ 

Extinction    of    recorded    mortgages    602-606 

Immovable    property    mortgages     455-45G 

Mistake — extinction    of    record    by'  mistake 

605-606 

Movable  property  mortgages 458-46  i 

Necessity  of  recordation  in  case  of  movable 

property  mortgages 495-499 

Property  in   transit 463 

Property   of   common   carrier    463 

Vessels,  mortgages  against 459 

Reformation  of  instrument  of  mortgage  ....  424-425 

Removal  of  mortgaged  movable  property 

...529-530,  601 

Renewal  of  mortgage   638-640 

Sales     of    mortgaged    property.     See    ^^mort- 
gages—transfer. ' ' 
Substitution  of  other  property  for  mortgaged 

property   '••••. 504-505 

Taxation  of  mortgaged  property.     See  '^Taxa- 
tion.'' 

Test   of   mortgage    432-437 

Transactions    amounting   to    mortgages    ....432-437 
Transfer  of  mortgaged  property. 

Immovable    property    590-596 

Movable  property 527-529,  600 

Unrecorded  mortgages,  effect  of.     See  '^  mort- 
gages—  operation  of.'' 

Use    of   mortgaged   property    525-527,    531 

See,  also,  '^mortgages — operation  of." 
Validity  of  mortgages. 

Immovable  property  mortgages 

. .  .17-19,  484-488,  595-596 

Movable  property  mortgages   496-499 

Mortgages  on  nonmortgageable  property.  .505-506 

Vessels,  mortgages  against 459 

Waiver  of  mortgage   611-613 

Waste  of  mortgaged  property  .  .327-329,  526-527,  534 

Writing— mortgage  in  writing 419-420 

Nature  of  encumbrances  in  general   7-9 

Parties. 

See  ' 'foreclosure,"  and  ''partition." 


1086  INDEX. 

Partition   of   encumbered   immovable  property — 

effect   thereof   on   encumbrances    158-lCl 

Encumbrancer  as  partv  in  action  in  partition 

r 155-157 

Partition  fences— lien  for  constructing 996-1001 

Personal   obligation   not   implied  in   creation   of 

encumbrance    7-8- 

Pledge. 

After-acquired  title 380-381 

Collateral  securities — sale  by  pledgee. .  .402,  412-413 

Conversion  of  pledged  property   391-393,  403^ 

Corporate   stock,    pledge   of    385-386,    396-399 

Cumulative    security,    pledge    a    409-410 

Definition ••.... 364-365 

Enforcement. 

Foreclosure.     See  ^^foreclosure. '^ 

Methods 411 

Sale  by  act  of  party   412-416 

Executory  agreements  to  pledge 382-384 

Increase    of   pledged'  property    380 

Operation  of  pledge 379 

Persons  who  may  or  may  not  pledge 

377-378,  386-389 

Pledgeholder 406-408 

Pledgelender    404-405 

Eequisites  of  pledge 364-374 

Eights  and  duties  of  parties 394-403 

Sale  of  property  in  satisfaction  of  pledge .  . .  399-400 

Transactions   deemed  pledge    375-376 

Pledgeholder   406-408 

Pledgelender 404-405 

Possession  of  encumbered  property. 

Encumbrancer   in  piossession  may  retain   same 

until  secured  demand  satisfied   

400,  576,   663,  684-685 

Priorities. 

Dependent   on  possession,  encumbrances    22 

Encumbrance  generally  superior  to  subse- 
quently acquired  interest  in  the  same  prop- 
erty   J3 

Homestead.     See   ' '  homestead.  ^  ^ 

Logger  ^s  lien 21 


1087 


Eights    of    inferior    encumhrancer    14-15 

Superiority    of    purchase    money    mortgage.  ..  .15-16 
Time  as   controlling  priorities. 

Maritime  liens    22-23 

Nonmaritime  liens 11-12 

Tax  liens  paramount    23 

Unrecorded  mortgages    17-19 

Vessels^  liens  against    21,   796,   800 

Propagating   animal — lien    in    favor    of     owner 

thereof    , 773-775 

Purchaser's   lien — immovable    property    822-823 

Receiver,  lien  of  | 493 

Redemption  from  foreclosure   sales.     See  '^fore- 
closure— redemption  from  sales.'' 
Rights  and  duties  of  parties  affected  by  encum- 
brance. 

Apiplication  of  proceeds  when  securing  two  ob- 
ligations       35-»:J7 

Inferior  encumbrancer  may,  in  case  of  neces- 
sity, satisfy  superior  encumbrance  before  ma- 
turity     26-27 

Interested  person  may  discharge  encumbrance 

when   due    26 

^Q^shaling  of  securities   32-34 

il-^^tive  rights  of  encumbrancer  in  possession 

au(i    owner    of    property    24-25 

Subrogation    27-32 

Sales  of  encumbered  property  in  foreclosure  ac- 
tions.    See  ' 'foreclosure— sales. '' 

Sheriff's  lien   718 

Stable-keeper's  lien   708 

Stoppage   in  transit 697-701 

Subrogation   . . 27-32 

Taxation  of  encumbrances  and  encumbered  prop- 
erty. 
Agreement  compelling  mortgagor  to  pay  taxes 

,. . 570-574 

Constitutionality  of  system  of  taxation 

549-551,  558-560 


1088  INDEX. 

Taxation— Continued. 

Liability  for   taxes   generally 566-567,  569-570 

Obligations  secured  by  propierty  outside  state.      561 
Obligations   secured  by   property  within   state 

561-566 

Quasi-public  corporations,  property  of    566 

Special  assessment  upon  encumbered  property.      560 
System  of  taxation  in  California  discussed.  .  .546-560 

Who  may  pay  taxes   567-568 

Tax  liens 1026-1029 

Priority  thereof    23 

Thresher's  liens   , . .  . .  771-772 

Title  not  transferred  by   encumbrance.  ..  .9,   379,  468 

Trespassing  animals— liens  against    719-764 

Trust  deed  in  the  nature  of  a  mortgage. 

Barring    of    secured    obligation    by    lapse    of 

time    663 

Defined  and  distinguished   657-660 

Enforcement    664-665 

Operation  of  trust  deed 661 

Presumption   against   trust   deed    661 

Primary  security,  trust  property  a   664 

Taxation    . 662 

Use    of   trust   property    662 

Validity   660 

Trustees,  liens   of    , 690-605 

Vendor's  lien. 

Immovable  property. 

Additional  security,  vendor's  lien  a 818 

Creation    808-810 

Distinguished 807-808 

Enforcement    820-821 

Inures  to  personal  representatives    812 

Unassignable    811 

Waiver  of  lien 813-817 

Movable  property. 

Enforcement 701-702 

Generally    696-702 

Stoppage   in   transit    697-701 


INDEX.  1089 

Vendor's    security    666-679 

Assignment    667,  668 

Continuance  of  security    671-672 

Cumulative    remedy,    vendor ^s    security    a.  .669-670 

Enforcement  of  security 672-677 

Extinction    668 

Transfer  from  vendor  to  third  party  as  se- 
curity for  obligation  of  vendee  equiva- 
lent to  vendor's  security   679 

Vendee's  lien,  immovable  property 822,  823 

Vessels,  liens  against. 

Creation   of    780-781 

Maritime  liens. 

Enforceable  solely  in  federal  courts.  .782-783,  797 
Enumeration   of    liens  established    by  state 

law 788-79') 

Nonmaritime  liens. 

Enforceable  in  state  courts 786,  800-802 

Enumeratioix  of  liens  established 798-800 

Priority. 

Generally    790 

Of   maritime   liens    22-23,    796-797 

Of  nonmaritime  liens   21,  800 

Liens  — 69 


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